NCAV Q2.5-10

As promised, a September update on the NCAV screen was run at the end of last week.  It resulted in 3 new names finding their way into the Absolute Value bucket portfolio (for information on the this bucket, and how it works, read here), they are:

- LAB (LaBranche) which had a market cap $165mn (vs. a 65% NCAV of $173mn)
- NED (Noah Education Holdings) which had a market cap of $88mn (vs. a 65% NCAV of $91mn)
- IESC (Integrated Electrical Services Co) with a market cap of $50mn (vs 65% NCAV of $55.5mn)

Additionally, a number of the existing holdings (AVTR, BXG, LTON, TWMC and XIN) reappeared on the screen.  As such, the final date when these names have to be sold has been extended (here are the rules on when NCAV names must be sold).

Finally, there was one bit of news on a name within the bucket; in early September, QXM was subject to a take-over offer from its majority shareholder Qiao Xing Universal Resources (XING) of $0.80 in cash and 1.9 shares in XING for each of share in QXM.  This is potentially worth $3.65 (XING closed at $1.50 today plus the value of the $0.80 in cash) or about 10% above QXM’s closing price ($3.35).  However, a special committee of QXM’s directors has asked for more time to analyze the offer; a number of the minority shareholders have said that the offer is too low (it is below the NAV/share and Cash/share of QXM as of their 6/30/10 financials).  I am waiting to see what the Special Committee recommends (and whether the bid is raised) before taking any final action