@travelightor,
I have spent the past four months building a position in ASW. It is notoriously illiquid, as you surely know. On many days I was the only buyer of stock, almost always having to cross the spread to execute my orders.
I am not ashamed to say that I last week happily paid 76c - a near 4 -year high - for my final tranche of stock.
Because it is a somewhat obscure business, I didn't think about checking to see if any meaningful discussion was taking place on HotCopper.
When I finally did check, some weeks back, who should I see being a fellow-owner of, and posting on, ASW but one of the voices of reason when it comes to stem cell investing, a certain
@travelightor.
Not surprising really. Possibly even a bit eerie, actually.
At any rate, what struck me about your post was your reference to "
...ASW being "unlikely to go under." Unlike many investors (evidently), when I invest, companies being financially self-sufficient - at a very bare minimum - is my starting point.
To that end ASW's net cash position and Current Ratio approaching 6 times, combined with it's capital consumption of just 20 cents in every dollar of cash it generates, makes it one the most solvent businesses around.
And given is WA centre of gravity, ASW's Revenues, Earnings and Cash Flows have demonstrated nothing short of remarkable resilience and stability given the sheer decimation of the market is services (Perth-based listed entities, predominantly).
If capital market activity in the resources sector continues its nascent recovery, I suspect ASW's financial performance will improve markedly in coming years.
However, I don't care much for forecasting economic cycles, so even if the WA economy remains in the doldrums, then based on ASW's robust financial performance during the commodity downturn of the past few years, it certainly doesn't appear that a failure of commodity prices to rise will prevent the company from continuing to grow anyway.
9.0x EV/EBITDA for a well-managed, 25% ROE business operating somewhere close to the bottom of the demand cycle for its services, is a most highly attractive investment proposition to my way of thinking.
Especially on a risk-adjusted basis.
