One of the bad things about this being a busy week is that I didn't have time to post this article I came across the other day. It's the Motley Fool's Rich Duprey on USA Mobility (USMO/NASDAQ). He writes:
I'm not ready to proclaim the company a value trap yet. USA Mobility trades at an apparent discount, and it doesn't appear that its business will vanish any time soon. Even so, I'd be hard-pressed to want to pick up its shares right now.
Well, I do own the shares and I'm underwater as we speak. And I'm continuing to hold them. If that changes you'll read it here.
Oh Value Trap, always difficult. The challenge with investing in this company is 1) the implicit assumption that management will find something new to invest the excess free cash generation or 2) Someone else will find something to invest the free cash generation into. So the balancing act is waiting for the Holy Grail while watching as the companies’ core business slowly grinds down to nothing as its product is supplanted by cellular and/or blackberries and its ilk. In my opinion it’s a hard bet to make as on one hand its rampant speculation that you’ll get taken out, while on the other hand you must have extreme conviction about management’s keen abilities. I think there other easier bets to be made. Good luck
Posted by: Harry | April 20, 2006 at 11:41 PM
Harry,
As always, your comments and analysis are spot on. Thanks for your good wishes -- I may need them.
Posted by: John | April 21, 2006 at 12:25 AM
Am quite pleased about the $ 3 special dividend however I think USMO can afford to pay out twice that... Wonder what they are going to use the rest of their free cashflow for.
Posted by: Random_Walker | June 08, 2006 at 03:41 PM
Random Walker: I'm pleased as well. As to what their going to use the rest of their free cashflow for -- I don't know.
They may be waiting to see how the entire year goes before declaring another dividend at the end of 2006. That's just a hunch.
Posted by: John | June 09, 2006 at 12:43 AM