Springhouse Capital Portfolio - Stockpickr! Your Source for Stock Ideas

Springhouse Capital

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Date updated:03-19-2007

Springhouse Capital is a hedge fund focused on undervalued small cap stocks. It is led by manager Brian Gaines, a protégé of legendary value investor Joel Greenblatt. Springhouse Capital has generated an average net return of 29.6% per year since its launch, versus a 13.9% annual for the S&P 500, according to Value Investor Insight.

Value Investor Insight interviewed Gaines about his investment in online survey company, Greenfield Online (SRVY) which is up almost 100% now from its lows this year. In the interview, we get a glimpse into how Gaines values positions:

“We also look here at valuing the parts of the business – the U.S. survey business, the European survey business and a comparison- shopping business in Europe, called Ciao, which they acquired when they expanded in Europe.
The North American survey business did $2.6 million of EBITDA minus capex in the first quarter of this year. The business isn’t particularly seasonal, so we think they can do $10 million for the full year. Given that the returns on invested capital are fantastic, there’s little reinvestment needed, they are the market leader in a business unlikely to see further entrants and pricing has gotten sane, we think this business deserves at least a 10x multiple. That makes it worth $100 million, or $4 per share.
The European business earned $1.5 million in the first quarter, so we believe $6 million for the full year is very achievable. The competitive dynamics are similar, so we think it’s also worth a 10x multiple, which comes to $2.40 per share.
The comparison shopping business, Ciao, is a hidden gem. It did $1.5 million in EBITDA less maintenance capex in the first quarter. Revenue grew 80% in 2005, margins are 40-50% and they have the #1 position in Germany. If you straight-line the first quarter and say they earn $6 million for the year and then apply an appropriate 15x multiple to it, that’s worth $3.60 per share. We think Ciao will earn $8-9 million in 2007, so that valuation is conservative."

As of 12/31/06

SWIM
Thinkorswim Group
$10.44
+2.65%
$10.16

No Analysis added

People owning SWIM also tend to own: BDSB.OB DBV NTRZ.OB XEC IWM MPEL MXIM

TheStreet.com Rating: C+ What is this?

SRVY
Greenfield Online
$0.00
0.00%
$N/A

No Analysis added

People owning SRVY also tend to own: AACC AAPL CRAY ITYC IUSA ROMA SRIB

TheStreet.com Rating: B- What is this?

IMOS
Chipmos Technolog
$0.69
-11.54%
$0.78

No Analysis added

People owning IMOS also tend to own: AAC KFX ADRE ATW BCS EXP GS

TheStreet.com Rating: D What is this?

LEA
Lear Corp.
$1.33
0.00%
$1.48

No Analysis added

People owning LEA also tend to own: ABFS AIG AM AWH AWI CBS CNO

TheStreet.com Rating: D What is this?

ESRX
Express Scripts
$64.29
-0.25%
$63.26

No Analysis added

People owning ESRX also tend to own: AKAM BRO COGT COH CPRT CTSH DNA

TheStreet.com Rating: B- What is this?

LEV
Lev
$0.00
N/A
$N/A

No Analysis added

People owning LEV also tend to own: CNS CORS DADE DRCT ESCA FMT IMH

TheStreet.com Rating: No Rating What is this?

CHCI
Comstock Homebuil
$0.2085
+12.70%
$0.19

No Analysis added

People owning CHCI also tend to own: ARKR DHOM ECR EEEE ESRX FBP IMOS

TheStreet.com Rating: D- What is this?

EEEE
Eeee
$0.00
N/A
$N/A

No Analysis added

People owning EEEE also tend to own: ARKR CHCI DHOM ECR ESRX FBP IMOS

TheStreet.com Rating: D+ What is this?

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