Wednesday, March 14, 2012

Milling Music

As value investors, we tend to put more emphasis than do others on the balance sheet. But Nate over at Oddball Stocks discovered a potential value investment with no balance sheet! This is because the company requires no capital, and just pays out to shareholders everything it earns. No cash hoards for management, no empire-building, no potentially wasteful acquisitions. The company has fairly steady royalty income, and pays almost a 10% yield at the current stock price! Check out the write-up at Oddball Stocks for more details...

1 comment:

Ponton said...

It is roughly the same thing as buying a HY bond that pays roughly 10% per year. The question is whether or not the 10% is high enough to compensate for the risk ( business+liquidity).

In 2009 (probably due to low liquidity) you could buy this trust for 20$ which meant you were getting 20% yield + the capital appreciation. Precrisis, the range was between 40-50$.

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