Springhouse Capital
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average rating: 3.60 / 5 ratings
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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

symbol name last price % change open
  • +
  • SWIM
    Swim
  • $0.00
  • N/A
  • $N/A

No Analysis added

People owning SWIM also tend to own: BDSB.OBDBVNTRZ.OBXECIWMMPELMXIM

TheStreet.com Rating: C+ What is this?

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  • SRVY
    Greenfield Online
  • $0.00
  • 0.00%
  • $N/A

No Analysis added

People owning SRVY also tend to own: AACCAAPLCRAYITYCIUSAROMASRIB

TheStreet.com Rating: B- What is this?

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  • IMOS
    Chipmos Technolog
  • $0.79
  • -1.25%
  • $0.78

No Analysis added

People owning IMOS also tend to own: AACKFXADREATWBCSEXPGS

TheStreet.com Rating: D What is this?

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  • LEA
    Lea
  • $0.00
  • N/A
  • $N/A

No Analysis added

People owning LEA also tend to own: BRK-AMDCMSFTOSTKPNCLKTCCMRH

TheStreet.com Rating: E+ What is this?

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  • ESRX
    Express Scripts
  • $85.30
  • +1.78%
  • $83.51

No Analysis added

People owning ESRX also tend to own: AKAMBROCOGTCOHCPRTCTSHDNA

TheStreet.com Rating: A- What is this?

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  • LEV
    Lev
  • $0.00
  • N/A
  • $N/A

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People owning LEV also tend to own: CNSCORSDADEDRCTESCAFMTIMH

TheStreet.com Rating: No Rating What is this?

  • +
  • CHCI
    Comstock Homebuil
  • $0.68
  • -5.56%
  • $0.70

No Analysis added

People owning CHCI also tend to own: ARKRDHOMECREEEEESRXFBPIMOS

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: ARKRCHCIDHOMECRESRXFBPIMOS

TheStreet.com Rating: No Rating What is this?

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