Acquisitions and Bowser Recommendations

A brief summary of acquisitions of Bowser companies

With the recent announcement of C. R. Bard's pending acquisition of recent Bowser recommendation Liberator Medical Holdings (LBMH)--story here--we thought of all of the other recommendations that have been acquired over the years. Because of their low prices and vital roles within unique niches, our picks are often prime buyout targets. Here are some of the highlights:

Top gaining acquisitions

Our top three recommendations of all-time executed buy-out deals:

  • MICROS Systems, recommended November 1981 and October 1984, gained 21,150% and 23,348%, respectively, on a $68 per share tender offer in 2014. MICROS represents our number one and number three picks of all-time; and
  • Smithfield Foods, recommended July 1977, gained 22,567% on a $34 per share acquisition deal in 2013. Smithfield Foods is our number two pick of all time.

More recent acquisitions

The two companies listed above were recommended over thirty years ago. While they represent tremendous pieces of Bowser history, they do not reflect more recent results. Nine of our recommended companies since January 2010 have been acquired, or are pending acquisition:

  • LML Payment Solutions (LMLP), recommended in March 2010, was acquired by Digital River for $3.45 per share in January 2013.
  • Medical Nutrition USA (MDNU), recommended in April 2010, was acquired by Group Danone for $4 per share in August 2010.
  • Bullion Monarch (BULM), recommended in June 2010, was acquired by Eurasian Minerals for $0.11 per share cash and 0.45 EMXX shares (valued at $1.85 per share) in August 2012.
  • RF Monolithics (RFMI), recommended in July 2010, was acquired by Murata Electronics for $1.78 per share in July 2012.
  • Valpey Fisher (VPF), recommended in September 2010, was acquired by CTS Corp. for $4.15 per share in January 2012.
  • Innotrac (INOC), recommended in September 2012, was acquired by Sterling Bancshares for $8.20 per share in January 2014.
  • Camco Financial (CAFI), recommended in November 2012, was acquired by Huntington Bancshares for $6 per share in March 2014.
  • XRS Corp. (XRSC), recommended in December 2013, was acquired by Omnitracs for $5.60 in the fourth quarter of 2014.
  • Liberator Medical Holdings (LBMH), recommended in April 2011 and August 2015, announced a pending acquisition deal in which C. R. Bard will acquire the company for $3.35 (edited) per share in the first quarter of 2016.

Based on the price at the time of our recommendations, these acquisitions resulted in an average gain of 121%. All ten were for more than our recommendation price, and four of the ten were for more than double our recommendation price:

  • Innotrac (+380%)
  • Camco Financial (+233%)
  • Liberator Medical (+145%)--Based on April 2011's recommendation price
  • XRS Corp. (+124%)

Liberator Medical Holdings (LBMH)

Liberator's acquisition deal is pending, and there are a number of investigations taking place (which isn't a surprise) to ensure that shareholders are getting a fair deal. For more about these investigations, visit LBMH's Yahoo! Finance page and click on one of the many investigation announcements.

Based on the company's 90-day trading average as of November 19, 2015, the buyout price represents a 36% premium. However, with a trailing annual dividend yield of 3.1% and a price-to-earnings ratio of 22.6, $3.35 appears to be a good deal for C.R. Bard. Still, management believes this to be a good deal for shareholders. The acquisition is expected to close in the first quarter of 2016, at which point LBMH will join the other Bowser recommendations that were bought out in some way.

Summary

Historically, quite a few of our recommendations have been bought out, 236 (not including LBMH) to be exact. As stated above, our picks generally operate within a unique niche of a national or international trend. They also are staunchly undervalued when we recommend them, and therefore make prime acquisition targets.

While LBMH is certainly the most recent acquisition announcement, it won't be the last. After all, we aren't the only ones to see value in small companies. However, we do try to be among the first to discover that value.

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2 Responses to “Acquisitions and Bowser Recommendations”

  1. mike birmingham
    November 27, 2015 at 10:51 am #

    Above article references two prices for LBMH buyout: $3.45 and $3.35. I believe the correct price is smaller of the two. I sold LMHC for $3.33. I thought the risk in holding outweighed the benefit in waiting on outcome of merger. I had 3662 shares.

    • Thomas Rice
      November 27, 2015 at 12:22 pm #

      Mike, the acquisition price is $3.35 per share. You are correct. Congratulations on your profit!

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