Monday, May 21, 2007

Kaiser Group Holdings Inc. (KGHI.PK)

This is a very interesting name that trades under net current asset value, and the kind of stock that gives me goose bumps. KGHI is the successor company to Kaiser Group International, a engineering and construction company that went into Chapter 11 bankruptcy at the beginning of the decade and then emerged fresh.

The company now has two businesses, a 50% ownership in Kaiser-Hill Company, LLC; which currently serves as the general contractor performing closure activities at the U.S. Department of Energy’s Rocky Flats site near Denver, Colorado.. Kaiser-Hill is working to clean up and close the Rocky Flats site. This contract is in the closeout phase and is ending shortly. The revenue that has been received to date ($510.8 million) is also subject to audit by the government.

KGHI also has a 100% ownership in the Monument Select Insurance Company (MSIC). MSIC is a wholly owned captive insurance firm that is not issuing new policies. However, a new subsidiary of MSIC, MS Builders Insurance Company, has been formed to enable MSIC to offer derivative captive insurance services to third party clients.

The company has current assets of $69.06 million (most of this is cash) and total liabilities of $9.59 million, giving us a Net Current Asset Value of $59.46 million, with a market capitalization of $46.5 million, according to Google finance. All this data is as of March 31, 2007.

There are several major holders of KGHI, and by the names involved, they seem to be all connected together. They are:

Mark S. Tennenbaum Investment Trust 11.2%
Andrew R. Tennenbaum Investment Trust 11.2%
Michael E. Tennenbaum 19.7%
James D. Bennett 11.2%

Kasier Group has decided to do a 1 for 20 reverse split of the shares. The effect and the purpose of this will be to reduce the number of shareholders to fewer than 300, and thus Kaiser will no longer be a reporting company under securities laws and will not have to file 10 K, etc.

The company has little or no revenues and has not identified any opportunities as of yet. When the shareholders approve the reverse split, and believe me they will, the company will sink deeper into the Pink Sheets as a non-reporting company.

So is it a buy? Stocks selling at below NCAV are instinctually attractive to value investors. However, the company has no operating businesses right now and not a lot of incentive to find one considering that it is sitting on a pile of cash (Golf anyone?) Also, the level of disclosure may plummet when it becomes a non reporting company. This will be another source of frustration to investors. Here is the company web site:


Mark said...

Altex Industries Inc. (ALTX.OB) has been trading for less than cash for awhile and nca.

Eric J. Fox said...

I'll check it out, thanks.