NCAV 2011-3

The third NCAV update of the year has been much delayed, as the screen failed to show up any new names that could be added to the Absolute Value/NCAV bucket portfolio (for information on this bucket, and how it works, read here).  However, on new name came up in recent days, passed the qualitative overlay, and was added to the portfolio.  It was:

- OPXT (Opnext Inc) which had a market cap of $98mn (vs. a 65% NCAV of $101.5mn at the end of Q3)

While the screen is a valuable tool, a number of names were removed during the simple qualitative overlay;
- As Our Man has discussed previously, Chinese companies (listed in the US) that come up on the screen are currently being excluded due to the number of frauds within their ranks (see DGW, JGBO, Sino-Forest, Longtop Financial, etc  for just 4 examples) .  Like all screens, Our Man’s NCAV screen is reliant upon the quality of the data going into it and the number of recent Chinese-based frauds listed in the US argues for their exclusion.
- A number of Financial companies were excluded, due to their different definition of Current Assets or the screen mistakenly using Total Assets (instead of Current Assets) to pass them.
- A number of companies were excluded as the data used in the screen was sufficiently dated to be of no great value (i.e. 2010 year-end).

One existing name (TWMC) reappeared on the screen.  As such, the final date that this name must be sold by has been extended (here are the rules when NCAV names are sold).   Finally, as noted in the recent monthly update, AVTR & IESC, had now spent 366+ days in the portfolio since last appearing in the NCAV screen so were removed from the portfolio.