A US Net-Net Priced at 1x FCF

The operating business is still profitable (TTM) and you get the net-cash at a 29% discount.

Today’s stock is a US-based net-net with profitable FCF, a huge pile of cash, and virtually no debts (or even liabilities).

This is quite rare these days, as most US-based net-nets tend to be cash-burning freakshows or ‘pre-revenue’ start-ups.

This one caught my eye, because it has a profitable operating business and has been going for 40+ years.

In fact, the business has generated positive FCF since 2013 and continues to do so on a TTM basis.

Here are the valuation ratios:

NCAV Ratio = 0.7

TBV Ratio = 0.5

Negative EV (we get paid to buy it)

P/5Y FCF Ratio = 1

This business, obviously, has issues, but the market is now pricing it as something that already died.

The only question we have to answer is, will it actually die, or is the operating business worth anything at all?

This, imo, is far easier than figuring out future growth rates or earnings multiples.

I don’t believe it will die anytime soon and I think FCF can actually grow from current levels.

Meanwhile the downside is protected by a massive pile of cash and liquid investments.

Let’s take a look…