Wednesday, May 11, 2011


Call me crazy, but I think that there may a good deal of value in Books-A-Million (BAMM). For those of you that were in the market ten or so years ago, this name might sound familiar, as their shares shot up when they established an online presence during the crazy bubble days. For those from the South, East, and Midwest, the name should be a familiar one. After all, they are the nation's third largest brick-and-mortar book retailer with around 200 superstores and 30 traditional stores.

Fast forward to today, and surprisingly, the company has survived. It is not worth so much these days (Market Cap ~$73MM at 4.61) despite its current profitability. Also, Borders' recent bankruptcy filing can do nothing but help BAMM. Their numbers, while not the 'let's buy hand over fist' cheap (as was the case when Wet Seal (WTSLA) was trading sub-$2 with $0.95 in cash net-of-debt), seem to indicate undervaluation.

Obviously, growth isn't there right now, and this is going to be a turnaround/survivor story.

Anyway, I also think there is some hidden value in Books-A-Million as well. I'm talking about their equity interest (40% stake) in Yogurt Mountain, which has a presence in some of their superstores as well as in malls, etc. Last year, when the company made its investment, I believe Yogurt Mountain had fewer than 5 shops. Today, I counted 27 locations.

I may be wrong about this, but as I always say... I'm planning to put money where my mouth is. I'm not entirely convinced this is worthwhile, so I'm likely going to start on the smaller side. Even so, the stock is pretty thinly traded, so I'll have to be a bit careful when I do my buying. If shares spike higher for whatever reason before I establish any position, I won't be chasing it.

If you think I'm crazy, please let me know. I would very much like to hear what others think.

----- Edit #1 -----

I just got a partial fill on my initial order, so it looks like I'm now the proud (for now) Books-A-Million shareholder at $4.61.

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