Desktop Stock Ticker | Bridging The Value Gap

Bridging The Value Gap

Manhattan Bridge Capital (LOAN) provides bridge loans to small businesses needing small-term financing. This is a risky sounding business, above all in a recessionary period. Though, many elements of this situation make for an intriguing potential value investment.

First of all, the company’s loans are secured and small-term in nature. Usually, real-estate is used as wellbeing against the loans, and all payments are due within a year. Throughout every quarter of this downturn, business has (somewhat surprisingly) appeared to run smoothly, with full and timely collections resulting in a growing loan asset pool.
Manhattan Bridge’s capital structure is very safe as well, as the company carries minimal debt relative to its loan selection. Furthermore, the stock tickers trades for half of its net current assets (with the loan selection classified as current due to the small-term nature of the loans).
There are some other fascinating items with respect to this stock tickers as well. It is a ridiculously small company, even by the <a href="http://www.barelkarsan.com/2008/10/stock tickers-thoughts.html”>standards of this site! The company’s market cap is just over $3 million, and the company had but 3 employees as of its last annual report. Also, as the company’s share price has hovered below $1 for extended periods, it has received warnings from the Nasdaq, but so far it has remained compliant with the exchange’s requirements.
Whether the company’s bridge loans will continue to perform is an open question. Though, the market appears to be counting on the fact that half of these loans will fail, offering value investors a margin of safety with potential for price appreciation. In many ways, this company’s price/value situation is very similar to that of Quest Capital, another potential value investment previously discussed on this site.
Disclosure: Instigator has a long position in shares of LOAN

This article was written by Saj Karsan of Barel Karsan. If you loved this article, please vote for it by clicking the Buzz Up! button below.

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