Wednesday, 3 November 2004

Company Update

Ambassadors International

Up: 46 percent

Last report: 2/22/03

Price: $12.46

Shares of this tiny travel services company have performed well since our initial report (see archive). At the time, the company was trading below it's net current asset value, but with its subsequent run-up, it no longer does. That doesen't mean, however, that there is no value here.

Although trading at a high price earnings multiple (around 70), the company boasts a strong, cash-rich balance sheet. With $97 million in cash and marketable securities, (that equates to $10 per share!), the company has no debt. Third quarter 2004 sales rose to $4.5 million, or $.07 per share, up sharply from the same quarter last year ($3.0 million, breakeven). The company also pays a $.10 quarterly dividend, and currently yields more than 3 percent. Watch as this story unfolds. Essentially, if you purchase this stock at $12.46, you are theoretically buying $10 in cash, a 3% yield, and getting the operating businesses for $2.46.

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