August 29 2020 – CA: BRTL – $0.115 CAD
Brattle Street Investment Corp (f.k.a. Inspira Financial) is a net-net stock controlled by Michael Dalsin and Roger Greene. Cash burn and share dilution are reasonable, and there is stock price inflection potential. Buy some shares, forget that Mr. Dalsin and Greene have been (unfairly) called “The Gruesome Twosome”, and be patient.
Valuation and Price
BRTL has cash and a small amount of securities (both USD) on its books. There’s no revenue, no PPE, and no debt. NCAV is $6.5 million USD and there are 49.75 million fully diluted shares out. At $0.131 per share NCAV and a $0.084 (both USD) stock price, this is a net-net! BRTL reports and trades in CAD. So that’s $0.18 per share NCAV and a $0.115 CAD stock price. BRTL’s market cap is 2/3’s of its NCAV. You’re buying $1.00 for $0.64. Not bad.
Stock price inflection potential. The stock is sitting near its all-time low, it’s priced as if dead, and it’s a penny stock. The owners of the company are apparently disliked, but they will probably do some good deals in the U.S. medical device industry within the next few years. If you can be patient, and dispassionate, you might make some good money.
Margin of Safety
Evaluate risks first. Mr. Dalsin and Greene could never complete a transaction (melting ice cube), they could continue to issue options and dilute minority shareowners, or they could do bad a bad deal (or six). I view these scenarios as unlikely because of their track record and large insider position.
On the other hand, while you’re waiting to see what will happen, you’re buying a dollar for 64 cents, which is pretty good. You can accumulate a significant number of shares relatively cheaply. I do think the stock will continue to trade at a discount to NCAV until a deal is done. Without the inflection potential, I wouldn’t own the stock.
I own shares of CA: BRTL.
Friends, if you want to buy this stock, use limit orders and be careful. The bid-ask on equity order screens appears to be inaccurate (which I’m excited about because it throws people off) and the stock is fairly illiquid.
Thank you David Flood for bringing BRTL to my attention.
BRTL has been discussed on Value Investor’s Club. Read the write up because it’s good.
All mistakes are mine. Questions and comments: firstname.lastname@example.org.