It's the last Friday of the month, so Frank (author of value site frankvoisin.com) and I are chatting messenger, where we discuss stories from the web that caught our interest:
Frank: Check out AGX. Tons of cash on hand. Sort of a weird conglomerate structure, but very little debt.
Saj: I've written about it here
Frank: Dammit, Saj, I swear you've looked at 98% of public companies.
Saj: Just the ones with high cash to debt balances...I'm no match for Cramer!
Frank: Can you imagine if you were on that show? Cramer would be screaming and making cow sound effects, and then they'd cut to you, and you'd be totally calm and say something about a company's fundamentals.
Saj: And I'd be off the show at the first commercial break. "Sorry, but when we cut to you, our ratings drop 50%"
Frank: "Yeah, can u at least 'moo' or something? Our research indicates animal noises raise viewer interest levels and strengthen our relationships with advertisers"
Saj: So salesforce.com is now trading at a P/E of 300!
Frank: Seems pretty fair.
Saj: Looks like the late 90's are back...any company with a "dot com" in the name is worth 5 times what it would otherwise be worth.
Frank: And another 5 times that that if they are related to "cloud computing" in any way.
Saj: To be fair, the guy in this video makes a pretty good case for owning shares at the current price.
Saj: Chinese reverse-takeover (RTO) stocks continue to take a beating.
Frank: HQS shows us you don't even need to be an RTO to have those problems, as an independent director resigned after claiming management was stalling him as he had "difficulties in verifying information relating to company accounts and customer positions".
Saj: That's pretty bad on the auditor, which is a fairly sizable firm, if "company accounts" are in question.
Frank: People are always saying the auditor can't prevent fraud, but at the very least can't they verify that the cash account is for real??
Saj: Seriously! It's like they spend all their time getting to really specific inventory numbers, or confirming whether the depreciation method conforms to GAAP, when what we'd really like to know is whether the bank balance exists!
Frank: "Are you straight line or accelerating your depreciation of that mirage?"
Saj: We should be allowed to ask auditors questions. "What is your process for verifying cash balances?"
Frank: As much as short sellers get a bad rap, thank God for them. If short-selling were outlawed, as my lawmakers would like, we'd still be thinking some of these stocks look like good value, because the SEC certainly wouldn't uncover these frauds.