Value Investing Congress West: May 4th and 5th

I'll be heading back to Pasadena in early May, to attend my sixth session of the Value Investing Congress, and fourth on the left coast. This is the premier forum for value investors; an extremely well-run event that attracts quality speakers, offering compelling insights and investment ideas. What's more, I've found the presenters to be approachable both during and after the Congress.

Last year, I walked away with several actionable ideas. One of them, Huntsman (HUN), has more than doubled since I initially took a position in early May.

The folks at The Value Investing Congress have been kind enough to extend a discount to Cheap Stocks readers, $1300 off the regular rate. If you are intested in attending, please click here and use discount code P10CS3, which will expire on March 16th.

I hope to see you in Pasadena!

*The author has a position in Huntsman (HUN). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Winding Down The Cheap Stocks 21 Net Net Index; Outperforms Russell Microcap by 1371 bps, S&P 500 by 2537 bps

Two years ago, we launched the CS 21 Net/Net Index, the first index designed to track net/net performance. The index was cap weighted, and comprised of the 21 largest net/nets by market cap at the time of launch. We had a few restrictions on inclusion in the index, including average daily volume and price, but otherwise, this was a very simply constructed index.

We originally intended to replace companies that were acquired, but thought better of it, instead deciding to keep proceeds from acquistions in cash. We also did not replace any names if they no longer met the net/net criteria. This was simply an experiment in order to see how net/nets at a given time would perform over the subsequent two years.

The results are in, and while it was not what we'd originally hoped for, it does lend credence to the long-held notion that net/nets can outperform the broader markets.

The Cheap Stocks 21 Net Net Index finished the two year period relatively flat, gaining 5.1%. During the same period, The Russell Microcap Index was down 8.61%, while the Russell Microcap Value Index was down 9.9%. During the same period, the S&P 500 was down 20.27%.

Here are the index constituents, their original weights, and performance.

Adaptec Inc(ADPT)
Weight: 18.72%
Computer Systems
+7.86%

Audiovox Corp(VOXX)
Weight: 12.20%
Electronics
-29.28%

Trans World Entertainment(TWMC)
Weight:7.58%
Retail-Music and Video
-69.55%

Finish Line Inc(FINL)
Weight:6.30%
Retail-Apparel
+350.83%

Nu Horizons Electronics(NUHC)
Weight:5.76%
Electronics Wholesale
-25.09%

Richardson Electronics(RELL)
Weight:5.09%
Electronics Wholesale
+43.27%

Pomeroy IT Solutions(PMRY)
Weight:4.61%
IT
Acquired
-3.8%

Ditech Networks(DITC)
Weight:4.31%
Communication Equip
-56.67%

Parlux Fragrances(PARL)
Weight:3.92%
Personal Products
-51.39%

InFocus Corp(INFS)
Weight:3.81%
Computer Peripherals
Acquired


Renovis Inc(RNVS)
Weight:3.80%
Biotech
Acquired

Leadis Technology Inc(LDIS)
Weight:3.47%
Semiconductor-Integrated Circuits
-92.05%

Replidyne Inc(RDYN)Became Cardiovascular Systems (CSII)
Weight:3.31%
Biotech
+126.36%

Tandy Brands Accessories Inc(TBAC)
Weight:2.94%
Apparel, Footwear, Accessories
-57.79%

FSI International Inc(FSII)
Weight:2.87%
Semiconductor Equip
+66.47%

Anadys Pharmaceuticals Inc(ANDS)
Weight:2.49%
Biotech
+43.75%

MediciNova Inc(MNOV)
Weight:2.33%
Biotech
+100%

Emerson Radio Corp(MSN)
Weight:1.71%
Electronics
+118.19%

Handleman Co(HDL)
Weight:1.66%
Music- Wholesale
-88.67%

Chromcraft Revington Inc(CRC)
Weight:1.62%
Furniture
-54.58%

Charles & Colvard Ltd(CTHR)
Weight:1.50%
Jewel Wholesale
-7.41%

Cash Weight: 8.58%

We are in the process of putting together a new net/net index, and still trying to decide whether or not we want to disclose the constituents, or keep them under wraps. Stay Tuned.

*The author has a position in Chromcraft Revington (CRC). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

Retail Net/Nets One Year Later, up an Average of 146%

This time last year we ran a two part series on retailers that were trading below net current asset value. Retail was all but left for dead then, and as we all remember, market conditons got even worse by March.

One year later, the twelve companies are up an average of 146%. There was just one company in negative territory, Zales.

Here are the companies and returns:

A.C. Moore Arts & Crafts
ACMR
Price Then: 1.47
Price Now: $2.72
Return: 85%

MarineMax, Inc.
HZO
Price Then: $2.49
Price Now: $10.22
Return: 310%

Perfumania Holdings, Inc.
PERF
Price Then: $3.78
Price Now: $6.46
Return: 71%

West Marine, Inc.
WMAR
Price Then: $5.69
Price Now: $8.24
Return: 45%

Zale Corporation
ZLC
Price Then: $2.88
Price Now: $2.12
Return: -26%

Signet Jewelers Ltd.
SIG
Price Then: $9.42
Price Now: $27.00
Return: 187%

Duckwall-ALCO Stores, Inc
DUCK
Price Then: $10.50
Price Now: $12.59
Return: 20%

Stein Mart
SMRT
Price Then: $1.28
Price Now: $8.05
Return: 529%

Shoe Carnival
SCVL
Price Then: $8.04
Price Now: $18.08
Return: 125%

Cache
CACH
Price Then: $2.00
Price Now: $4.34
Return: 117%

PC Connection
PCCC
Price Then: $5.25
Price Now: $6.19
Return: 18%

Tuesday Morning
TUES
Price Then: $1.33
Price Now: $4.95
Return: 272%

At this writing, just two of the company's AC Moore, and Duckwall Alco remain in net/net territory.

*The author has a position in Tuesday Morning. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.