monkey on the back

Hi everybody,

I've just bought into this stock. I don't actually feel as confident as everyone else seems to about this company. My main reservation relates to FFI.

FFI has liabilities of almost $3 million. Supposedly, the sale of assets will "materially" cover this. I interpret that as meaning that they will get at least $2 million for it.

That still leaves liabilities of $1 million, $500,000 of which accrues to CLV.

In my view this unquantified liability is what is keeping the share price where it is.

So, if my rough calculations are sufficiently conservative, the possible liability owed by CLV is small enough to be offset by growth. In that case, the share is fairly valued for the short term.

If on the other hand, the assets can be sold for more than $2 million, AND there is sales growth, then CLV is under valued.

Finally, if the liabilities are greater than $500,000 and/or there is no sales growth dividend yield may fall, possibly precipitating a fall in share price.

I've taken recent director buying as an indication that the worst case scenario is unlikely.

I'd be interested to hear if people agree with my reasoning.