Liquidation World - LQW (TSX)

Discussion in 'Stocks' started by Babak, Oct 17, 2005.

  1. Babak


    I've bought a long term position in this micro play on the Toronto X. Its a very tiny tiny company but I see a lot of value there and can't help but pick some up.

    I'm not usually a fundymentalist investor but when a whole company is selling for less than their inventory and they have no debt - I just can't resist!

    Things have been pretty ugly but I think they're turning the ship around with a new CEO. They've also picked up some great bargains in the wake of Katrina.

    Do your own DD. :)
  2. I don't know much about the company as a whole but I do know that the Cambridge Ontario location is always busy. The clerk there told me that when they get the frozen food in on Wednesdays and Saturdays it is often sold out within hours. Personally I like the store. It is full of reasonable quality goods at very good price, not like dollar stores that are full of junk.
  3. the chart just made new lows so why NOW and not under $3????
  4. Babak,

    Chart looks like dogshit (but I'm not a big believer in TA anyway). Why the interest now?

    P.S.-- I live in the U.S. and never heard of Liquidation World. You know something Bud? :D
  5. Babak


    Ofcourse the chart looks horrible. That's the whole point. You have a company which has around $45-50 m in inventory and almost no debt with revenues around $180 m selling for less than $30 m !!

    They made some horrible decisios and had bloated costs but all the bad stuff is already discounted IMHO.

    The catalyst is a new CEO (who is new to the job but not the company). We'll see. I'm planning on holding this year+. Another reason why I like is that all the small fry got flushed out into this spike down. I look at BB discussions and either retailer investors are disgusted and are selling or have already sold and won't be revisiting that sorry chapter in their investing lives.
  6. As you know from my earlier post I would really like to be a bull on this company. After looking at their sedar documents it starts to look like a money losing business with no assets other than inventory and $14m in debt. The value of the inventory will be an educated guess at best and I would think would be relatively hard to borrow against.

    If you believe in management and the business concept this could be a good buy. Anybody who has shopped there loves the place. But if you are looking at it as a deep value play I just don't think it meets the criteria.
  7. This company is buying inventories that other firms couldn't sell and simply wanted to dump.

    Who's to say what the real value of that garbage inventory is anyway? Likely just one big write-off and Chapter 11 ....
  8. Babak


    Well, things seem to have turned around and the stock is also reflecting that. Its going to be tough sledding getting through all that resistance and I expect a bit of rest is in order in the short term. But hopefully the ship has been turned around. I've spoken to Hill (prez) and feel he has a good head on his shoulders.

    I just wish he and the other high level mgmt would put money where their mouth is and actually BUY their stock for their own accts. rather than relying on options.
  9. Did u make a big bet or are u just testing the waters?

    And what are your plans if things get hugly, u keep it?
  10. Babak


    Small bet. I had much conviction that things would turn out ok mostly based on sentiment and fundamentals, but since this sort of longer term trade is new to me, I didn't want to tie up a lot of capital (in case it went sideways) or lose a lot (in case it went down). Anyway, we'll see how it goes.
    #10     Jan 8, 2006