Megatech (MGTC) is another in my line of super cheap yet unfortunately dark companies. It's also very illiquid so good luck on that front. This will be a quick post because there's not much to the story: real company, real dark, real hard to get info... and real cheap.
Currently trading at 10% of book.
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Update 1/27/2017: How funny. I published this post last night then this morning MGTC sent the latest financials. I've updated the numbers with 2016 data.
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MGTC makes automotive training equipment. Think lab equipment for training technicians and mechanics in trade school. Not the most exciting arena but it's stable.
Here are the most recent numbers I have:
As for what's going on and what are their plans, I have no idea. I've never talked to them. They de-registered from the SEC in 2004. At that time Vahan Basmajian was CEO, aged 65. Now Vahan's son Varant is CEO, age 52. According to the last proxy in 2004 Vahan and Varant own 28% of the shares.
Just looking at the website you can see they are coming out with new products so at least we know they are alive. It looks like they're diversifying as they have a lot of alternative energy equipment that I don't remember seeing before. Things like solar panel and wind turbine training equipment.
On the subject of my thesis I have none. The stock is cheap and I am patient. Latest price is $0.03 giving a market cap of $0.12M. I'd put value around $1.5M = $0.38 per share.
The stock doesn't do much. There are spikes every so often but on the whole it hasn't moved in almost 30 years. You can see the stock crumble after they stopped communicating.
Super high upside but the question is will it ever be realized and that I don't know. Maybe the son will get bored and sell some day.
--Dan
Disclosure: long MGTC
Currently trading at 10% of book.
***
Update 1/27/2017: How funny. I published this post last night then this morning MGTC sent the latest financials. I've updated the numbers with 2016 data.
***
MGTC makes automotive training equipment. Think lab equipment for training technicians and mechanics in trade school. Not the most exciting arena but it's stable.
Here are the most recent numbers I have:
- share price $0.03
- BV $1.2M in 2016 $1.2M in 2015 vs $1.2M in 2014
- no long term debt
- 3.9M shares out
- rev $1.83M vs $1.85M vs $1.86M
- earnings hovering around nothing
- net income -$7.4k vs $9.2k vs -$71k
As for what's going on and what are their plans, I have no idea. I've never talked to them. They de-registered from the SEC in 2004. At that time Vahan Basmajian was CEO, aged 65. Now Vahan's son Varant is CEO, age 52. According to the last proxy in 2004 Vahan and Varant own 28% of the shares.
Just looking at the website you can see they are coming out with new products so at least we know they are alive. It looks like they're diversifying as they have a lot of alternative energy equipment that I don't remember seeing before. Things like solar panel and wind turbine training equipment.
On the subject of my thesis I have none. The stock is cheap and I am patient. Latest price is $0.03 giving a market cap of $0.12M. I'd put value around $1.5M = $0.38 per share.
The stock doesn't do much. There are spikes every so often but on the whole it hasn't moved in almost 30 years. You can see the stock crumble after they stopped communicating.
Super high upside but the question is will it ever be realized and that I don't know. Maybe the son will get bored and sell some day.
--Dan
Disclosure: long MGTC
Did they ever have any earnings? Is this something you think will eventually earn a return or is this something that should just be liquidated?
ReplyDeleteThey are like many of these little companies, just sort of scraping by. If a product catches on then revenue and earnings could take off, but who knows. For now they are just doing their thing. I don't think they should be liquidated. There is not an abnormal amount of cash or anything like that. In 1994 they earned $240k on $4M in revenue. Anything is possible
DeleteWell how much is the CEO paying himself? How much does the CEO and father own in terms of % of this business too?
DeleteThe whole co is worth $120,000? Dan buy the company and liquidate it! :)
ReplyDeleteAny ideas as to what the assets are and how much these guys are paying themselves?
ReplyDeleteThe assets are normal business stuff as far as I know: cash, receivables, inventory. I don't know if they own any real estate.
DeleteI don't know pay. The annual report doesn't list that.
DeleteI see they do have about a half million of "building and improvements"
I emailed Megatech for financials a long time ago and never heard back. Then, I called them in December, was given an email for a guy in accounting, sent him a message, and he gave me the 2016 numbers in a few days.
ReplyDeleteBoring stock, but it's worth owning a few shares.
According to masslandrecords.com, it looks like they own their office unit in Tewksbury.
ReplyDeleteGood to know. Thanks
DeleteHow do you go about finding all of these sub 5mm market cap stocks that are actually viable and have operations? What sites do you use?
ReplyDeleteDo you screen or just get a list then sort by Market Cap and start with the "A"'s?
Unfortunately I don’t have any special secrets for you. One large benefit of having a blog is people email me ideas. I bought RBCL after a reader emailed me about it. Other interesting ideas I’ve seen recently are ERMS and TMED.
DeleteMost of my ideas come from one friend who has been doing this for decades and spends his days reading filings.
I talked a bit more about it an interview with Jan Svenda I did last year. http://www.nonamestocks.com/2017/09/an-interview-with-nonamestocks.html
Great earnings from TMED today. Sales up 50%, earnings of $0.70 for the quarter, TBV around $15. Not sure if the sales/earnings are just a one-off, though. Considering the recent history of losses, this might be the case.
DeleteToo bad I don't own any. I meant to buy some recently but forgot.
DeleteIs there any news on this one? Saw it printed $0.30 today.
ReplyDeleteNone that I see. I emailed the company this morning to ask what's up, hopefully I hear back.
DeleteCould be nothing more than one person using a market order
That is what I suspect as well, thanks.
Delete