How can a profitable business trade at a third of its value in cash net of...

JunkTop
JunkTop

How can a profitable business trade at a third of its value in cash net of total liabilities?

Wouldn't this mean that if the business closed tomorrow every shareholder would get a 200% ROI? So it's worth more dead than alive?

Fuzzy_Logic
Fuzzy_Logic

no one gonna answer?

Raving_Cute
Raving_Cute

Which stock you mean?

cum2soon
cum2soon

/unrealistic hypotheticals general/

JunkTop
JunkTop

@cum2soon
What does that mean?

StrangeWizard
StrangeWizard

@JunkTop
Show me the stock
@JunkTop
If english is your first language... god help you

Supergrass
Supergrass

I hate to post it but I know there will be more stocks like it.

Emerson Radio Corp (NYSEMKT:MSN)

RavySnake
RavySnake

@Supergrass
Emerson Radio Corp
Oh so you're speculating on sub 50MM stocks ok

That's why. They're littered with fraud and market makers can manipulate it to their hearts content.

Nojokur
Nojokur

@RavySnake
By market manipulators do you mean the company. Look at the financials they look rock solid.

Also ADVM and CHMA are both below liquidation value.

TreeEater
TreeEater

@Nojokur
No you fuckin moron. Protip: don't buy

Emberburn
Emberburn

@Nojokur
Look at the financials they look rock solid.
It makes me sad how profoundly stupid people on Veeky Forums can be. That you could possibly look at this company's financials and conclude that they look "rock solid" is probably the dumbest statement on this board in 2016, and that includes all the crypto bullshit threads.

A quick scan of the company's most recent 10K shows:

- major tax disputes
- major issues with the controlling foreign parent
- unhealthy supplier concentration
- falling year-to-year sales
- falling year-to-year revenue

This company is a shit-show that does nothing other than slap the "Emerson" brand name on Chinese-made crap appliances, which it then tries to sell in the highly-competitive North Amerson consumer markets. It doesn't make anything, doesn't own anything, and doesn't have any plants, warehouses, or facilities. It's headquarters is a small 4th-floor office in a largely empty B-Class office building in Hackensack, New Jersey. It doesn't even have a credit facility. It could disappear from the face of the Earth tomorrow, and no one (other than perhaps its literal Chinese overlords) would even notice.

And this is what you call "rock solid" financial?

PurpleCharger
PurpleCharger

@Emberburn
Don't forget to mention even if it was financially ''''solid''' its low volume makes it an easy target for pump and dumps

Boy_vs_Girl
Boy_vs_Girl

@Emberburn
I called it rock solid because if it left the face of the earth tomorrow then then the shareholders would get 3 times their money back (cash + marketable securities- total debt) or am I missing something?

@PurpleCharger
As soon as it reaches the appropriate value then you dump it anyway.

w8t4u
w8t4u

@Boy_vs_Girl
You're fucking retarded. But you also are probably using robinhood with sub 10k balance so you really have nothing to lose anyways.

massdebater
massdebater

Wouldn't this be an SEC violation?

iluvmen
iluvmen

@JunkTop
I'm new to business

can someone explain what ops post means as if you were explaining it to a 2 year old?

thanks

how can shareholder get a 200% return if the company is bankrupt even if there is some technical aspect saying it be worth more dead?

likme
likme

@Boy_vs_Girl
Oh and you're retarded because of being so naive about bankruptcies

kizzmybutt
kizzmybutt

@iluvmen
cause I can only imagine creditors profiting from a bankruptcy not shareholders

TurtleCat
TurtleCat

@kizzmybutt
I don't think they have any debt which is what the OP seems to be getting at. Let me read.

CouchChiller
CouchChiller

@TurtleCat
OP don't be a nigger. They are close to being delisted.

AwesomeTucker
AwesomeTucker

@kizzmybutt
Well I am apparently wrong, but what I meant was in the event of liquidation debt holders get first right to the assets. Once they get their money back then the shareholders get the remaining value of the assets, with preferreds being paid out first. That leaves common share holders with the remaining balance. However in the case of MSN I thought since cash plus marketable securities added together then minus total liabilities (they get paid first) was significantly higher then the market cap this company would be financially rock solid. Even leaving the common shareholder with money at the end in the event of bankruptcy.

Fuzzy_Logic
Fuzzy_Logic

Of course with this type of invest I can see too major things normally going wrong. Either the company is so poorly managed at the piss away capital or in the actual event of liquidation the assets are worth shit. However they're sitting with more than enough cash, restricted cash and marketable securities to be actually worth something if they go tits up.

That was my logic away but I fucked up somewhere and others seem to be pointing it out now. Thanks

Lord_Tryzalot
Lord_Tryzalot

@AwesomeTucker
so what I think your saying is that shareholders have more incentive to keep you afloat when you are in debt rather than free and clear?

MPmaster
MPmaster

@Fuzzy_Logic
They are a way to export cash from China. They aren't a real business.

Emberfire
Emberfire

@MPmaster
I am just talking about liquidation value here. Worst case scenario the firm goes bankrupt. Best case is the income statement improves, the firm gets acquired or theres a pump and dump. I am just planning and (hoping) for bankruptcy.
I think in this case A/R and inventory is 0.

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