Northamber Share Discussion Threads

[bird of dawning] 25/6/2007 13:17

Scripophilist,

Just for the record, would you apply the above analysis to Amstrad (AMT.L)? Amstrad also distribute electronic hardware & software and some years back were a `net, net' (cigar butt) stock. However Amstrad's share price was probably a victim, at that time, of `Mr Market' in an abjectly (post dot-com boom) depressive mood.

Amstrad's share price subsequently recovered along with its market sector. I guess my basic query is.....do you consider Northamber typical of the electronics distribution industry or, alternatively, is Amstrad an exception that proved the rule?!

Regards
bod

[scripophilist] 05/6/2007 13:07

"How much of a threat is direct sourcing to NAR?"

Most dominant buyers went direct many, many years ago. Distributors are seen a stock holding area for vendors and as a bank for small buyers.

[arthur_lame_stocks] 02/6/2007 23:52

How much of a threat is direct sourcing to NAR? It seems to me that consumer electronics is increasingly being concentrated in the hands of a few big players who have real buying power and who are selling in such quantity that it's probably worth their while doing their own sourcing and keeping that couple of percent for their own bottom line.

I think the days of the independent high street retailer are numbered.

[cjohn] 02/6/2007 19:52

Thanks scburbs: I do accept that NAR's very rapid stock turnover make it less vulnerable to the fierce price deflation in the sector and (obselesence). But I suppose I wasn't thinking of the margin on any unit of stock considered in isolation from overheads!!

Thanks. I'll take a look at Swallowfield.

[sleepy] 02/6/2007 19:17

Thanks CJohn. I will take a look at them. Have you considered Swallowfield?

[scburbs] 02/6/2007 18:58

CJohn, Its a distributor. It is very hard for it to make negative margins as it buys stock and sells on at a small profit [if it couldn't sell it for a profit it wouldn't buy the stock]. Therefore, little risk of margins going negative. The greater risks are bad debts, stock obselence or margins being insufficient to cover overheads (which is largely the case at the moment).

[cjohn] 02/6/2007 18:53

Given NAR's tiny PSR, if margins went negative, as could well happen, NAR would make large losses in relation to the market cap. There is a considerable risk attached to NAR therefore. Its past profitability record is patchy.

Better small cap prospects: I don't see NAR as a good prospect. Therefore there are many better prospects than NAR. In terms of asset-rich small caps though, Leeds Group looks less risky to me. Mallett is an interesting proposition with a forthcoming return of cash to shareholders. SIXH are also worth a look.

[sleepy] 25/5/2007 13:39

Thanks CJohn.

Which small caps have you in mind?

[cjohn] 25/5/2007 10:33

Turnover in long-term decline. Asset value in long-term decline. Stock of 17m in amongst the current assets, which reduces their quality. Dividend uncovered. Cut-throat competition.

Several better small cap value prospects available.

[scripophilist] 24/5/2007 14:38

I invest for a living, have had an audience with Warren Buffett and attended Columbia business school and can tell you that this is not a value stock.

Maybe at much lower levels but not at these, Maybe by numbers alone it qualifies for some basic filters but when you dig deeper and look at the qualitative side it's a no go. They have no bargaining power with suppliers and while they have managed costs well, it's a failing business. The market is tough, they are losing market share and this is in a business where volume is everything. You have to ask how you see a return from this. Discount to NAV is not really valid as this market suffers price deflation and most of NAR's NAV is not made from items that can easily be realised at book value. I think there are many better candidates out there unless you can snap up NAR at lower levels.

Not arguing just trying to give you the benefit of what I see.

[rainmaker] 24/5/2007 13:13

Scripophilist-The Ben Graham Cigar Butt approach is my style of investing, I make no bones about that.Frequently the Company concerned are franchises and have fantastic futures eg Stanley Gibbons Group, Theo Fennell. Here Northamber operate in a very competitive market so i can't reasonably expect the same type of performance but I'm happy that they have, and continue to control costs-eg they recently renegotiated payment terms with Suppliers.I don't have any issues with the CEO and believe that he acts in his and the minority shareholders best interests

Reduced profitability does not constitute a failing business particularly as they are still profitable and have "net cash" of approximately £10mln around half their market cap although I have read that they have reached £14mln and there is also surplus Property to be sold

regards

[scripophilist] 23/5/2007 13:34

It's a cigar butt, the only value you will get out of it is the last gasp. That fact aside the shareholding structure means it is unlikely that last gasp will be in general shareholders favours. The business is failing and it will not recover due to the general competitive context.

[rainmaker] 23/5/2007 12:48

Scripo- I respect your opinion but given it's profitable cash generative trading history and it's large cash balance + surplus Property I don't understand why you call it speculative. An small Oil Exploration Company is speculative but Northamber at current levels? I think not!Not looking for huge upside maybe 40/50% from current levels up to about £1

regards

[rainmaker] 23/5/2007 12:42

Hi Arthur-I know its a very competitve business but to put this into context it has a very high stock turn at at 17 times

regards

[arthur_lame_stocks] 17/5/2007 18:51

Rainmaker

No I don't own these. They're interesting because of the discount to Net assets and the large %age of net assets that are cash. They're similar to Fayrewood in that respect. The thing that's put me off of both this and Fayrewood is the wafer thin margins and the fear that they'll eventually get squeezed right out of the loop.

I prefer Leeds group as i've said before, at least they're operating margins are reasonable and most of their market cap is covered by cash and there is a possibility of some extra cash from some property they own and some disposals they made a few years ago.

[scripophilist] 17/5/2007 14:05

Rainmaker, with respect, I worked in the industry and know it inside out and your investment is speculative at best. The company is in a poor position to compete and investing in a dying business isn't a great move.

[rainmaker] 17/5/2007 12:57

Arthur-Have you bought NAR?- I see it as a safish low risk/reasonable return at current levels, maybe up to 100/120p over the next twelve months given it's historically low rating

regards

[rainmaker] 16/5/2007 13:02

A 10k purchase this morning and a couple of small purchases yesterday so I'm not the only Person who believes that NAR is undervalued!


regards

[rainmaker] 16/5/2007 13:00

Scripo-With respect, there're still making Money and have net cash on their balance sheet as proof positive that there're a cash generative Business!So I don't think that your analogy is accurate!

regards

[arthur_lame_stocks] 15/5/2007 07:45

Is that some kind of secret code?

[scripophilist] 14/5/2007 22:52

It stopped snow some time ago in this industry and most people have been investing in sun loungers for some time.

[rainmaker] 14/5/2007 13:09

Some (miniscule)buying at 69p-is it finally going to start moving up?!

regards

[rainmaker] 13/3/2007 13:09

To use the Ski Resort analogy-If such a business which is normally profitable and growing business, being cash generative has a bad year because there is little snow and a strong local currency puts off Tourists,does that make the long term value of that business any less?Or put another way would the long term value of that business suffer to the extent that Investors believe in the likely reaction of the Company share price?

regards

[rainmaker] 13/3/2007 12:59

Hi scburbs-I see what you mean-I don't want to mislead anyone but really encourage Investors to look at the long term value on offer in the context of NAR long term trading record at the current price rather than look at the current year's trading in isolation. Anyway remain optimistic re share price outlook in the short term

regards

[scburbs] 09/3/2007 08:01

Rainmaker, You may well be proved right as it is currently very cheap. However, your statements are slightly misleading and may be referring more to previous periods. In the interims it was broadly break even and had a cash outflow of £2m from operations, so it certainly isn't a highly cash generative business at the moment!