rick_v Posted August 23, 2010 Share Posted August 23, 2010 HLYS - Heely's Shoes Market Cap - $68M Cash - $67.2m Equity - $80.1M Company is essentially trading at cash, the business is being given away for Free. Is the business worth anything? I believe it is. Either way there is very little risk of permanent capital loss given the fact that the company generates enough interest and cash from operations to prevent it from burning its equity. Catalyst: New Shoe Line, at one point HLYS generated 27m$ in net income. Not sure if those days will ever return, but this is an easy buyout target at even 3-4$ given its huge cash position. The shoes are still sought after by kids and they have great global distribution. Enjoy! Link to comment Share on other sites More sharing options...
Parsad Posted August 23, 2010 Share Posted August 23, 2010 Good pick! Unfortunately, there is no way to influence management on what to do with the cash, as they control the company pretty much. It is cheap though. Cheers! Link to comment Share on other sites More sharing options...
SmallCap Posted August 23, 2010 Share Posted August 23, 2010 Interesting company, thanks for bringing it up. At first glance the fact that there have been extensive stock sales by primarily one 10% holder is of concern, I haven't seen them do that very often in smallcaps were the company is a viable or likely buyout target. The last quarters profitability is due completely to a settlement and a tax refund. Still worth looking into some more. Link to comment Share on other sites More sharing options...
rick_v Posted August 23, 2010 Author Share Posted August 23, 2010 Yup Adams has been selling for quite some time, I have been buying a lot of his shares. Have just under 3% now. Link to comment Share on other sites More sharing options...
yseric Posted August 23, 2010 Share Posted August 23, 2010 Great pick!!! Thanks for sharing!!! =) I have a question that I'd like to bring it up to folks here. When you encounter cigar butts or mediocre companies like the one above(maybe HLYS is not, but I'm just using as an example), should we invest in them or should we wait for a great company/fat pitch that can give you compound returns.. Once in a while I do come across such companies through screening, and I'm not sure whether I should commit capital into them or just wait for better opportunities.... What are your thoughts? =) Link to comment Share on other sites More sharing options...
beerbaron Posted August 23, 2010 Share Posted August 23, 2010 Great pick!!! Thanks for sharing!!! =) I have a question that I'd like to bring it up to folks here. When you encounter cigar butts or mediocre companies like the one above(maybe HLYS is not, but I'm just using as an example), should we invest in them or should we wait for a great company/fat pitch that can give you compound returns.. Once in a while I do come across such companies through screening, and I'm not sure whether I should commit capital into them or just wait for better opportunities.... What are your thoughts? =) Both are good, to use the words of Buffett himself. Dodd is good if you have a small capitalization and Fisher is better with large capitalization BeerBaron Link to comment Share on other sites More sharing options...
biaggio Posted August 23, 2010 Share Posted August 23, 2010 BeerBaron, "Dodd is good if you have a small capitalization and Fisher is better with large capitalization" Does that mean if you have small amount of capital to invest or is it the capitalization of the investment in question i.e. use Graham + Dodd for small caps and Fischer for large caps? Thanks Link to comment Share on other sites More sharing options...
beerbaron Posted August 23, 2010 Share Posted August 23, 2010 It means both are good but as your portfolio gets bigger you won't be able to find Dodd's stock to generate superior returns. I saw this quote from a guy that scanned a letter he sent to Buffet and got a reply. It was funny the guy wrote a 2000 words letter and Buffet answered back on the corner of the page with a 10 words sentence. BeerBaron Link to comment Share on other sites More sharing options...
beerbaron Posted August 24, 2010 Share Posted August 24, 2010 10k: "In 2008, we elected to reduce the number of stores offering Heelys to better balance supply and demand" Wtf, balance supply and demand! It's not like they are running a billion dollar business. It sound like B*llsh*t to me. Very good find, I'll continue reading. Link to comment Share on other sites More sharing options...
ericd1 Posted August 24, 2010 Share Posted August 24, 2010 I think Heely's and Croc's are similar - the fad is over and future growth potential is slim to none...which makes them worth pennies on the dollar...I pick up a cigar butt from time to time, but unless there's more to the story, I'd stay away. Tis only my opinion... Link to comment Share on other sites More sharing options...
Myth465 Posted September 3, 2010 Share Posted September 3, 2010 Rick thanks alot. After seeing your Japan post I decided to review your stocks in more detail. This may be a viable company and could work out great. This got me excited - http://www.heelys.com/SitePages/MoreInfoNano.aspx I am a grown man and even I want a pair, if they get even the slightest following in the skateboarding market then we could have a huge winner. I plan to do some scuttle butting, but have you heard or read anything review wise? I am also looking at Garmin, maybe it deserves its own thread. Link to comment Share on other sites More sharing options...
beerbaron Posted September 3, 2010 Share Posted September 3, 2010 Why not buy a pair for your kid or nephew and see what he thinks of it? BeerBaron Link to comment Share on other sites More sharing options...
rick_v Posted September 3, 2010 Author Share Posted September 3, 2010 I would love to discuss GRMN! Good Luck on HLYS its an easy 50% gain in 3 years or less.. Link to comment Share on other sites More sharing options...
Myth465 Posted September 3, 2010 Share Posted September 3, 2010 Why not buy a pair for your kid or nephew and see what he thinks of it? BeerBaron If I am bored this weekend, I will probably check a few skater message boards. If they get any kind of transaction and you can place a 5x or 10x multiple on the cash flow then you would have a pretty nice share price. If not, you have the cash protecting you no the downside. I believe you all said that Southwest owns most of the shares. Why do you wise they would sell? Link to comment Share on other sites More sharing options...
beerbaron Posted September 3, 2010 Share Posted September 3, 2010 I believe the patent portfolio is worth quite a bit too. I started browsing trough the patent last week and saw that they had nice broad claims. Who would be a buyer of the portfolio? BeerBaron Link to comment Share on other sites More sharing options...
Myth465 Posted September 3, 2010 Share Posted September 3, 2010 I believe the patent portfolio is worth quite a bit too. I started browsing trough the patent last week and saw that they had nice broad claims. Who would be a buyer of the portfolio? BeerBaron This is a very good point. They probably have alot of safegaurds on the concept. Not sure what its worth but its free. What intrigues me is this looks like alot of fun, much funner then skateboarding, and could generate another fad. I also like the design. The units will increase sales for the shoes, and vise versa. Link to comment Share on other sites More sharing options...
twacowfca Posted September 3, 2010 Share Posted September 3, 2010 Kicked Heely's tires a few years ago, but passed because they seemed to have lawsuit exposure. A kid on their shoes could suddenly go "whoops". Brain injury. What about this issue? Link to comment Share on other sites More sharing options...
Myth465 Posted September 3, 2010 Share Posted September 3, 2010 Kicked Heely's tires a few years ago, but passed because they seemed to have lawsuit exposure. A kid on their shoes could suddenly go "whoops". Brain injury. What about this issue? Wouldnt a skateboard company or a bike company have the same exposure? Wouldnt Wal-Mart have a similar exposure? Link to comment Share on other sites More sharing options...
twacowfca Posted September 3, 2010 Share Posted September 3, 2010 Kicked Heely's tires a few years ago, but passed because they seemed to have lawsuit exposure. A kid on their shoes could suddenly go "whoops". Brain injury. What about this issue? Wouldnt a skateboard company or a bike company have the same exposure? Wouldnt Wal-Mart have a similar exposure? Far less legit liability because skateboarding is all about wearing helmets and pads, but this isn"t the case with casual shoes. Link to comment Share on other sites More sharing options...
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