The second NCAV update of the year was a little more successful than the first, providing one new name to be added to the Absolute Value/NCAV bucket portfolio (for information on this bucket, and how it works, read here).
- SUTR (Sutor Technology Group) which had a market cap of $62mn (vs. a 65% NCAV of $72mn)
While the screen is a valuable tool, I think that some of the names removed from this month’s list highlight the importance of a simple qualitative overlay to it;
- As usual, there were the names that were removed because the screen mistakenly used total assets rather than current assets (PCC and SVLF) or stale (>6mths old) financial data (NINE).
- As Our Man has discussed previously, given the prevalence of Chinese companies (which are listed on NASDAQ) the qualitative overlay has become more important to ensure that the data the screen uses is both timely and appropriate. Unfortunately, given this month’s developments we shall have to add accurate to that list. In TWO cases this month NASDAQ-listed Chinese companies were removed from the list after passing the quantitative screen for being potential frauds.
- DGW: Saw its CFO resign after the stock was accused of being a fraud by a research firm (interestingly, DGW’s sister company DYP, which has the same chairman, is being investigated by the SEC for being a fraud!)
- JGBO: Also saw its CFO resign and replaced its auditor!
A couple of existing names (LTON and XIN) reappeared on the screen. As such, the final date that these names must be sold by has been extended (here are the rules when NCAV names are sold). Finally, QXM has now spent 366 days in the portfolio since last appearing in the NCAV screen so is coming out of the portfolio.
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