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Intrepid Capital Management CEO Mark Travis on stocks that are often overlooked but should be considered by investors.
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While recent market volatility is not spoken all investors we have a money manager.
Who has ways to make money was some stock plays you probably never heard -- so.
Let's bring a -- mark Travis is president and CEO of intrepid.
Capital management now.
We'll talk I think actually all of somebody's not bought the stock market for so long -- -- -- as we work here and everywhere else it makes you wonder.
There are names out there that are little jewels -- -- are not so happy you go about finding them.
Well as an intrepid capital funds we want to disconnect between price and value and we focus our attention on the less sufficient parts of the capital markets which tend to be market caps.
Say below five million dollars and down.
You know where there's -- analyst coverage there's undiscovered companies that.
Trade at a discount from what we think -- private market values are well let's get right to some of -- -- let me start where the smallest -- -- this is Epiq Systems the market cap is.
About four and a half of Florida have 450.
Million dollars pretty small market -- -- -- why do you like -- well you know David its interest in the Wall Street Journal this -- there's an article talking about the discovery business and lawsuits and they have a division.
Do any discovery they also do.
You know software for bankruptcies which.
Even in this economy has not grown as much as you might faint but they discovery business -- -- quite quickly.
And it generates meaningful free cash flow on a roughly 450 million dollar market cap and management -- about.
-- I'd say close to 20%.
I want to just mention when you're dealing with smaller cap name some of the moves tend to be a little more.
Shall we say violent up for example -- the trailing price to earnings ratios kind of expensive.
Market's about 41 why is this still a bargain to you.
Well -- away -- look at it -- it generates roughly you know 45 minute free cash flow on a market cap before fifty so you can lead a double digit free cash flow yield.
When we take a conservative estimate -- growth and -- pretty high discount rate and are discounted cash flow we come up with a mid teens valuation.
And you know I think there's some larger competitors that would like to be in the discovery business so we're gonna sit here patiently and rock and roll with the Greeks I -- all right let's let's talk about a slightly bigger market cap by two billion dollar market cap of telephone.
And data systems why -- why do you like that.
You know David this one really befuddled me they -- 80% of US cellular ticker US cell which is about a 3.2 billion dollar market cap.
We take -- percent of that -- you to two point six.
Well you can -- all you want right now TDS telephone and data services for 2.2.
So you can ask since liquidate.
Telephone and data services and get up 12% return on your capital city got a discount to -- tangible book I have a although liquid security.
Granted that the -- -- business is not great but the sell businesses hold up quite nicely that the unfortunate part as you have.
Entrench management and a fairly control that really needs the help shareholders the last five years -- share prices down about 80%.
From say 07.
Let's get to your third one and that's telephone data and systems and what is it about this one that gives you that sort of -- -- that hit at the heart.
You know balance what I just talked about -- US symbolism what I think we're gonna talk I'm -- whole efforts OK that's all right.
Its sale of a bonds arrogant I know with you know people worried about the Fed this week I'm really frankly.
Surprise they wanna give any more jelly -- to our economy with a ten year at 160.
And the thirty year -- say to forty.
I frankly think there are a lot of publicly traded companies did generates are much more attractive.
We found one in the in Great Britain that does two things it services cars and sells bicycles.
And down they're paying out about 60% of their free cash flow the company's name is -- offers.
And we think it trays and a maple discount to a private market value.
And we're we get a 9% dividend while we way.
Okay now once again wanna warn investors out there that these stocks have a lot of volatility the smaller the market cap the more volatile so these these things move gracefully but -- is a great suggestions mark we really appreciate mark Travis presidency -- intrepid.
Capital managed.
