Forum | Old School Value

Champion Industries (CHMP)

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1:43 am
September 29, 2009

Jae Jun

Admin

posts 397

You're right about the intangibles. There is too much intangibles in my view as well. I like having tangible assets to protect the downside but if CHMP missteps something, it could go all the way down near the 0 line.

Fundamentally however, the company has a decent track record. They are good at generateing cash so applying all that to a 50% margin of safety would be a good entry point for me.

Now to do some reading and see what they really do.

3:27 pm
September 28, 2009

Floris

Rotterdam, Netherlands

Member

posts 18

Hey Jae,

I had a look at this stock yesterday. Looks like an undervalued stock. The only question mark is the lack of underlying tangible assets. There is no margin of safety if earnings go down the drain, but looking at the industry and the long term record of earnings the chances of the firm not continuing on the same path are slight. Furthermore the tax shield generated by the high level of intangible assets (which of course need not be replaced) is excellent for investors. This should mean that the firm will be able to continue its dividend policy in the future. The dividend yield of 12% is quite attractive (at half of earnings).The chances of the business being wiped out the next few years are neglible. I do believe it is a business that hinges strongly on contact and might be difficult to be succesful as a web based venture (its most likely source of competition).

Usually I will find many reasons to disgard an investment and move on to the next stock, but this does not seem like a bad purchase.

Reg and thanks for starting the forum

Hope it will a success,

Floris

3:06 am
September 26, 2009

Jae Jun

Admin

posts 397

Came across a thinly traded boring, ugly company today. CHMP.

Champion Industries, Inc. (Champion) is a commercial printer, business forms manufacturer and office products and office furniture supplier in regional markets in the United States. The Company also publishes The Herald-Dispatch daily newspaper in Huntington.

Initially, it looks like it should be between $3-$5. Will have to look into it and see whether the economics of the business is viable for it to at least return to its intrinsic value.

I'll also have to take a look at their debt to see whether the coming due debt has any impact.

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