3SOF

Like individuals, stocks have a unique personality and way to behave. SAMC.OB has a peculiar way of moving as you can check on the chart below:



The stock usually trades to new lows and then it spikes sharply higher, in rage, refusing those extremely low prices (and valuations, as we'll see next).

On rectangle 3 the move is just starting, and if technical history is any guide SAMC.OB will shot up in the coming days/weeks.

Let us consider a medium term view:



We can clearly identify a strong support at $0.55 and two major valleys with volume above average. Volume has been very high lately and that means the lower prices are attracting bargain hunters/value investors.

And this stock really looks like a bargain to me. First, I was very surprised to see the company that owns the brand Lacoste being traded on the OTCBB. Second, it has a market cap of just $156.74M  

Here's the profile of the company: Samsonite Corporation (SAMC.OB). The Group's principal activity is to design, manufacture and distribute luggage and consumer products. The products include suitcases, garment bags, business cases, computer cases, casual bags and backpacks. The Group also manufactures and markets luggage, casual bags, clothing, shoes and accessories. These products are sold under the brand names Samsonite(R), American Tourister(R), Hedgren(R), Lacoste(R) and Trunk & Co(R). The products of the Group are sold in over 100 countries at retail establishments including department stores, specialty stores, mass merchants, warehouse clubs, compute and electronic superstores, office superstores and bookstores. The products are sold in more than 100 countries around the world from the retail locations of the Group's own stores and over the Internet.

Here's the latest earnings report: Samsonite Reports Second Quarter Results

Earnings seem great to me. Probably that market cap issue isn't correct because they have many preferred shares, but the chart tells me the following:

- Results were good but didn't attract attention from investors since this is an OTCBB stock with small coverage from the media at this point;
- Stockholders felt very discouraged and bailed out in mass;
- Bargain hunters, value investors and probably insiders (they were heavy buyers at prices much above the current price as you can see here: Last 10 Insider Actions for Samsonite Corporation ) picked up shares from bored investors at very cheap prices.

I'm thinking SAMC.OB can run high to about $1.40 in the coming weeks and it is easy to set a stop loss if I'm wrong, I wouldn't like to see the stock close below the all important $0.55 support level.

I will buy $1,000 of SAMC.OB for the 3 Pennies on Fire Portfolio tomorrow.

www.3stocksonfire.org is a community of traders and investors. David Randolph manages two public portfolios there, the 3 Stocks on Fire Portfolio and the 3 Pennies on Fire Portfolio. He updates the analysis of every holding of his portfolios everyday, so you can check here for updates on SAMC.OB every single day. If you want to receive 3 Stocks on Fire newsletter and exchange trading ideas and stock picks on our message boards, please register, it takes only 10 seconds  

I bought these shares at $0.71 yesterday (as you can check on the 3 Pennies on Fire Portfolio page) and nothing further happened.

I've heard that Samsonite is a worldwide known brand for travelling suitcases. I will investigate this company's past so I can make a plausible explanation to why it is quoted on the OTCBB and with such a low market cap, a worldwide company like SAMC.OB should be on the NYSE, not OTCBB, so like someone funny said (funny and right, let me applaud the man), «something's fishy»  .

I will continue holding the stock.

I still didn't have the time to investigate SAMC.OB, the stock is trading on a small range, seems to be consolidating recent gains, I will keep on holding it.

David,
I do not know how old you are, but I remember looking at SAMC sometime around 2000 based on a blurb in some investment rag (probably the Dick Davis Digest, so it is impossible to remember the author).  The blurb back then was "great brands" and cheap stock at $5-$6 per share (the company had run up into the $40s in the late 1990s, so $5 was a "bargain").  I never invested.  Never could find a reason to do so ... great brands and a company that did little with them.  Well ... a great decision on my part (I cannot always say that ).  In 2001, the stock managed to sink below a dollar a share and it has spent the last five years mired in between a quarter and a bit over a dollar (with most of the time at less than a buck).  This is truly a turd of a company.  It has two trademarks in Samsonite and LaCoste that you or I could make more money with just doing licensing deals from our spare bedroom.  The company completely fails to keep the investment community informed (I always say that if you cannot market your stock, you cannot market your product) - though it may be that there is nothing to tell.  You are right David, this stock occasionally moves above a dollar, but if you will look back a few extra years you will see that it is more sporadic than your chart AND (big AND here) volume has not been the predictor of the move.  With all that said, I'd love for someone to tell me what I am missing.     Being able to buy a company that owns Samsonite and alligator shirts and has $900 million+ in revenue and less than a $200 million market cap for 70 cents a share is intriguing....  Dave. 

edit: Doing some more research - SAMC's website is not working.  I can say no more.   

Thank you for shedding the light on this dog.  (Applaud)  I say we pull our funds together and buy this company out.    They have such a great name for brief cases.
Anyways, dog do you visit raging bull? your name looks familure

Thanks a lot for your comments on SAMC.OB, bigdogs 

I'm investing since 1996, but not in the US for the most part, so I didn't know much about SAMC until now. Of course, like everybody else on this planet, I know their brands.

The company filed some forms with the SEC today, and maybe they will give us some light about why the company's stock is so low: they had a lot of options and warrants outstanding since 1997 and 1998, somekind of "Award Plan":

«This Registration Statement is filed pursuant to General Instruction E to Form S-8 by Samsonite Corporation, a Delaware corporation (the "Company"), in order to register 94,250,000 shares of Common Stock for issuance pursuant to the Company's Amended and Restated FY 1999 Stock Option and Incentive Award Plan (the "1999 Plan"), which shares are in addition to those previously registered on a Registration Statement on Form S-8 (File No.333-57014), as filed with the Securities and Exchange Commission on March 14, 2001 (the "2001 Registration Statement").  The 2001 Registration Statement is incorporated herein by reference.»

There was more:

«This Registration Statement covers 200,000 shares, not previously registered, under the Samsonite Corporation Directors' Stock Plan ("Directors' Plan"). » This thing was from 1996, read here: «The Directors' Plan was approved and adopted at the Company's annual meeting of stockholders in 1996, with 200,000 shares of common stock reserved for issuance.»

Ok, so we have 94,250,000+200,000 = 94,450,000 more shares outstanding that what's published on websites like marketwatch.com. So the market cap for this company is actually (94,450,000+227,160,000)*$0.71 = $228,834,100

I actually think these are great news ! The company is finally taking out those skeletons from the closet and telling the truth to market participants.

This is still a bargain at these prices.

I'm no accountant so this analysis can have flaws, we'll judge from the market reaction tomorrow, but I will continue holding SAMC.OB whatever happens to the stock price, i hope it goes up, I believe it should, given the news.

(the website is working now bigdogs, please check it out here: http://www.samsonitecompanystores.com/webapp/scs/servlet/SHomepageView?storeId=10151&langId=-1)

David,
You are on the right track, but the analysis seems to have more to the story (and I cannot quite unravel it).  If you look at the listed insiders who report holdings, there is approximately 400 million shares being reported as held by a handful of insiders.  There have also been some sweet deals - I do not know if they were private placements, warrants,or whatever ... over the years with some of them (and SAMC seems to have several of these institutions sitting as directors for more than theusual nominal directors fees - always a fishy sign to me).  What all these holdings actually represent, I do not know.  But to stay in theme, there are a lot more bones in the graveyard and too good to be true is a cliche that earned its stripes.  Good companies speak plainly per the Warren Buffett rule.

For year end, ending APR 04 they show a lose of 11 cents per share, and over the next three months the stock goes from .50 cents to approx $1.40. Skip forward a year and earnings are positive 3 cents per share, share price spends a week just above a buck and then back down to  approx where we are. What gives with that?. Not a nice stock!!!. 

Hopefully times are a chang'in

uc

Regarding the financials of Samsonite:

IMO Valuation is so low because of huge debt load and preferred stock (debt characteristics) and minority interest.

LT Debt around $400MM
Negative net tangible assets  $131MM

Also, the preferred stock charges work to diminish net income whenever there is a profit.

IMO  This is not a bargain investment.  In fact, I'm surprised the company has avoided bankruptcy thus far.  A recession could change that.  With that said, the market often acts independently of fundamentals.

From my experience Preferred Stock is a drain on a company, as common shareholders take a back seat to those in control of the debt.

poorman1

Great posts on the fundamentals of SAMC.OB. You've convinced me, I'm selling this today taking a negligible loss or profit. Will look for better opportunities.

Thank you for your input

I sold out of this as well, but one of the reasons why I thought they were headed upwards was because of the success of their new ad campaign.  (Granted, I'm an advertising guy...)

I've been seeing the ads all the time -- they're pushing their new Samsonite Spinners hard and I think it's pretty compelling.  Stupid reason to buy a stock, I know....but I figured that it would put the company in a higher profile than it had been for years..

here is another positive review of their ad:  http://slate.msn.com/id/2116521/

But I still sold out....

Just noticed a large insider buy today. Although the transaction date was Oct 14 2004...one year ago...and the reported date was today...what does that mean exactly?

http://www.secform4.com/insider/showhistory.php?symbol=samc



julia