Bexil (BXL) Update

Bexil, one of the stocks selling for less than net current asset value, held a call last month at which it was "to discuss the recent results of the Company and other matters." I had to miss the call as I was out of the office that day, but was expecting the replay to be posted to the Bexil website since they have a conference call archive page on the web site. So I waited and nothing was put up there. I sent an e-mail to John Ramirez who is listed as the contact and received no reply as to the status of the replay. Then a few weeks ago this cryptic message appeared on the site:

"Investment Conference calls May 11, 2007 and November 8, 2006 will not be available due to technical issues."

I am still wary on investing in this stock despite the intuitive appeal of a net-net stock.

Bexil (BXL) - Earnings Report

Bexil reported a small loss in its first quarter results. They are still in the hunt for a business to buy. Some things stand out in the press release.

"At March 31, 2007, we had positive working capital of $37,937,663, total assets of $38,377,973, no long term debt, and shareholders equity of $38,011,275. Our book value per share at March 31, 2007, (886,592 shares issued and outstanding) increased to $42.87. "

Solid book value $10 above the market price.

"We have no plans to dissolve and liquidate the Company."

Are they feeling any pressure to step up the search for a company to buy? It has been a year since they sold York and paid themselves a bonus, and the Winmills have effective control over the company, so it appears unlikely.

"Approximately 25% of Bexil's shares are owned by Winmill & Co. (WNMLA)"

This is correct, but according to the proxy for this years annual meeting, the Winmill family indirectly or directly own 41.1%.

"We are currently engaged in the business of evaluating opportunities to develop and acquire long-term acute care hospitals and other enterprises."

Is this the best way to grow book value long term as the company says on its web site? Time will solve that mystery I guess.

Bexil Corp (BXL)

Everyone knows Benjamin Graham and his Net Current Asset Value (NCAV) model, which states, in part, that one of his criteria to buy is that the market captalization must be less than 2/3rds of the Current Assets less total liabilities.

Now these were fairly easy to find in his day, due to market inefficiency and poor disclosure by publicly traded companies, but they are rare now. When we find one, it stands out. I found a company that is close to this measure, trading at .76 of its Net Current Asset Value.

My calculation


Current Assets $38,071,710
Total Liabilities $206,829

Net Current Asset Value $37,864,881
0.76 $28,777,310

Market Cap $28,700,000


The company web site is here:

http://www.bexil.com/

Now before you start salivating at the prospect of buying a dollars worth of assets at 76 cents on the dollar, read on.

The Good

1) Bexil has $38 million in cash sitting on its balance sheet. Where did this cash come from? Last year it sold its 50% interest in an insurance services company, and paid out a dividend to shareholders for a fraction of that sale.

2) Management seems intent on creating value. They actually have a web site, which is not required so this I view as a positive. Thomas B. Winmill, the President of Bexil, states in his letter posted on the web site:

"Our objective is simple, straightforward, and sharply focused: to increase book value per share over time. We believe that long term stockholders will benefit from a rising book value as market recognition builds and investors come to appreciate Bexil’s intrinsic value as well."

Could this be Berkshire, vintage the 1970's?

The President even has his personal e-mail on the site. Does he read them? We will find out because I will send him an e-mail later today.

3) The company has invested the cash wisely in the interim, it has virtually all of it in a U.S. Treasury Note.

The Bad

1) The company is taking its sweet time looking for an operating business to buy. They sold the 50% stake in the insurance services company last May. The criteria they are looking for are (from the web site)

*A proven track record with demonstrated earning power.

*Sales between $10 million and $50 million.

*A seasoned business with solid customer relations.

*Good return (at least 15%) on equity, little or no debt.

*Solid management must remain. Audited financials required.

*Particularly interested in a “spin-off” from a larger company.

Mr Winmill, in the last year, there have been something like $500 billion in private equity purchases. Is it really that hard to find a business to buy?

3) The company has a shareholder rights plan that would activate if an entity owns more than 10% of the company stock or makes an offer for the company. This plan is almost a waste of time, because more than 50% of the stock is controlled by the Winmill Family or entities that they control.

4) Bexil is nosing around looking for Hospitals to buy in Mississippi. They formed a subsidiary to work on locating assets here. I'm not sure that this is the best business to own to grow book value over time, but I will reserve judgment on that until later.

Later this week I will post on the parent company of Bexil, another intriguing play that is not for the feint of heart.