ELEMENTARY VALUE
  • Home
  • About
  • Forum
  • Books
  • Tools
  • Contact

Profit Planners Management Inc (PPMT) - Uncertainty and potential

11/9/2019

3 Comments

 
Picture
Profit Planners Management Inc (PPMT) ticks all the boxes to be included in my basket of stocks. It's dark, illiquid, minuscule and  has plenty of hair on it.

​We'll start with a few numbers and a quick description.

Market Cap = $355k
Share price = $0.055
Spread = 65%
Common =   6,468,393


PPMT  is a business consultancy and advisory firm which provides its clients with services including  SEC consulting,   CFO and accounting services,  CPA services and business & tax  services.

I came across the company shortly after they had filed a form 15 and gone dark back in August 2017. At that time the stock was trading around $0.08, after the announcement it dropped to around $0.05 and has been there or thereabouts ever since.  

Picture
PPMT 3 Yr Chart

The last available financials for  PPMT is the  Q3 2017  10-Q from Feb 2017.

They reveal both the bad and good.

BV = -$425k
Total Assets =$564k
Cash = $386k
Total Debt = $999k
No warrants or pref's 


​​A big chunk of the debt,  around  $633k, was accrued officer's compensation (the CEO).

Negative BV is never appealing  but, in my opinion, it's better to have the debt owed to company officers than to the bank. If the bank calls in the debt it must be paid but the compensation can be put off till things improve.  Once  the officer's compensation is backed out the cash  covers the payables.

Now to the good,

For  Q3 2017   PPMT earned rev of $476k and net income of $68k

For the 9 months of 2017 rev's were $1 mil and net profit was around $111k

That's around $0.02 per share on a $0.055 stock for a P/E of 2.75


Here's  the  rev's and profits/losses for the previous few years;

2016 = $1.3 Mil/$129k ($0.02 per share)
2015 = $813k/-$291k
2014 = $703k/-$415k

BV for the same period;

2016 = -$536k
2015 = -$665k
2014 = -$379k


Whilst I can't say for sure I'm guessing that PPMT will still be profitable given it no longer has the burden of registration and filing costs. It has  also got some NOL carry-forwards to offset taxes for a few years.

Now we'll look at the hair on this thing.

Whilst the firm is based in NY it's incorporated in NV. For those of you that don't know, corporate law in NV is not shareholder friendly which makes it easy for management to screw over minority holders. As a general rule , if you see a firm reincorporate to NV sell your stock as you are likely  to get screwed. 

To compound the problem there is only one director on the board, can you guess who it is?

Yep, it's the CEO and he owns 56% of the common.

​This means he can basically treat the company like his own little fiefdom, he's got majority voting rights , no one else on the board to challenge him, and no reason to  put out financials unless forced to do so.

For the past few years he's been paying himself around  $286k,  a truly egregious salary    when one considers what the firm has been earning in that time.

So, why am I telling about this piece of junk?

A few reasons really.

a) The likelihood    of the firm trading at a super low P/E is appealing.

​b) De-registering will have lowered the firm's costs.
​
c) I like to buy at the point of maximum pessimism.  the long-range chart tells me most other investors have probably thrown in the towel with this one.

Picture
PPMT 5 Yr Chart
Picture
PPMT Long-range Chart

Ted Warren fans will notice that PPMT has been building a long term base  for the last few years, this is what he called the 'accumulation period'. This is exactly when I like to buy.

You'll also notice this stock has been down here before, back in 2011 it was  trading at around $0.07 per share.  Maybe some positive news will emerge to send the stock upward again.

You never know what it might be with these tiny companies. Maybe they start filing again, maybe they pay a special dividend or do a tender offer. Perhaps they get bought out or an activist comes in to shake up the company.

I like to buy here when the stock is sat around support and is building a base. You can see that the volume has dropped off and most investors have probably given up on the company by now.

Things don't look good but yet the stock hasn't gone to zero,   all it takes is some good news and the negative sentiment toward the company can start to change.

There's no guarantee that things will improve though, maybe the firm remains dark and the CEO continues to  run the company for his own benefit alone. Maybe this one ends up rotting in my portfolio.

This is why I buy a basket of this stuff, over time I think the winners will make up for the losers , I just don't know which ones will run up and which ones will languish and die.


I try and buy at the point of maximum pessimism guided by the long-range chart, ideally at a discount to tangible assets or at a low single digit P/E. 


​Then it's just a  question of patience.


Thanks for reading,

David.


Long PPMT 


3 Comments
G
11/11/2019 04:57:58 am

Nice one. All your picks make me dry retch just a little - that means you're onto something ;-).

On this - "Negative BV is never appealing"... actually that isn't always bad... at least not at the other end of the scale of market cap. MacDonald's for instance has negative equity. I recommend you read Price-to-Book’s Growing Blind Spot (https://www.osam.com/pdfs/research/_19_Commentary_Price-to-BooksGrowingBlind%20Spot_Nov-2016.pdf)

Reply
mike
3/21/2020 07:07:39 pm

Is this a dark company now or do you still get financial statements?

Reply
David
3/21/2020 08:55:49 pm

Hi Mike,

This one is dark and not providing financial statements. I sold out when it ran up a while back. I'll probably buy back in at some point if/when it drops back down to $0.02

Reply



Leave a Reply.

    David J. Flood

    UK based Investor. I focus
    ​on Net-nets, Pico/Nano caps, AIM/OTC/Dark stocks & Special Situations. Balance sheets & Long-range price charts are my guide. Looking for inflection points. Do not construe my blog as investment advice, always conduct your own due diligence.  Caveat Emptor!


    For updates enter your email address and hit subscribe


    RSS Feed



    Archives

    February 2023
    May 2022
    January 2022
    November 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    December 2020
    September 2020
    June 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    November 2018
    October 2018
    August 2018
    April 2018


    Categories

    All
    AFFY
    AWRY
    BVERS
    CDTI
    CWPS
    Dark Companies
    ECRO
    EESE
    ENET:AIM
    EQTL
    FULO
    GTC:AIM
    HDT:AIM
    HGPI
    HMGN
    IMUC
    IOF.L/IOFNF
    ITS.AIM
    LTRE
    MFCO
    MGAG
    MIRI:AIM
    MNO:AIM
    MYRX
    MYX:AIM
    NFPC
    NTIP
    NVTRQ
    ORGN
    PCOA
    PHSC.AIM
    PLWN
    Podcasts
    PPMT
    PSSR
    SPCB
    Svenda's Manual Of OTC Stocks
    SYEV
    TCN:AIM
    TTYP
    WSTL
    ZCOM


    BLOGS I FOLLOW

    No Name Stocks

    Svenda's Manual of OTC Stocks
    ​
    Caveat Emptor Stocks
    Leaven Partners
    OTC Adventures
    Nothing But Net Nets
    Clark Street Value
    Value Investing Blog
    Alpha Vulture
    Deep Value Investments
    OddballStocks
    Value Stock Geek
    Barel Karsan - Value Investing
    Shadow Stock
    Hidden Value
    Yet Another Value Blog
    Streets Of Value
    TES Optimal Value Investing
    The Bad Investor
    ​
    Undervalued Japan
    ​Liquidation Almanac
    ​
    Adventures in Capitalism
    White Chip Stocks
    Light Blue Value
    ​Global Investing Insight
    ​Mesaba Range Value
    The  Market Plunger
    Neto's Notes
    ​Battleship Investing Blog
    The Investment Long-List
    Oceania  Value
    Grahamian Value Digest
    Stock Speaking
    Canadian Value Stocks
    Analyzing Bargain Stocks
    MicroValue
    ​
    Hidden Gem Investing
                                                             © COPYRIGHT 2018-2021 ALL RIGHTS RESERVED
  • Home
  • About
  • Forum
  • Books
  • Tools
  • Contact