Barron's ran a piece today [subscription] on an interesting list that has some history. Back when I was at the hedge fund, we found a list of interesting stocks produced by boutique investment firm, B. Riley. This list, called Cash Rich Technology Stocks (CRTS), was a favorite among value investors in the technology sector. According to Barron's, this list screens for tech stocks trading at or near net cash per share. More specifically, the CRTS looks for stocks where:
- Net cash for all the companies considered was at least 35% of market cap.
- Riley eliminated companies with market caps under $40 million or high cash-burn rates.
- They crossed off those its analysts believed to have business models with little chance of success.
In a list of 29 cheap stocks, a couple of sectors dominate:
Semiconductors:
- California Micro Devices (NASDAQ: CAMD)
- Centillium (NASDAQ: CTLM)
- ESS Technology (NASDAQ: ESST)
- Exar (NASDAQ: EXAR)
- Ditech (NASDAQ: DITC)
- Endwave (NASDAQ: ENWV)
- Extreme Networks (NASDAQ: EXTR)
- Sycamore (NASDAQ: SCMR)
- Tollgrade (NASDAQ: TLGD)
- Westell (NASDAQ: WSTL)
B. Riley likes Centillium, Ditech, and Open TV.
The first time B. Riley published such a list was in 2002. In what proved to be a great buying opportunity, the list was up 326% in just 19 months.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author does not hold a position in any of the stocks mentioned above.
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