Gendis Inc. trading on thin volume

Mar 7th, 2014 – Comment

The best potential outcome for an upside breakout would be some bonanza news coming out of the energy ventures or their agribusiness holdings.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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GDS LOGO

Hey Lou,

Love your column.

I’m curious about your thoughts on GDS. They are a small cap holding company with a simple balance sheet trading around 65% of NAV. The company has a share buyback in place and they have a 3% dividend. Seems like a potential value play.

Thanks so much for your thoughts and all the best!

Mario

 

Hey Mario,

 

Thanks for the assignment. I first became aware of Gendis Inc (GDS TSX)through my contact with Dr. Harry Cohen in the 1980′s. Dr. Cohen was generous enough to spend many an afternoon regaling me with tales of his entrepreneurial adventures with his five brothers and providing me with his business acumen. The best advice he ever gave me was to never let anyone tie up my assets without paying for the right to hold the option. He also taught me that when you make your own money nobody has the right to tell you how to spend it. I learned more about business listening to Harry than I ever did in school!

GDS is 73% controlled by the Cohen family with James Cohen having taken the helm of the company on the passing of his father, Albert. The company controls six real estate properties,has holdings in the oil and gas business, and has interests in agribusiness. GDS has a market cap of $44.08 million. The average daily volume over the last three months is 3,445 shares.

A review of the charts will help inform my thoughts on this holding company.

 

GDS

The three-year chart depicts the lift that the shares have enjoyed since September of 2013 when they traded near $2.80. The choppy trading in the shares can be attributed to the thin average volume. What is also evident is the resistance that has been coming in at $3.40 during the first quarter of 2014.

 

 

 

 

 

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The six-month chart illustrates the resistance at $3.40 and the broad daily swings that are characteristics of a thin market. The best potential outcome for an upside breakout would be some bonanza news coming out of the energy ventures or their agribusiness holdings. If you like the exposure to these assets and feel secure about the dividend, and can tolerate the very small market cap and thin trading volume then you should pick away opportunistically to build a position.

For my money I’ll keep the memories and leave the stock.

 

Make it a profitable day and happy capitalism!

 

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