Boole Microcap Fund - Page 11 of 17 - Quantitative Deep Value Investing

Danavation (DVN.CN)

March 28, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Myomo Inc. (MYO): https://boolefund.com/myomo-inc-myo/

The Singing Machine Company (SMDM): https://boolefund.com/singing-machine-company-smdm/

ADF Group, Inc. (DRX.T): https://boolefund.com/adf-group-inc-drx-t/

Thermal Energy International Inc. (TMGEF): https://boolefund.com/thermal-energy-international-inc-tmgef/

Helix Energy Solutions Group, Inc. (HLX): https://boolefund.com/helix-energy-solutions-group-inc-hlx/

Five Star Senior Living Inc. (FVE): https://boolefund.com/five-star-senior-living-inc-fve/

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Danavation (DVN.CN). Do you know the little labels with price and product description that are placed on the edge of the shelf underneath the product in stores? Danavation makes a digital version of those labels.

Danavation has a market cap of $41.9 million. The stock price is $0.41. (All values are in Canadian dollars.)

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Danavation:

- EV/EBITDA = 2.87
- P/E = 6.25
- P/B = 3.42
- P/CF = 3.13
- P/S = 0.63

(These figures are based on estimated revenue of $67 million in a couple of years.)

Step Two

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company. For more on the Piostroski F-Score, see my blog post here: https://boolefund.com/piotroski-f-score/

Danavation has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Danavation has TL/TA of 100%, which is a bit high.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Danavation, insiders own 40% of the shares, which is excellent.

Shareholder yield is the dividend yield plus the buyback yield. At Danavation, the dividend yield is zero and the buyback yield is negative due to the issuance of warrants and stocks options. So shareholder yield is negative.

Step Four

The final step is to study the company’s financial statements, presentations, and quarterly conference calls to (i) check for non-recurring items, hidden liabilities, and bad accounting; (ii) estimate intrinsic value—how much the business is worth—using scenarios for low, mid, and high cases.

See Danavation’s most recent investor presentation (March, 2021): https://danavation.com/wp-content/uploads/2021/03/March-1-2021-Danavation-Investor-Deck-FINAL.pdf

Intrinsic value scenarios:

- Low case: EBITDA may only be $3 million. The company may be worth an EV/EBITDA of 8. That works out to $0.20 a share, which is 50% lower than today’s $0.41.
- Mid case: Normalized EBITDA is at least $13 million. With an EV/EBITDA of 10, the stock would be worth $1.24 per share, which is over 200% higher than today’s $0.41.
- High case: EBITDA may reach $20 million. With an EV/EBITDA of 10, the company would be worth $1.92 per share, which is about 370% higher than today’s $0.41.

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

Myomo Inc. (MYO)

March 7, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

The Singing Machine Company (SMDM): https://boolefund.com/singing-machine-company-smdm/

ADF Group, Inc. (DRX.T): https://boolefund.com/adf-group-inc-drx-t/

Thermal Energy International Inc. (TMGEF): https://boolefund.com/thermal-energy-international-inc-tmgef/

Helix Energy Solutions Group, Inc. (HLX): https://boolefund.com/helix-energy-solutions-group-inc-hlx/

Five Star Senior Living Inc. (FVE): https://boolefund.com/five-star-senior-living-inc-fve/

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Myomo Inc. (MYO). From the company’s website: “Myomo, Inc. is a medical robotics company that offers expanded mobility for those suffering from neurological disorders and upper-limb paralysis. Based on patented technology developed at MIT, Harvard Medical School, and by the Company, Myomo develops and markets the MyoPro^® product line of lightweight, non-invasive, powered arm braces (orthoses) to restore function in the paralyzed or weakened arms and hands of individuals that have suffered a stroke, spinal cord or nerve injury such as brachial plexus injury, or other neuro-muscular disability such as amyotrophic lateral sclerosis (ALS) or multiple sclerosis (MS). It is the only device that, sensing a patient’s own neurological signals through non-invasive sensors on the arm, can restore their ability to use their arms and hands so that they can return to work, live independently, and reduce their cost of care.”

MYO has a market cap of $62.3 million. The stock price is $13.55.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Myomo Inc.:

- EV/EBITDA = 1.04
- P/E = 3.90
- P/B = 2.71
- P/CF = 1.30
- P/S = 0.39

(These figures are based on estimated revenue of $160 million in three to four years. There are 3 million people in the United States with chronic arm paralysis, and at least 10% of them would fit the perfect patient profile for MYO. Also, 750,000 people have a stroke in the United States each year, and 10% of them would be good candidates for the MYO product. Furthermore, the company’s product has gained regulatory approval in Germany and the company also has a footprint in other European countries. Moreover, the company signed a JV with Ryzur Medical in China.)

Step Two

MYO has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Myomo Inc. has TL/TA of 21.4%, which is excellent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Myomo Inc., insiders own 13% of the shares, which is decent.

Shareholder yield is the dividend yield plus the buyback yield. At MYO, the dividend yield is zero and the buyback yield is zero. So shareholder yield is zero.

Step Four

See MYO’s most recent investor presentation (February, 2021): http://ir.myomo.com/~/media/Files/M/Myomo-IR/reports-and-presentations/myo-inv-presentation-mar-2021.pdf

Intrinsic value scenarios:

- Low case: EBITDA may only be $6 million. The company may be worth an EV/EBITDA of 8. That works out to $13.11 a share, which is 3% lower than today’s $13.55.
- Mid case: Normalized EBITDA is at least $48 million. With an EV/EBITDA of 10, the stock would be worth $107.02 per share, which is about 690% higher than today’s $13.55.
- High case: EBITDA may reach $72 million. With an EV/EBITDA of 10, the company would be worth $159.20 per share, which is about 1,070% higher than today’s $13.55.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

The Singing Machine Company (SMDM)

March 7, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

ADF Group, Inc. (DRX.T): https://boolefund.com/adf-group-inc-drx-t/

Thermal Energy International Inc. (TMGEF): https://boolefund.com/thermal-energy-international-inc-tmgef/

Helix Energy Solutions Group, Inc. (HLX): https://boolefund.com/helix-energy-solutions-group-inc-hlx/

Five Star Senior Living Inc. (FVE): https://boolefund.com/five-star-senior-living-inc-fve/

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at The Singing Machine Company (SMDM). From the company’s website: “Creating joy through music is our driving force. We believe in the power of a song. And that force is what has kept us going for over three decades. Based in the U.S., Singing Machine® is the worldwide leader in consumer karaoke products. The first to provide karaoke systems for home entertainment in the United States, we offer the industry’s widest line of karaoke products, allowing consumers to find the best machine for them! Singing Machine is the most recognized brand in karaoke and our products incorporate the latest technology for singing practice, music listening, entertainment and social sharing.”

SMDM has a market cap of $18.7 million. The stock price is $0.48.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for The Singing Machine Company:

- EV/EBITDA = 4.86
- P/E = 4.16
- P/B = 2.05
- P/CF = 4.17
- P/S = 0.33

Step Two

SMDM has a Piotroski F-Score of 8. (The best score possible is 9, while the worst score is 0.) This is very good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). The Singing Machine Company has TL/TA of 59.2%, which is good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At The Singing Machine Company, insiders own 68.5% of the shares.

Shareholder yield is the dividend yield plus the buyback yield. At SMDM, the dividend yield is zero and the buyback yield is zero. So shareholder yield is zero.

Step Four

See SMDM’s most recent quarterly report (for the quarter ended December 31, 2020): https://cdn.shopify.com/s/files/1/1937/9279/files/Singing_Machine_Announces_22_Increase_in_Net_Sales_in_Third_Quarter_2021_Earnings_Report.pdf?v=1613761632

Intrinsic value scenarios:

- Low case: The company may be worth book value, which is $0.23 per share. That’s 51% lower than today’s $0.48.
- Mid case: SMDM has an EBITDA of $4.5 million and is probably worth an EV/EBITDA of 10. That works out to $1.07 a share, which is over 120% higher than today’s $0.48.
- High case: EBITDA may reach $6 million. With an EV/EBITDA of 10, the company would be worth $1.46 per share, which is over 200% higher than today’s $0.48.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

ADF Group, Inc. (DRX.T)

February 28, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Thermal Energy International Inc. (TMGEF): https://boolefund.com/thermal-energy-international-inc-tmgef/

Helix Energy Solutions Group, Inc. (HLX): https://boolefund.com/helix-energy-solutions-group-inc-hlx/

Five Star Senior Living Inc. (FVE): https://boolefund.com/five-star-senior-living-inc-fve/

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at ADF Group, Inc. (DRX.T), a Canadian company. (The company trades in the U.S. stock market over the counter under the symbol ADFJF.) From the company’s website: “From a blacksmith shop founded in 1956, ADF Group Inc. has become over the years a North American leader in the design and engineering of connections, fabrication and installation of complex steel structures, heavy steel built-ups, as well as miscellaneous and architectural metalwork. The Corporation’s products and services are intended for the following five principal segments of the non-residential construction market: Office Towers and High-Rises – Commercial and Recreational Complexes – Airport Facilities – Industrial Complexes – Transport Infrastructures.”

DRX.T has a market cap of $57.7 million. The stock price is $1.69. (All values are in terms of Canadian dollars.)

Step One

First we screen for cheapness based on five metrics. Here are the numbers for ADF Group:

- EV/EBITDA = 4.90
- P/E = 4.83
- P/B = 0.56
- P/CF = 2.67
- P/S = 0.32

(Earnings per share is estimated at $0.35.)

Step Two

DRX.T has a Piotroski F-Score of 8. (The best score possible is 9, while the worst score is 0.) This is very good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). ADF Group has TL/TA of 45.2%, which is good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At ADF Group, insiders own 89% of the shares in terms of voting rights.

Shareholder yield is the dividend yield plus the buyback yield. At ADF Group, the dividend yield is 1.2%, whereas the buyback yield is zero. So shareholder yield is 1.2%.

Step Four

See ADF Group’s most recent quarterly report (October 31, 2020): https://www.adfgroup.com/wp-content/uploads/2020/12/ADF-Group_Q3-2021-Interim-Consolidated-Financial-Statements_31Oct020.pdf

Intrinsic value scenarios:

- Low case: Book value per share is $3.03. The company may be worth half of book value. That’s $1.52, which is 10% lower than today’s $1.69.
- Mid case: ADF Group is probably worth at least book value of $3.03 per share. That’s about 80% higher than today’s $1.69.
- High case: EPS (earnings per share) may reach $0.40. With a P/E of 12, the company would be worth $4.80 per share, which is over 180% higher than today’s $1.69.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

Thermal Energy International Inc. (TMGEF)

February 7, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Helix Energy Solutions Group, Inc. (HLX): https://boolefund.com/helix-energy-solutions-group-inc-hlx/

Five Star Senior Living Inc. (FVE): https://boolefund.com/five-star-senior-living-inc-fve/

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Thermal Energy International Inc. (TMGEF). Thermal Energy International creates products that improve the efficiency of industrial thermal energy.

TMGEF is not a typical deep value stock. It has a high P/B that reflects its fast growth. The global market for industrial thermal energy efficiency is $250 billion. This means TMGEF has a huge amount of room to grow.

However, the Boole Microcap Fund does not own shares in Thermal Energy International. TMGEF would be a good candidate for purchase if the stock price were lower relative to current earnings and cash flow. So TMGEF is on our watch list. The stock may get cheaper in the future.

TMGEF has a market cap of $25.3 million. The stock price is $0.16. (Although TMGEF is a Canadian company, this writeup is in terms of U.S. dollars.)

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Thermal Energy International:

- EV/EBITDA = 4.96
- P/E = 9.01
- P/B = 12.14
- P/CF = 5.17
- P/S = 0.62

(The company has been growing strongly for most of the past five years. The ratio’s assume that Thermal Energy International continues to grow.)

Step Two

TMGEF has a Piotroski F-Score of 6. (The best score possible is 9, while the worst score is 0.) This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Thermal Energy International has TL/TA of 76.1%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At TMGEF, insiders own 8% of the shares, which is solid.

Shareholder yield is the dividend yield plus the buyback yield. At TMGEF, the dividend yield is zero. But the company, rather than buying back shares, has issued some shares via stock options. So shareholder yield is negative.

Step Four

See TMGEF’s most recent investor presentation (January, 2021): https://www.thermalenergy.com/presentations.html

Intrinsic value scenarios:

- Low case: The business may shrink 50 percent. In that case, it would be worth $0.08, which is 50 percent lower than today’s $0.16.
- Mid case: If the business continues to grow, then EBITDA may approach $4.89 million. With an EV/EBITDA of 10, the stock would be worth $0.32, which is 100% higher than today’s $0.16.
- High case: EBITDA may reach $6.11 million. With an EV/EBITDA of 10, the stock would be worth $0.40, which is 150% higher than today’s $0.16.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

Helix Energy Solutions Group, Inc. (HLX)

January 31, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Five Star Senior Living Inc. (FVE): https://boolefund.com/five-star-senior-living-inc-fve/

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Helix Energy Solutions Group, Inc. (HLX). Helix Energy is an international offshore energy services company that provides specialty services to the offshore energy industry, with a
focus on well intervention and robotics operations. Their services cover the lifecycle of an offshore oil or gas field. Their services also include
subsea cable burial and seabed clearing services for the offshore renewable energy sector.

HLX has a market cap of $618.7 million, with $259.3 million in cash and $522.1 million in debt. The stock price is $4.12.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Helix Energy:

- EV/EBITDA = 4.45
- P/E = 9.23
- P/B = 0.36
- P/CF = 4.47
- P/S = 0.83

Step Two

HLX has a Piotroski F-Score of 6. (The best score possible is 9, while the worst score is 0.) This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). HLX has TL/TA of 31.8%, which is good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At HLX, insiders own 6.1% of the shares, which is OK.

Shareholder yield is the dividend yield plus the buyback yield. At HLX, the dividend yield is zero. But the company, rather than buying back shares, has issued some shares (equal to 1% of shares outstanding over the past year). So shareholder yield is slightly negative.

Each component of the ranking has a different weight. The overall combined ranking of HLX places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

See HLX’s most recent investor presentation (December 7, 2020): https://helixenergysolutionsgroupinc.gcs-web.com/static-files/e91eec9a-9637-4aae-ac62-4484dff0c1b5

Intrinsic value scenarios:

- Low case: The company is probably not worth much less than half of book value of $11.36 a share. That works out to $5.68, which is 37% higher than today’s $4.12.
- Mid case: Helix Energy is likely worth at least book value of $11.36 a share. That’s 175% higher than today’s $4.12.
- High case: EBITDA may reach $300 million in a full recovery. With an EV/EBITDA of 10, the stock would be worth $18.23, which is over 340% higher than today’s $4.12.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

Five Star Senior Living Inc. (FVE)

January 24, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

North American Construction Group Ltd. (NOA): https://boolefund.com/north-american-construction-group-ltd-noa/

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Five Star Senior Living Inc. (FVE), which serves approximately 23,000 older adult residents in 262 senior living communities with 30,413 living units across 31 states, offering Independent Living, Assisted Living, Alzheimer’s/Memory Care, Continuing Care Retirement Communities, and Stand-Alone Skilled Nursing.

FVE has a market cap of $234.6 million, with $105.2 million in cash and $32.2 million in debt. The stock price is $7.43.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for FVE:

- EV/EBITDA = 4.54
- P/E = 15.64
- P/B = 1.13
- P/CF = 5.12
- P/S = 0.20

Step Two

NOA has a Piotroski F-Score of 6. (The best score possible is 9, while the worst score is 0.) This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). FVE has TL/TA of 53.3%, which is OK.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At FVE, insiders own 66.9% of the shares.

Shareholder yield is the dividend yield plus the buyback yield. At FVE, the dividend yield is zero. But the company massively increased its share count as a part of restructuring (getting rid of $900 million in operating leases). So shareholder yield is negative.

Each component of the ranking has a different weight. The overall combined ranking of FVE places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

See FVE’s most recent investor presentation (November, 2020): http://s1.q4cdn.com/858151462/files/doc_presentations/2020/FVE_Investor-Presentation_November-2020_Final-(2).pdf

(You may have to become a guest member of www.valueinvestorsclub.com, but it is free to do so.)

Intrinsic value scenarios:

- Low case: The company is probably not worth much less than half of book value of $6.57 a share. That works out to $3.29, which is 55% lower than today’s $7.43.
- Mid case: EBITDA is $33.14 million. With an EV/EBITDA of 8, the stock would be worth $11.06 a share, which is 49% higher than today’s $7.43.
- High case: EBITDA may reach $40 million. With an EV/EBITDA of 10, the stock would be worth $15.33, which is over 105% higher than today’s $7.43.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

North American Construction Group Ltd. (NOA)

January 17, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Vera Bradley, Inc. (VRA): https://boolefund.com/vera-bradley-inc-vra/

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at North American Construction Group Ltd. (NOA). North American Construction Group is the premier provider of heavy construction and mining services in Canada.

NOA has a market cap of $299 million, with $40.3 million in cash and $365.5 million in debt. The stock price is $10.26.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for NOA:

- EV/EBITDA = 4.97
- P/E = 7.41
- P/B = 1.25
- P/CF = 2.82
- P/S = 0.62

Step Two

NOA has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). NOA has TL/TA of 71.7%, which is OK.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At NOA, insiders own 7.3% of the shares worth close to $22 million. This is good.

Shareholder yield is the dividend yield plus the buyback yield. At NOA, the dividend yield is 0.6%. But the company has increased its share count by over 10% in the last year. So shareholder yield is negative.

Each component of the ranking has a different weight. The overall combined ranking of NOA places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

See NOA’s most recent earnings presentation (October 29, 2020): https://nacg.ca/assets/uploads/2020/10/NACG-Q3-2020-Earnings-Presentation-Oct-30-8-05-AM.pdf

(You may have to become a guest member of www.valueinvestorsclub.com, but it is free to do so.)

Intrinsic value scenarios:

- Low case: The company is probably not worth much less than book value. Book value is $8.18 per share, which is 20% lower than today’s $10.26.
- Mid case: Normalized EBITDA is approximately $150 million. With an EV/EBITDA of 6, the stock would be worth $19.02 a share, which is 85% higher than today’s $10.26.
- High case: EBITDA may reach $170 million. With an EV/EBITDA of 7, the stock would be worth $28.97, which is over 180% higher than today’s $10.26.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

Vera Bradley, Inc. (VRA)

January 10, 2021

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Lazydays Holdings, Inc. (LAZY): https://boolefund.com/lazydays-holdings-inc-lazy/

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Vera Bradley, Inc. (VRA). This is from the company’s website: “Vera Bradley is a leading designer of women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts. The brand’s innovative designs, iconic patterns, and brilliant colors inspire and connect women unlike any other brand in the global marketplace.”

VRA has a market cap of $266 million, with $76.8 million in cash and $152.4 million in debt. The stock price is $7.98.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Vera Bradley:

- EV/EBITDA = 5.03
- P/E = 8.29
- P/B = 0.87
- P/CF = 8.47
- P/S = 0.55

Step Two

Vera Bradley has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Vera Bradley has TL/TA of 38.3%, which is good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Vera Bradley, insiders own 26% of the shares. This is excellent.

Shareholder yield is the dividend yield plus the buyback yield. At Vera Bradley, the dividend yield is zero while the buyback yield is about 2%. So shareholder yield is 2%.

Each component of the ranking has a different weight. The overall combined ranking of Vera Bradley places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

See Vera Bradley’s most recent 10-Q (October 31, 2020): https://investors.verabradley.com/static-files/55473d48-d0ef-49d6-92a9-da1f69d50928

See also the following writeup: https://valueinvestorsclub.com/idea/VERA_BRADLEY_INC/1003334886

(You may have to become a guest member of www.valueinvestorsclub.com, but it is free to do so.)

Intrinsic value scenarios:

- Low case: EBITDA is $50 million. With an EV/EBITDA of 5, the stock would be worth $5.22 a share, which is 35% lower than today’s $7.98.
- Mid case: Normalized EBITDA is approximately $70 million. With an EV/EBITDA of 7, the stock would be worth $12.40 a share, which is 55% higher than today’s $7.98.
- High case: EBITDA may reach $90 million. With an EV/EBITDA of 8, the stock would be worth $19.29, which is over 140% higher than today’s $7.98.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com

Lazydays Holdings, Inc. (LAZY)

December 20, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Karora Resources Inc. (KRRGF): https://boolefund.com/karora-resources-inc-krrgf/

Diamond S Shipping Inc. (DSSI): https://boolefund.com/diamond-s-shipping-inc-dssi/

DHI Group, Inc. (DHX): https://boolefund.com/dhi-group-inc-dhx/

Saga Communications Inc. (SGA): https://boolefund.com/saga-communications-inc-sga/

Northwest Pipe Co. (NWPX): https://boolefund.com/northwest-pipe-co-nwpx/

Smart Sand Inc. (SND): https://boolefund.com/smart-sand-inc-snd/

Terravest Industries Inc. (TVK.TO): https://boolefund.com/terravest-industries-inc-tvk/

LGL Group, Inc. (LGL): https://boolefund.com/lgl-group-inc-lgl/

G-III Apparel Group, Ltd. (GIII): https://boolefund.com/g-iii-apparel-group-ltd-giii/

Hummingbird Resources Plc. (HUMRF): https://boolefund.com/hummingbird-resources-plc-humrf/

Micropac Industries, Inc. (MPAD): https://boolefund.com/micropac-industries-inc-mpad/

Barrett Business Services, Inc. (BBSI): https://boolefund.com/barrett-business-services-inc-bbsi/

Delta Apparel, Inc. (DLA): https://boolefund.com/delta-apparel-inc-dla/

AdvanSix, Inc. (ASIX): https://boolefund.com/advansix-inc-asix/

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Lazydays Holdings, Inc. (LAZY). Lazydays rents and sells RV’s. This is from the company’s website: “Since 1976, Lazydays RV has built a reputation for providing an outstanding customer experience with exceptional service excellence and unparalleled product expertise, along with being a preferred place to rest and recharge with other RVers. By offering the largest selection of RV brands from the nation’s leading manufacturers, state-of-the-art service facilities, and thousands of accessories and hard-to-find parts, Lazydays RV provides everything RVers need and want.”

LAZY has a market cap of $138.4 million, with $81.7 million in cash and $181.7 million in debt. The stock price is $14.65.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Lazydays Holdings:

- EV/EBITDA = 3.82
- P/E = 3.51
- P/B = 1.47
- P/CF = 1.21
- P/S = 0.18

Normalized EBITDA is approximately $77 million, normalized net income is $39.4 million, cash flow is $114 million, and sales is $765 million.

Step Two

Lazydays has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Lazydays has TL/TA of 62.5%, which is OK.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At LAZY, insiders own about 2.5% of the shares, but much more than that when you include stock options and warrants.

Shareholder yield is the dividend yield plus the buyback yield. At Lazydays, the dividend yield is zero while the buyback yield is negative 10.5%. This means the company issued shares rather than buying them back. This is not ideal, but it won’t matter if the company does well in the next few years.

Each component of the ranking has a different weight. The overall combined ranking of Lazydays Holdings places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

See LAZY’s most recent 10-Q (October 30, 2020): http://d18rn0p25nwr6d.cloudfront.net/CIK-0001721741/a49dcc33-e624-461a-87b4-21407932730b.pdf

See also the following writeup: https://valueinvestorsclub.com/idea/LAZYDAYS_HOLDINGS_INC_LAZY/3401518578

(You may have to become a guest member of www.valueinvestorsclub.com, but it is free to do so.)

Intrinsic value scenarios:

- Low case: Book value is $9.97 per share, which is about 32 percent lower than today’s $14.65.
- Mid case: A conservative estimate of normalized EBITDA is $56 million. Also, the company is likely to acquire an additional $60 million in EBITDA. Total EBITDA would be $116 million. With an EV/EBITDA of 7, the stock would be worth $37.10, which is over 150% higher than today’s $14.65.
- High case: Current EBITDA is $77 million. The company is likely to acquire an additional $60 million in EBITDA. Total EBITDA would be $137 million. With an EV/EBITDA of 8, the stock would be worth $51.22, which is about 250% higher than today’s $14.65.

(Note: There are currently 9.8 million shares outstanding. But fully diluted shares add up to 20 million. There are 6.88 million shares of preferred stock. Converting warrants will create 2.3 million new shares. And the exercise of stock options will create 1 million new shares.)

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: jb@boolefund.com