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Monday, December 12, 2005

another batch of companies

ABHH (sec), American Bank Note Holographics. Did they split off from American Bank Note Corp? 56% gross margins. 12.7% operating margins. Earned 10 cents in 2004, 5 cents in 2003, lost 44 cents in 2002 (impairment of goodwill). Cumulative earnings since 2000 are negative (apparently due to the all-too-common stupid acquisition).

Assets are mostly cash. Current ratio is insanely high. Lots of equity. Free cash flow is routinely great.

Q3 2005: Cash dropped, AR and inventories went up. PP&E went up. Earned 11 cents in 9 months. Cash flow from ops was slightly negative. Capex went way up, 5 times depreciation!
The Company’s operating activities used cash of $84,000 for the nine months ended September 30, 2005, compared to $2.1 million of cash provided for the nine months ended September 30, 2004. The decrease was primarily due to an increase in accounts receivable consistent with the increase in sales and increased inventory in anticipation of future sales of HoloMag™, partially offset by an increase in accounts payable for the facility consolidation and inventory build.
So this is a portent of things to come, eh?

18.6 million shares, 1.14 million options. Probably worth about $2.75. Shares are selling for $5.98.
worth following

ACMC (sec), REIT, loans to churches. No employees. Assets are loans, bonds, and some cash. 50% leveraged. 2,551,568 shares on Feb 28, 2005. Dilution is the normal sale of stock. Earned 63 cents in 2004, 55 cents in 2003.

Cash flow from ops makes sense. Cash flow from investing shows a large, continuous net outflow of cash into investments much greater than net income: in other words, it might be possible to hide a lot of bad stuff in there. Cash flow from finance shows a continuous large input greater than net income, after dividends paid (dividends would be part of the whole scam, if it was one). The finance and investing cash flows for 2003-2004 could be either legitimate or a scam. The same pattern holds for 2001-2002 and for 1999-2000.

I know from experience with ALD and ACAS that it's more or less impossible to know whether this business is totally legitimate or whether it's at least partly a smoke and mirrors Ponzi scheme. Can't bet for it, can't bet against it. Just ask David Einhorn.
not interested

ACMT (sec), went dark. website. 1) Contracting services to commercial and governmental customers. 2) Insurance underwriting. 3) Owns a commercial office building in New Britain, CT. (partly intra-company revenue). 4) Specialty insurance to general contractors. 5) Product liability insurance. 5) Surety bonds to contractors. 6) Workers compsensation bonds and related stuff.

Significant customer concentration (4 customers are most of the business). Insurance revenues grew very fast, which makes me very nervous. It's very easy to write lots of policies. They earned about $1.28 diluted in 2004. Cash flow for the last 3 years looks good at first glance (all categories).

Loss and loss reserves went down and seemed low to start with. Balance sheet is about 1/3 equity. I accidently deleted some stuff I had written (not much), but essentially, this also falls into the "I don't know" pile because I don't know if their underwriting discipline is good, especially with the rapid increase in business. The stock is trading at $20.00, so it's probably not all that cheap anyway.
not interested

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