Here’s a testimony to the odd power of investing conferences: tiny, little-known retailer Trans World Entertainment’s (TWMC) stock is popping 11 percent after a thorough endorsement this morning by Guy Gottfried of Rational Investment Group.
Speaking at the Value Investing Congress in Omaha, Neb., Gottfried credits the mostly overlooked company (with a $75 million market cap) with adapting well to a declining market. You may have seen its best-known stores, For Your Entertainment, that used to sell music CDs and more in a swath of U.S. malls. Those stores are far less common after a major retrenchment as the firm acknowledged the industry’s decline.
Gottfried credits the company with operating a majority of short-term leases that allow it to scale down unprofitable locations rapidly. He calls the stock “underfollowed,” with no analyst coverage and a majority-owner CEO who doesn’t sell himself on Wall Street. He also credits the company’s turn to selling Apple accessories and other reasonable replacements for the rapidly dwindling in-store retailing of music, DVDs and such, mentioning a lease to a South Beach Walgreen (WAG) showing what the company can do with unused locations.
“The company is physically unable to lose the amount of money it lost before,” says Gottfried as he touts a stock in “not the most attractive industry in the world” but whose negatives are “more than reflected in the stock price.”
Brendan Conway, of Barrons.com’s Focus on Funds blog, is reporting from the Value Investing Congress, which is being held in Omaha today. Speakers include Doug Kass, Chuck Akre, and Whitney Tilson. Check back here and on Barrons.com’s Focus on Funds blog for more coverage.
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