Author Topic: SODI- Solitron Devices  (Read 113023 times)

ragnarisapirate

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SODI- Solitron Devices
« on: September 30, 2012, 08:15:44 PM »
I am kind of surprised that no one has started a thread on this yet... It's been a perpetual net-net (albeit, a small one).

2 of my favorite blogs have already written the company up, so there is no need for me to get into detail here as they have already bested me in that. But the highlights are:

$7mm mkt cap
$10.389mm tang book, with just under $7mm in treasuries. Debt of just over $1mm from a BK in the early 90's, which yields virtually no interest.
~$750K in earnings last year, which was far from a great year for the company. They have a pretty nice backlog at the moment.
Take out excess cash, which is basically what you pay for the company, and you are left with a nice business that is trading at 12x earnings.

They have ~$14mm in NOLs that are carried at NOTHING.

Not trying to be political, but it seems that the biggest risk are the budget cuts from Washington, though, I would think that personel and amenities/perks for soldiers (no matter how trivial) would get cut before missiles, air craft, and other lifeless forms of defense (which SODI is a part of). If a war breaks out, then SODI (and all the other small defense cos) seem like a good hedge.

Blog write ups:
http://www.whopperinvestments.com/?s=sodi&searchsubmit=
http://www.oddballstocks.com/search?q=sodi

A few of us bloggers (an a whole lot of shareholders) would really like there to be an annual meeting, as well. :)

http://ragnarisapirate.blogspot.com/2012/09/solitron-and-blogtivism.html


Palantir

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Re: SODI- Solitron Devices
« Reply #1 on: September 30, 2012, 08:53:33 PM »
I have looked at this stock as well. What's your catalyst though? I'm worried about investing in net-nets that continue to stay net-nets long after you buy them...
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Green King

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Re: SODI- Solitron Devices
« Reply #2 on: September 30, 2012, 09:53:00 PM »
Their activist play seems to be catalyst. Although this has been a net net the share price has been growing since the 2000. 
http://www.otcmarkets.com/stock/SODI/chart
Cash is reflected but not business.
possible on how much u need and how much is being held by value investors ?
« Last Edit: September 30, 2012, 09:57:01 PM by Green King »
GK

Kraven

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Re: SODI- Solitron Devices
« Reply #3 on: October 01, 2012, 05:08:57 AM »
I have looked at this stock as well. What's your catalyst though? I'm worried about investing in net-nets that continue to stay net-nets long after you buy them...

Sometimes value is its own catalyst.  There is always a risk with any stock that it will take a long time to reach its intrinsic value, if ever.  Such is life.  The best way to describe these stocks is what a friend called "one day" stocks.  That is nothing happens for a while (possibly years) and then "one day" something happens that causes the investment to pay off.  You just don't know what that thing will be.
Buy cheap and something good might happen.

Hielko

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Re: SODI- Solitron Devices
« Reply #4 on: October 01, 2012, 02:26:24 PM »
I own SODI as well. Think there is no doubt about it that it's cheap, but the corporate governance situation is obv also far from perfect.

infinitee00

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Re: SODI- Solitron Devices
« Reply #5 on: October 01, 2012, 04:12:48 PM »
I read valueprax's experience with SODI board, oddballstocks letter to the board and also followed Ragnar's blogtivism post. I am disappointed by the CEO's lack of shareholder friendliness and I appreciate the effort to start an annual meeting. Saraf's 30% control of the company is a difficult enough hurdle ( although not impossible) to overcome by activists, especially if SODI's board is dragged into a proxy fight ( I understand that's not the purpose of the blogtivists). Unless, we can get a few of the major shareholders to make some noise, it would be difficult to shake SODI's board off their inertia train (which I think is a major issues here) and get anything done.

I have only a very small % of my portfolio is in SODI, so I do not think I have much influence one way or the other. I support the blogtivists in their effort and I would be following the efforts closely. Btw, I was wondering if Ragnar can give us any updates following his blogtivism post.
« Last Edit: October 01, 2012, 04:14:52 PM by infinitee00 »

oddballstocks

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Re: SODI- Solitron Devices
« Reply #6 on: October 01, 2012, 07:23:50 PM »
infinitee00

I'm not ragnar, but I was mentioned in your post and above.  Thanks for reading, and the encouragement to know there's another shareholder who supports our effort.

Here's a little secret, I don't own a huge amount of SODI either, not as much as a lot of people.  That's mostly a function of the fact that I don't has as much money as most investors, and I don't manage any funds, so no other people's money to invest.  What I do have though is a voice and a readership.  I can be most effective rallying the troops and getting interested shareholders on the same page.  That's the strange thing about company ownership, there are all these little owners but no one knows who anyone else is, that's something we're trying to rectify with Solitron.

Here's more good news, I haven't talked to ANY shareholder yet who's said they disagree with our ideas.  Between Ragnar, Valueprax and myself I think we know shareholders who account for 20-30% of the shares outstanding.  That's significant because Solitron only requires a plurality of votes.  Saraf owns 30% but if 31% votes against his votes the 31% wins.  Knowing 31% of the votes, and being in agreement with them is encouraging.

When I wrote my letter my main goal was some sort of shareholder return, a dividend, a buyback, something tangible.  I wanted an annual meeting as well so we could interact with management and voice our concerns.  After thinking about this for a few months I've come to realize what we really need is a better governance, that's it.  A new board, annual meetings, proxies, those are the sort of conduits that allow shareholders to interact with the company, and ensure that shareholders are taken care of.  As it stands now shareholders are playing second fiddle to Saraf.  I think with the pressure we've generated this is changing, and hopefully we can boot out the puppet directors and get Solitron on the right track.

I'm glad to see this thread on here.
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Palantir

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Re: SODI- Solitron Devices
« Reply #7 on: October 01, 2012, 08:16:42 PM »
Yo. This gives me an idea, why don't we organize as a group, and buy shares, and try to get one of us (oddball?) elected to the board? This is a tiny microcap company, we could with a big enough group do it. Call me crazy, but I'm kindof serious......
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Hielko

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Re: SODI- Solitron Devices
« Reply #8 on: October 02, 2012, 04:10:52 AM »
They do have a poison pill in place, so you can't own more than 15% if I remember correctly (and I think they should have a poison pill in place, otherwise they could lose their NOL assets?).

writser

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Re: SODI- Solitron Devices
« Reply #9 on: October 02, 2012, 05:08:04 AM »
I'm a small shareholder as well. According to the SEC, the "Lauriston group" had close to a 15% stake but in their latest filing they disclosed they have only 2% left. Does anybody have an idea what happened? Could it have to do with the poison pill? I like the idea of trying to nominate a director, but what is the procedure for this if there never is a meeting?
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