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Automodular Corporation Opportunity

Automodular Corporation ([[OTCPK:AMZKF]]) is an auto sub-assembly company. In 2014 it lost its only customer, Ford (F). The contract ended in December 2014. Unfortunately for Automodular, it would either need to find new customers or liquidate itself.

Thankfully, the value of the stock is fully backed by its cash balance. For the sake of being conservative, we will assume that the company earns no additional cash in Q4 2014. Instead, Q3 2014 financials will be used.

At the end of Q3, the company had ~$43.8m in cash and ~$21m in receivables. All receivables come from Ford, thus they are virtually guaranteed. On the liabilities side, the company had ~$7m in payables and ~$12.5m in layoff provisions, and ~$1.8 in tax payable.

Adding everything together we reach a value of ~$43.5m or $2.24/share. Unsurprisingly the stock is currently trading at $2.18/share, which is fairly close to the liquidation value. So where… Read More …