Greenbackd

Greenbackd’s ideal investment opportunity is a deeply undervalued asset situation with a catalyst to quickly remove the discount. Unfortunately, those opportunities are few and far between.

We frequently find deeply undervalued asset situations with no obvious catalyst. We also often find activists in stocks that we woud not consider to be undervalued on an asset basis.

As a thought experiment, we thought that we would compare the performance of two stocks: one a net net and net cash stock lacking a catalyst, and the other a stock not obviously undervalued on an asset basis but nonetheless pursued by an activist investor.

We’ve selected Dataram Corporation (NASDAQ:DRAM) as representative of the net-nets. DRAM is a classic net-net stock, with a $10.5M market cap and around $19.4M of value in liquidation, including $16M in cash.

The second stock selects itself: Yahoo! Inc. (NASDAQ:YHOO), one of the original Internet stocks, has as one of its largest stockholders activist investing legend Carl Icahn and the NY Times speculates that it has a potential suitor. YHOO has a market cap of around $15.9B and tangible assets of around $5.5B, including around $3.2B in cash, which means it is not undervalued on an asset basis.

Today, we examine DRAM and on Monday we will examine YHOO.