Gencor is for sale… for free!

Gencor released last financial statements.  I have a bunch of shares of gencor in my portfolio.  It currently occupies over 15 to 20% of my portfolio but I think I’ll affirm my investment at 20 percent.

This business is sold for free!  Current municipal bonds and cash equivalent are traded at 78million.  You get inventory (18m), account receivables (1.5M) and assets (8m) for free!  You even get the patents and trademark (not written in books) at that 0$ price!

The company is making money in 2010 (0.12 EPS) after a small loss of 0.02$ per share in 2009.  The only issue in Gencor board is the operating loss of 1.6M in 2010.  But I do not care if it takes some months to show a rebound in United States road building industries, we get the company for nothing .  We actually get paid to buy this company(current market cap is 74.5M). 

The company also bought back 100k shares in 2010 worth over 7M.

The board owns 17% of the stock but there also is an insider with tons of this stock received from her passed away father : Sherry Houtkin.  She now is at 25.9% ownership!  She could bring in a big catalyst to distribute that sleeping cash if she would like to do so.

Oh! by the way did I said it was trading for free?

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Posted in GENC, NASDAQ
5 comments on “Gencor is for sale… for free!
  1. Doug says:

    About 42% of the cash Gencor has is invested in an equity portfolio. Any idea what’s in it and do you have any concerns about risk management here?

    • Dominic Nadeau says:

      Hi Doug,

      It is actually 29M out of 78M in equities has of September 2010 so around 38% of total cash.
      The overall S&P500 made a profit of around 12% over the same period. I assume Gencor didn’t get any profit from that overall market growth. Corporate and municipal bonds generated steady cash flow from interest of marketable securities around 3.1M last year. I assume they didn’t get any interest or that the received interest covers any loss from equities fluctuation since sept. 2010.

      Gencor investment history is not garrant for the future, but management have been pretty conservative in the past.

      Good comment!

    • Dominic Nadeau says:

      Wow! what a mistake from me!
      I was in my bed this morning thinking about my response and I flashed that I used Annual info instead of Q1 info!

      Then the same comment applies but with the following:

      Coporate and municipal bonds interest income is 600k by quarter.
      Market S&P 500 raised by 3.5%.

      32M in equities out of 76.5M cash is a 42% as you said.

      Sorry for those mistakes.

      It is a concern has you have said. I’ll dig into it.

  2. Doug says:

    I suppose the other way to look at it is, if you are buying the stock knowing that your purchase price is in cash, providing your margin of error, would you not want your cash invested, and if invested, would it not be in equities?

    If the stock market goes up by 10%, this part of the cash should rise by the same amount and I would suspect the floor price of this stock would also rise by that amount, providing your return on investment, while you wait. Although I hate surprises, which is a risk here, if it were me, I would have the money in equities while I await opportunities. It also confirms your point that they obviously don’t intend to use this money for business use and may decide to pay it out to shareholders.

    Doug.

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