Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Hi Thetenor,

Was there anyway we could have forseen this buy?

There should not have been without obtaining illegal insider information.

Also take a look at the recent insider trades and notice that most are sells,

thus contradicting the saying that "all insiders make out at the expense of stockholders". TMF has vouched for CNS's management for a long time.(Most recently in an interview with the CEO)

One way to get an idea about whether a small company might be a buyout candidate is to look at the Enterprise Value = Mkt Cap+cash-debt

Since 2003 after changing fiscal year, the enterprise value has been:
(All number in millions except stock price)

Shares Price Mkt cap Cash+ST inv debt EV
2003 14 6.00 84 41 0 125
2004 14 14.00 196 49 0 245
2005 14 13.00 182 61 0 243
2006 15 23.00 345 52 0 397
ytd 15 28.50 427.5 52 0 479.5

My calculations give EV a CAGR of ~40% over this time span.
This indicates that the money required to buy the company is increasing at a rapid rate. Thus a possible candidate for a buyout?
I also think that the increases in FCF and no acquisitions in site make it a good way for the buyer to increase its earnings if the purchase price is not too high.

I didn't look at these figures till this morning and didn't load up on CNXS like I wish I had either.

Anyone have more opinions on ways to look for/at possible buyout candidates?

charlie---long CNXS
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.