WSHE DD Post...
Westphere Asset Corp. (WSHE -- last trade $.33/share at start of contest) is a stunning buy based on the raw numbers.
--P/E is 0.5
--Revenue/share is over $9
--Book value is $1.21
--Cash/share is $.98
--There are only 552,000 shares out and the float is about 400,000 shares
Revenues for 12/02, 12/03, 12/04, 12/05 were $1.7M, $2.8M, $3.2M and $4.5M, respectively. Nine month revenues for the period ended 9/06 were up again (17%) to $3.65M. Twelve-month trailing EPS through 9/06 came in at $.66 and benefited from a Q3 currency gain of $.24/share. Backing that out you still get a P/E of less than one.
WSHE operates a chain of over 900 ATMs in Canada (138 of which are owned and the rest operated for others), and holds a grabbag of other businesses/investments which appear inconsequential to me.
The negative in the WSHE story is the balance sheet structure, which features 1.2M shares of preferred stock (of which management owns about 60%). Each share of preferred gets one vote (same as the common), so management clearly has control of the company through its preferred stock ownership. However, if they ever want to convert the preferred back to common, the terms specify a preferred owner must pay $1/pfd. share converted/each share common. Furthermore, once converted, these common shares cannot be sold for restricted periods beginning six months from conversion and ending 18 months from conversion. In short, if any of the preferred is being converted to common, things are going REAL well at WSHE.
Obscure, sure; undervalued, definitely; am I long? Yup...
When it comes to P/Es, 7 is the new 14...
