Something for Nothing
By Glen Bradford
For those of you who aren’t familiar with me, a lot of what I’ve done recently is in the space of Chinese Microcaps. That said, I specialize in finding the most undervalued companies in the world. I’ve got two companies of the American variety that could be in your back yard. In my opinion, I’m looking at companies priced to shrink that are boiling over with uncontainable growth.
DJSP Enterprises, Inc. (NASDAQ:DJSP) is one of the largest providers of processing services for the mortgage and real estate industries in the United States. Who cares? Well, you should if you’re an investor. In my opinion, there is a lot of money to be made. They are looking to add additional clients, and have carried several of their clients for over 15 years. They are incredibly scalable. Their margins are big.
Foreclosures are going to go through the roof as we all know that in the last decade, many mortgages were financed to those who are unable to pay them. It is expected that there will be default rates of around 50% in some mortgage classes. If you really love the story, you can go straight for the warrants and buy DJSPW. Be careful, these expire August 11, 2012 and convert at $5. I wouldn’t recommend these for novice investors. The greatest news is that they are currently priced to shrink! I’ll be laughing all the way to the bank on this one. Clock it, I’m calling 100% return and more in the next year.
The other company that is about to explode I’ve talked about before. Apparently, nobody believes me because I’m still accumulating cheap shares. More for me. Let’s play a game. I’ll give you the puzzle pieces and let you figure out what might happen in the near term. Here is what we know. HearUSA (AMEX: EAR) signed the largest contract in the company’s 20 year history with AARP in August with an October 1, 2009 start date in NJ and Florida. The plan is to roll out across America. As of Valentines day, they are rolling out to Pennsylvania, Massachusetts, Michigan, Missouri, North Carolina, New York, and Ohio.
Siemens (NYSE: SI) has around $38M of HearUSA’s self liquidating debt and HearUSA contractually has the upper-hand in the event of a buyout of Siemens’ hearing aid division. Siemens owns 16% of the equity in HearUSA. Siemens has announced their intention to sell their hearing aid division. Private Equity funds as well as strategic manufacturers are submitting bids. HearUSA is contractually the largest distributor of hearing aids for Siemens in the USA. Siemens is the number 3 hearing aid manufacturer in the world behind William Demant and Senovo. Siemens is the only manufacturer in the top three that does not own distribution. The US market has the greatest growth opportunity throughout the world going forward.
All things said, HearUSA and DJSP enterprises have unpriced potential in their company. In my opinion, they are set to appreciate and “surprise” the investing community. Hold onto your seatbelts. I own them both. You should too, especially at these prices because you’re getting something for nothing.