Northamber Share Discussion Threads

[liarspoker] 10/10/2009 17:17

You'll enjoy this Walter Schloss interview Rainmaker:

[rainmaker] 09/10/2009 22:06

I know LP it's just crazy which ever way you cut it!A rock solid balance sheet stuffed with cash which more than covers the current share price even at the offer, stocks worth 36p a share and tangible fixed assets of another 10p for free!At current levels it's just brimming with great value.You have to be a bit patient though but I believe before the New Year we will see a steep climb on improved trading prospects for 2010 and the share price will go to at least 60p.

regards

[liarspoker] 09/10/2009 21:30

Can't believe the valuation here. just spend a while listing various aspects of the net working cap stocks ( and some that are close ) on my list. I'm up to N ( Northamber of course ) and it's the cheapest stock on assets out there. Offer price is 43p yet if you multiply inventory by half then multiply receivables by .75 and add cash then add them all up and subtract all liabilities you get a price of 49.25p per share. Ben Grahams method of net net working less 34% gets a price of 52p.

Dividends being paid, share buy backs going on, market cap less than cash, receivables cancel payables so you get a few million in cash, all inventory plus the property assets for free at this price.

Hello......

[brando69] 08/10/2009 23:11

thank you rainmaker, and thank you davius.

[old boy returns] 08/10/2009 10:35

Liarspoker - NAR have employed 2 strategies for returning value to shareholders over the past few years. These have been share buy backs at below NAV (although with hindsight they bought too mnay back at too high a price) and the payment of a special dividend (10p a share from memory a couple of years ago). I would not be surprised to see another special dividend.

[davius] 08/10/2009 10:26

Brando, Nexus - small player in a very competitive market. I see their ads in the trade press from time to time. Not sure if I can see a reason they should suddenly transform into a big fish, though no doubt as the recession ends and spending rises there will be fewer companies left to pick up the business (weekly reports of businesses going under over the last few months). That they've survived is at least a positive, but as you'll know they are a services company rather than a distributor.

[sleepy] 08/10/2009 08:50

Thanks for the charts

[rainmaker] 07/10/2009 23:22

No probs Brando, I'll get to it now

regards

[brando69] 07/10/2009 22:40

rainy - any chance of incorporating a couple of shareprice graphs in the header?

[davius] 07/10/2009 22:30

Hmm, Well I think you have to consider that Maverick was bought out by Computer 2000 because it was going bust, no doubt they made a bit of a killing on that, though of course took on its debt too. I think the strugglers will either go under or get taken out cheaply. I can't imagine any will want to buy a relatively successful outfil like Northamber when there are plenty of strugglers around. However, I suspect you're more likely to be wondering whether any may be bought up by Northamber with its free cash...

Hard one to answer, next time I'm reading through the trade press I'll keep an eye out for any rumours of distributors in trouble. There are stories on a weekly basis of small buy outs and mergers.

[liarspoker] 07/10/2009 19:09

Thanks Davius - I've had a good look at each of those websites.

If you don't mind I'd like to ask another question:

Which companies would most likely be interested in acquiring or merging with Northamber provided the conditions were good ( I am of course assuming that you have some idea of the financial condition of a few companies in the sector ) ?

I don't mean just from those listed above but from the whole sector. I note that you mentioned that Computer 2000 was acquisitive which I found interesting. It certainly has economies of scale and the like.

It seems to be a fragmented industry so some consolidation would be welcome I'd say.

[davius] 07/10/2009 16:32

Don't know about listed ones, but there are many competitors, such as:

CMS Computers
Entaonline
ETC Distribution
Midwich
Micro-P
Target Components
VIP Computers
Westcoast

Plenty of others, but those are the ones I tend to use.

[liarspoker] 07/10/2009 15:47

Any one here own up to that 5K buy ?

[liarspoker] 07/10/2009 13:06

Hi Davius,

I would appreciate it if you could list a few other UK companies which are in Northamber/Computer 2000's industry.

Thanks,

Liars

[rainmaker] 02/10/2009 00:06

"Personally I won't invest here for two reasons. Very thin liquidity is one. The other is that I don't want to bias my purchasing decisions on the basis of holding shares in the company I'm buying from. That said, my contact at Northamber, Raj, will get as much business as I can put his way, as he's always helpful, polite, promt and as keen as he can be on pricing."

Davius,Many thanks for all your input and I admire and respect your integrity.

regards

[liarspoker] 01/10/2009 14:41

Those are large companies alright.

Perhaps a larger company would be interested in NAR. The stock position of the Chairman is interesting. He holds over 58% but is 64 years of age. The other directors are 64, 57 and 67 years of age of which only one hold a significant amount of shares 3.42%. I can see something happening over the next number of years.

Maybe it is up to the shareholders to shop NAR around. ;O)

[davius] 01/10/2009 14:36

Tech data, the parent company of Computer 2000, has a turnover of something like $20bn I believe. Ingram Micro is even larger, with annual sales of over $30bn.

The smaller distributors are getting bought out. For example Maverick, that specialise in AV products (I used to use them regularly for Projectors and the like) were in trouble and are now a part of Computer 2000.

[liarspoker] 01/10/2009 14:23

Thanks you for your posts detailing the industry Davius.

Could you please tell me, perhaps in terms of turnover or the like, how large Computer2000 and Ingram Micro are ?

Also are you in effect saying that Northamber is possibly increasing its market position as other 'second tier and smaller distributors' dip below the survival line ?

[davius] 01/10/2009 14:08

I think another point of note, these distributor are all working on behalf of the vendors, in most cases it's the vendors that fund the stock, rather than the distributors. A positive cash balance is an enviable position to be in, but it gives them no greater buying power with their vendors. Scale, in this business, is all important. Northamber were not shifting enough HP product, hence lost them as a vendor. Fortunately they retain a number of high end brands to assure their existance.

The cash position is very positive when considering the viability of the business though. Whilst the likes of Computer 2000 and Ingram Micro are very likely safe due to their size and power, many of the second tier and smaller distributors are ticking along at just above survival. At least that isn't a problem for Northamber at present.

[davius] 01/10/2009 14:01

> I'm not saying they are able to offer more competitive prices but there
> balance sheet strength allows them to offer longer repayment periods for
> example

I'm afraid that's not the case. In my experience both Northamber and Computer 2000 offer similar payment terms. The jewel of the three is Ingram Micro. They have this rather useful scheme whereby if you pay by DD on a 10 day timescale, you get a 0.5% discount on your invoice price. Hence why where prices are all but identical they win my business. Whilst 0.5% may not sound much, when you put in a £20K order that's £100 in extra margin. A deal maker for those large sales. Though to be fair, the big sales are when Raj puts in the extra effort to do me a good deal.

[rainmaker] 01/10/2009 12:46

"To suggest that they offer better pricing than the others is at best, speculation, and at worst, misleading. Computer 2000 and Ingram Micro have far more buying power."Some confusion, here I believe,if you check,I'm not saying they are able to offer more competitive prices but there balance sheet strength allows them to offer longer repayment periods for example-that's how I read Northanmber's statement about their balance sheet strength creating opportunities so maybe they can start a Customer's payment from the new financial year if they have already exhausted the Budget in their current year.

regards

[cwa1] 01/10/2009 11:44

Can't ask for more than that Davius. I'm delighted to hear that you get good personal care and attention at Northamber. That is something that I am usually happy to pay a few coppers more(not much more than that though!) for and is often the motivating factor in my purchasing decision making at least. Thanks for your input.

[davius] 01/10/2009 10:43

Whether or not Northamber is a good investment aside, I'd like to pick up on one point:

> Northamber with a very strong balance sheet are ready to take advantage when
> their Rivals can't(I've been told they have weak balance sheets)

Someone else pointed out that margins are tiny. I have to say that, whilst competitive, Northamber aren't generally the cheapest. They have been able to do decent deals on large orders, but they are relative minnows compared to the big boys. To suggest that they offer better pricing than the others is at best, speculation, and at worst, misleading. Computer 2000 and Ingram Micro have far more buying power.

I've been buying from all three for years. Ingram Micro are generally the best on price (though that is vendor dependant). Computer 2000 have better stock than almost anyone, probably because they are part of the European Tech Data group. Northamber have great customer support. I can always rely on my contact there to come up with a good deal and to reply to requests for pricing and availability promptly.

However, one problem they have is a much more limited range of vendors. Were I looking for notebooks for one of my educational customers for example, at Northamber I could source Acer, Fujitsu, Lenovo and Toshiba (and they've recently added MSI). At Ingram Micro by contrast, I can get HP, Toshiba, Acer, Lenovo, Asustek, Fujitsu, Sony and Apple. And at Computer 2000 they have 10 notebook vendors.

I think to suggest that Northamber are any better placed than the others is misleading. Will they benefit from an upturn in IT spending? Undoubtedly so, but my experience is that currently there's very little sign of it, yet. Schools and colleges are still running under very tight budgets, despite the huge level of government expenditure.

Personally I won't invest here for two reasons. Very thin liquidity is one. The other is that I don't want to bias my purchasing decisions on the basis of holding shares in the company I'm buying from. That said, my contact at Northamber, Raj, will get as much business as I can put his way, as he's always helpful, polite, promt and as keen as he can be on pricing.