My Views on IEH Corp

Hi all, in the last year since I've been mostly silent, I've received the most inquiries about IEH Corp (OTC:IEHC). I have attended a number of the annual shareholder meetings and today I am going to give an update on how I see things. Note: the text below are my impressions and opinions and recollection of conversations, take everything in here with a grain of salt. And with that out of the way, let's dive in.

My impression from the meetings generally aligns with the market perception. The company is hitting a very good spot and things are generally on the up and up. Just look at the last seven years' revenue numbers below.

The CEO though, constantly reminds us that their customers are long-term customers and they are slow adopters. This means that it takes a long time to bag a new customer but when they do they stay as customers. A new customer must design in these hyperboloid connectors, and once they do they are hard to substitute.

So, sales improvement in this company take time. And one can expect more years of revenue increase. That said, there is also a limit to how much the company can sell. This is not a company making technological breakthroughs. Instead, it is a niche provider riding on society's increasing reliance on technology in more and more rough and extreme environments. Their technology is not new, in fact it is old enough to be out of patent protection.

Their main customers are the big drivers of our economy: defense, old and gas, commercial aerospace and the medical field. So long as the S&P 500 does well, so will the company, provided it can execute.

And execution is the main thing I am monitoring during my yearly visits. The company of course, has a very long history with a single family, the Offermans, as owner-operators. Recently, the fourth generation of the family has taken the helm. I am very pleased with this change. The current CEO, David Offerman, has taken the helm for three years. In that time, I just feel things look better to us shareholders. Firstly, the governance wasn't impressive, their non-executive board members did not even reside near the company and dialed into every board meeting. With some shareholder prodding, they have added more conventional and local people for board members.

The previous CEO, Michael Offerman, had also relied on a small-time accounting firm to do their books and inventory. This firm was replaced by a related accountant who was also a small operator. Last year, that accountant left. Incidentally, that second accountant attended the last shareholder meeting to tell everyone that it was all an amicable break. As I remember, he said that he liked the job but in the end he felt that he was too small to handle the task. And so, we are here today with a more traditional firm Marcum LLP as accountants.

Shareholders in past meetings have also expressed concerns when retained earning for grew several quarters as IEH had good numbers, but the value all just went to more inventory, instead of more cash. Furthermore, in the last meeting one shareholder pointed out that the company wrote off $400k in inventory for 2019, whereas was it was only $200k for 2018. So many shareholders are looking at the inventory and pressing for improvement.

On the positive side, in the last shareholder meeting I heard that the company was moving to SAP software. I also noticed the company hired a new, and much younger, controller. And the new controller just happens to specialize in SAP. I would expect that with this and the accounting changes we will see improvements in inventory controls and hence better margins.

So with the new CEO in this fourth year, I am watching for inventory levels and margins. My best scenario is that inventory stays flat and there are no significant write-offs, and margins continue to improve. The CEO used to be in charge of sales and clearly has done a great job in the sales department. By showing better control of inventory and margins he will be able to keep up the earnings growth. In the last seven years that I have owned this stock, I have seen annual EPS go from $0.63 to $2.15. Of course, as most people know, the unusual spike in sales last year was due to a single customer order. That customer had decided to switch to hyperboloid from a cheaper technology. But no single customer contributes more than 14% of revenue, so even if this customer cut off all future orders, the company is still growing at a goodly pace.

IEHC
Price	17.40
Shares (M)	2.32 (2.74 fully diluted)
Equity (M)	26.20
Earnings TTM	3.71
Marketcap (M)	40.60
ROE	14.1
PE	10.9
PTBV	1.55

The previous year spike also contributed significantly to operating margins. The operating margin for the last five years are 20%, 16%, 14%, 19% and 27% in 2019. Other than the previous year, the company has never achieved margins over 20%. If the company can be a bit more consistent and keep the margin say, at 23%. I would feel confident that things have really changed to take this company to the next level; the CEO has indicated that he wants to take the company back on to the Nasdaq someday.

And so, having weighted all these thoughts, I feel that the company at $17.40 today is about fairly priced. I know the stock was at a high of $25, reflecting the rich valuations of stocks everywhere. But I feel IEHC has to have another good year, maybe not as good as 2019, to deserve a price over $20. That said I did not sell at $25 because there is just too much upside. Like I said earlier, one really has to be patient with this stock. And if the stock drops under the $14 - $13 range, I definitely will start buying more. At $12, I would back up the truck!

Earnings from IEHC, New Century and Hanover Foods

IEHC reported 2015 earnings of $0.79 versus $0.63 a year earlier. Revenue increased to $16.4 M from $15.4 M a year earlier. Gross margin was was slightly better; 37% versus 36% M a year earlier.

Today, IEHC is a growing company trading at 7.7x earnings. It has no long-term debt. And it trades at book! If it trades 25% higher at 10x earnings it would still be undervalued.

A new blogger NoName Stocks has written a tremendously detailed post on the earnings results. So, I feel no need to repeat what he wrote. But I'll summarize and emphasize some important points. The company increased book value by $1.8 M as a result of the increased retained earnings. This amount is not reflected in cash however. It is instead reflected mostly in inventory and, to a lesser extent, accounts receivable and PP&E. The report stated that order backlog is up to $8.7M from $5.9M a year earlier. All this indicates that the company is experiencing a secular increase in demand for its products. The company needs to increase production capacity and it is in the midst of doing that. The company purchased several new machines. While it is doing that however, margin may temporarily compress. So, it is good news that margins have been flat at 37%.

New Century Group Hong Kong (HK:234) reported earnings of 1.71 HK¢ versus 0.52 ¢ a year earlier. The stock spiked to 25.5 ¢ on the news. See the chart below. The stock has twice spiked in the last year, each time on earnings results — in November 2014 and May 2015.

The stock carries 25.5 ¢ of equity per share. And the balance sheet is liquid. 43.2% of the balance sheet is investment properties, 35.2% is cash, and 26.3% is in stocks. So the market value should be close to the book value. Anyone looking at the chart must be puzzled as to why the stock can drop to the 13 ¢ range. The last time it happened was just a few weeks after the earnings announcement. And maybe the following picture of a typical brokerage firm shows why. While in US markets retail investors make up around 40% of stock ownership, in China it is 80%. Many of the retail investors buy stocks in those types of operations. They are basically people who want to do online trading but who do not have home computers setup for it.

	HNFSA
Price	102.500
Market Cap	76.49 M
P/E TTM	12.1 x
Div yield	1.1 %
P/BV	0.34
ROE	2.8 %

From what I can gather, these investors are not really investors, but speculators. And that is why the Chinese stockmarket has gone through record highs followed by a 35% crash. I guess that this effect has also infected Hong Kong, either through the Shanghai and Hong Kong interconnect or some other means.

Hanover Foods reported another underperforming quarter. So far in Q3 the company is on track to earn around $8M for the year. The company's operating margin was 3.3% versus 2.9% a year ago. But this is such a drop from 5% just a few years ago. I have no idea why this company has such low margins. The company also had almost no cash flow because it spent all the year's profits on inventory buildup. Again, I have no idea why. On the plus side the stock trades very low relative to book and at least is still profitable. Sooner or later it will turn around and improve its margins — or at least I hope. But in hindsight, I wish I never got involved with this stock.

Recent Portfolio News

IEHC recently reported Q3 2015 results. Q3 revenue was $4.73 M versus $3.66 M the same period a year ago. Income was $0.59 M versus $0.19 M the same period a year ago. EPS was $0.26 versus $0.08 the same period a year ago. EPS for the first 9 months was $0.65 versus $0.51 a year ago. So the company is on track for another record year!

The gains came from increased revenue and improved margins. Gross margin was a eye-whopping 39.8% in Q3 versus 31.2% a year ago. It was 35.9% for the last fiscal year, which was a record year. If the company can maintain a close to 2% margin improvement in the current year that would mean a more than 20% income improvement even if the revenue is flat.

The company credits the commercial space for the great quarter. While the military business is a more traditional customer for IEHC, I feel it has plateaued. Instead, I feel the growth will come from the commercial space, in particular the medical and transportation areas.

I feel IEHC is a $8 stock.

Tachibana Eletech just reported earnings that show it is also having a record year. The company earned ¥ 203 for the first 9 months versus ¥ 133 for the same period a year ago. Tachibana is a distributor of factory automation and electronics equipment made by Mitsubishi Electrics. Tachibana serves the Asia region and China is a lucrative market as it modernizes. Exports to China is made even easier because the Chinese Yuan is virtually pegged to the US dollar as it appreciates against the Yen.

Tachibana stock has doubled in local currency in the two years that I've owned it. And to get a better sense of why, I compiled the following data on both companies. The chart shows Tachibana's revenues and that of Mitsubishi Electric. It also shows the revenue of the Mitsubishi Factory Automation (FA) group and the Electronics group. But if we focus on the red and purple bars which are the Tachibana revenues and the Mitsubishi FA revenues, we see they move in tandem. That is very reasonable as FA accounts for almost 50% of Tachibana's revenue. Mitsubishi's stock (TSE:6503) has also doubled in local currency in the last two years. So, Tachibana's success has really been the result of Mitsubishi's success.

Putprop announced it will do a R100M (US$9M) capital raise to buy more properties and diversify away from Larimar, the bus operator that is responsible for 80% of the company's revenue This is a rights subscription to buy shares at R6.30 whereas the stock is at R7.00. So, I feel it is in the shareholder's interest to participate, or sell the stock before the deadline. This capital raise should increase the company market cap from US$20M to US$30M. I haven't decided on my choice because earlier this month the company announced that Larimar was late with the rent. Larimar seems to have some financial troubles and needs a few months to be current with the rent payments. Maybe this is nothing but it caused the stock to drop 10%, and it is factoring into my decision for the rights description right now.

IEHC Q2 Update

	IEHC
Price	$ 4.910
Market Cap	11.31 M
P/E TTM	9.0 x
Div yield	0.0 %
P/BV	1.04
ROE	11.5 %
ROIC	15.6 %

IEHC reported Q2 earnings that I felt was quite reasonable. The company EPS for the 6 months this fiscal year is $0.35 versus $0.44. Revenues fell slightly (3%) but the bigger reason for the earnings drop is that margins fell from 63% to 61%. But last year earnings petered out in the second half and year-end EPS was $0.63. I expect earnings this year will be at least as good. So this is a long-term growth stock that is trading at 8x forward earnings. Apparently, other shareholders didn't agree with me and sold off the stock after the earnings. The stock dropped 10% on the news and I used this opportunity to double my position.

In other news, I closed my KCLI and ITIC positions. KCLI has run up a bit and it is a cigar butt that probably has one or two inferior puffs left. But I think I can better deploy my capital elsewhere. And I sold ITIC because I felt my original thesis was a mistake. The company had great margins in 2013 due to unusually low claims, and not surprisingly, this is not looking to be the case in 2014.

My Trip to the IEHC Annual Meeting

IEHC just held their annual shareholder meeting on Thursday and I was there. I decided to trek 3000 miles to attend because IEHC is a tiny company with a $12M marketcap and, not surprisingly, has little coverage in media. The company went up 75% in the 1 1/2 years that I owned it, and I needed more information to decide what to do next. So, I went mainly to see the company and its people in the flesh. Besides, I badly needed a vacation, even if it was for just 4 days.

So on the day of the meeting, I found myself in a busy business area of Brooklyn with a huge prison or military type building on one side. As I walked towards the company address in the rain, I found that prison or military building is the company's location! And the building is huge, the lobby has a 10-story high ceiling that makes you feel like you are in a train station. As I entered, I paid careful attention to my surroundings, because every impression can be a clue about the company. Next I had to ask someone where is the IEHC suite in this mammoth building. The person told me to go through an atrium which evidently used to be a railway platform because there is still the railroad tracks on each side, and there is even a WW2 era train car on one of the tracks! I even took pictures just in case anyone doesn't believe me. See below. If you look closely you can see weeds on the tracks. Look even closer and you can see that the surroundings were wet. That is because the atrium ceiling was leaking!

Entrance to IEHC; the office is on the 8th floor on the left

Now I will move on to the meeting. It was in a small partitioned conference room. I was one of three shareholders present, the other two being local to the area. The CEO Michael Offerman and his son David were there, as well as Robert Knoth, the CFO, the legal counsel and Jerome Rosenberg the long-time auditor. We started the meeting with the boilerplate legalese and voting formalities, then we spent about an hour on questions and discussions. I didn't expect to get any material nonpublic information, and I didn't. But it was extremely informative at the same time. I saw the interaction between the David and Michael, which was harmonious. Michael was a sharp, hands-on and knowledgeable for a 73 year old CEO. David, who is the marketing VP, also was passionate and knowledgeable. He appeared to be a person who deserves his position and I would gladly see him take over from the elder Offerman someday.

In the meeting us shareholders raised the issue of dividends and Michael Offerman said he has considered it but he was non-committal. But I learned that the IRS apparently pressures companies to have a clear path to either use retained earnings for capex or to distribute it. I got the impression management is still developing the growth strategy for the next few years as the company builds up more and more cash. The company increased equity by $1.8M last fiscal year but spent only $0.35 M in capex. If the company continues to perform well as it has done in the last few years, I think the company will accelerate capex spending. But it will still be in the same ballpark as it is now, maybe $0.5M. So then, given the about $2 M dollar expected cash flow in the coming years, management will have no choice but to give out at least a token dividend. I think 2% will make investors very happy. It will make me very happy.

After the meeting David gave us a brief tour of the factory. At this point, I just wanted reassurance that this small company really makes what it says it makes, and that it does employ over 100 employees as stated on its 10K. But it was during this tour that I met a most interesting 90 year old woman. This petite woman has been an IEH employee for 67 years! She originally worked for David's grandfather in the 1940's and not only has she worked for IEH for her entire life, but she has also brought her children and grandchildren into the company. This woman's presence told me more about the company management than anything I learned so far that day. As a shareholder in a company where the CEO owns more than 50% of the company, my biggest worry besides the health of the company is whether the insiders are treating the minority shareholders fairly. I know that Michael Offerman is paid $240,000 per year. And the company has a stock option plan but that plan is totally untapped. So I know the management compensation is very reasonable. And, after I met this lady, I am sure that the insiders will not take advantage of minority shareholders. A boss who can get that kind of loyalty from employees will not be out to screw the minority shareholders!

So, when I left the company, I felt very good about my IEH investment. I met the management and liked them. I saw the operation and it appeared efficient, well managed and low-cost, which leads me back to the company's building. This building I found later was the Brooklyn Army Terminal used in WW1 and WW2 to supply ships bound for Europe. The building now belongs to the City of New York who rents it out to businesses. And while it sure doesn't look impressive for an office building, I like it because it must be cheap. To me a company's premises should be as cheap as possible so long as it doesn't scare the customers and potential employees away. Below is a picture of the Brooklyn Army Terminal from the outside.

Globus Martime H1 2014 Resuls

Globus Martime, a Greek microcap shipping company, reported a loss for H1 due to impairment charges. Without the impairment charges, the company would have profited $0.13 per share. Revenue was roughly flat versus a year ago.

The company has shifted five of its seven ships to the spot market. Apparently, this is a strategic move to take advantage of the expected recovery in charter rates. The CEO George Karageorgiou said in the report that by next year, when rates are higher, the company will move the ships to longer term charters. The CEO appears to have a much more positive tone compared to last several years. He even said he intends to grow the fleet in the next few years.

The company reported a $1.7M impairment charge for H1.  This impairment has been fluctuating recently because one of the company's ships is held for sale. And its value changes every quarter due to mark-to-market accounting. The impairment has even been negative in the past.

An investor in Globus Maritime must weight two issues. One is the charter rates, which one can gauge using the benchmark like the Baltic Dry Index (BDI). And the other is the company's debt. BDI right now is above the average of the last few years; see here. But it is still depressed, though the CEO is optimistic. The debt issue looms quite large. The company has $85M in debt and $60M of equity. The company's adjusted EBITDA is 5.5 times the interest expense. However, EBITDA doesn't include depreciation. With depreciation, then the interest coverage is an unacceptable number.

In other news, IEHC's CEO wrote a shareholder letter along with the 2014 annual proxy. In the letter, he summarized the published 2014 results. But more importantly, he stated that, at this point in Q2 FY2015, the company's order backlog is $8M. This is the highest level ever and a $2.1M increase since FY2014 end. The company is buying equipment to increase capacity to meet this demand. The stock jumped 12% to $5.10 per share on the news.

Summer Quarterly Updates

Tachibana Eletech reported Q1 total income increased 18.9% yoy; revenue increased 6.7% yoy. This improvement was partly the result of strong industrial demand in Japan. The results are even more impressive because the market presumed that last quarter's results were good because customers moved forward purchases to avoid the impending consumption tax increase. Q1 results were the first that included the consumption tax increase, and the results would have been impressive even if there was no tax increase!

The company also upped its year end EPS guidance from ¥161.41 to ¥170. The stock has rallied recently but it is still selling for only 8 times EPS guidance.

Riken Keiki reported earnings increased 19% yoy. Revenue increased 6.6% yoy. This company is firing on all cylinders. Last year its earnings increased 14% and the year before it increased 22%. This is my best performing Japanese holding, increasing by 90% in the 18 months that I've held it. When I initially bought the stock 18 months ago, the fact that it was a netnet was my margin of safety. Now it has risen 90% and is no longer a netnet. The market has priced it more as a earnings growth engine. But the stock still trades below book and and at 11x EPS guidance. This is Ben Graham's value investing at work: buy a good cheap stock, and usually something good happens!

Fujimak reported a ¥ (38.39) loss per share versus ¥ 3.5 a year ago. Revenue decreased 5% yoy. This was a surprise...no... a shock! The company said much of this was the result of a natural pullback from its knockout Q4, when it earned ¥ 99 a share, and to a lesser extent the consumption tax increase.

The company gave an EPS guidance of ¥98, which I hope is true but I also fear may not be met. The company trades at 8x EPS guidance.

Now on to US stocks. Seaboard Corp had one of its best quarters in history. Because of record pork prices, EPS was $79 versus $33 a year ago. H1 EPS was $119 versus $81 a year ago. The stock didn't budge after the earnings reports. In fact it dropped a bit because of plunging pork futures. Pork meat was regularly around $0.80/lb for the last several years, then it suddenly jumped to a high of $1.30. Today, futures for delivery in the next several months is back at $0.90s. Next year delivery dropped but now is back in the 90s also! So the weak stock performance is understandable.

Kansas City Life Insurance reported Q2 earnings slight down. Q2 EPS was $0.77 versus $0.98 a year earlier and premium revenue was down 5%. Book value has grown steadily and now the stock trades at 2/3 book. It also pays a 2% dividend. I feel this is one undervalued and neglected company.

Investors Title Insurance Company reported earnings were down 20% yoy. Premium revenue was flat yoy, which is encouraging considering the exceptional refinancing activity last year. The decrease in earnings was primarily the result of increased commissions. The company now trades at 1.1x book.

Putprop pre-announced that the company's earnings will be approximately ZAR$1.50 vs ZAR$0.86 a year ago! That is a 75% increase and even after the stock jumped by 30% from my initial purchase, it is still trading at 6 times earnings!

IEHC reported Q1 EPS $0.17 versus $0.23 a year ago. Sales was down 4% yoy. I would've liked to see better yoy results, but last year's Q1 was exceptional. I don't really know what to make of this tiny company. I had hoped based on my reading that this company's sales would take off in the last several quarters. But this hasn't happened. The company's sales are quite erratic. I'll pay close attention to this one in the coming quarters.

IEHC Reports Higher 2014 Earnings

IEHC
Price	$ 5.00
Market Cap	$ 11.51 M
P/E TTM	7.9 x
Div yield	0.0 %
P/TBV	1.14
ROE	14.4 %

IEH Corp (IEHC) recently reported 2014 results. Revenue was $15.4 M versus $13.3 M the previous year. Income was $1.5 M versus $0.9 M the previous year. Gross margin was 35.9% which improved from 31.9% in the previous year. The stock trades about 70% higher than when I bought it 17 months ago because of these numbers.

The only negative is that all the yoy earnings increase came in the first half of the fiscal year. The revenue was better in the second half versus a year ago. However, the earnings didn't improve yoy because of higher SG&A expenses. But then again I wouldn't read too much into the quarter by quarter fluctuations. This is a very small company after all and an extra business trip would have an impact on the bottom line.

I am holding this baby long-term because it has potential for significant gains in the coming years.

IEHC Reports Disappointing Q3

Price	$ 4.50
Market Cap	$ 10.36 M
P/E TTM	7.7 x
Div yield	0.0 %
P/BV	1.05
ROE	13.8 %

IEH Corp stock tanked 20% on disappointing Q3 earnings. Ouch!

The stock has been up some 100% since I bought it because earnings have doubled yoy for the last few quarters. Well that trend did not continue. In fact Q3 earnings were down to $0.08 from $0.11 from a year earlier. Revenues were up 12%, less than the earlier two quarters. Gross margin was a few percentage lower. But Q3 SG&A was $143k higher than last year, due to increased travel expenses. These three factors resulted in the drop in income.

Looking back I of course wish I had sold the stock at its all time high of $6. Now, I'll just wait for next quarter to improve and hope this quarter was just a blip.

IEHC Jumps on Q2 Earnings

IEHC stocked jumped two quarters in a row on positive earnings. I am not totally clear on the exact reason for the rise though. Revenue and income was flat quarter over quarter. However, last quarter was an exceptional quarter and maybe the stock jumped on confirmation that the current rate of income is sustainable. At the current pace, IEHC will have its best year ever. I did not find anything worthy of note in the report. The report wording was almost exactly the same as last quarter (other than the actual numbers). The company reiterated that they have new products in the pipeline. It isn't clear to me whether the company has generated revenue yet from the new products, but it appears that sales will ramp up in the coming quarters. I am eager to see how much of an impact this will have on the overall revenue, and the market is anxious too, I am sure. But right now, my margin of safety lies in the stock price which still trades at 7 times my projected earnings.

The following chart shows the revenue, earnings and the stock price. As you can see, the stock only moves four times a year, when he earnings reports come out. I find that is the case for all the small and microcaps that I follow. This is great for the small time investor, there is little room for manipulation and hype such as what happens with the more universally followed stocks (for an recent example, think Tesla!). The small cap stock price is more likely to follow fundamentals.

Revenue and Earnings (mil) and Share Price (dollar) over last 12 months

Tachibana Eletech, Pfizer and IEH Corp Report Solid Earnings

Earnings season is in full swing. And my holdings are doing well.

Tachibana Eletech (TSE:8159), a small cap factory automation company reported a great start with 1Q 2013. The company reported EPS of 34 yen, a 60% increase yoy. Revenue increased 10% yoy. I presume that the yen's recent drop contributed to the company's results. Management projects 134.75 yen EPS for the year. Which translates to a PE of 7x! In addition, this is a netnet company (see previous post).

The only disappointment with the company is the paltry 20 yen annual dividend (2% dividend yield).

Pfizer reported Q2 adjusted EPS of $0.56. This adjusted EPS leaves out special items such as the Zoetis share sale. For the year, the company projects adjusted EPS of $2.10 - $2.20 and actual EPS $3.07 - $3.22. This is all not surprising. With shares trading at around $30, Pfizer has a healthy P/E in the low teens (adjusted earnings). Recently, I have sold some shares in my tax-sheltered account. But, I'll leave the rest alone. Pfizer is one of those solid stocks in a great industry that you can just leave alone without worry.

IEH Corp (IEHC) reported full year earnings of $0.40 vs $0.48 a year ago. That is a PE of 7x also. Total revenue for the last two years were almost identical. So, it seems margins slipped a bit. IEHC is also a netnet (see previous post).

IEHC is a tiny company with a market cap of $8M. They only do one thing, electrical connectors, and they do it well.  The company has very few customers. The company sells 31% to the corporate world, 63% to the military. All this is little changed from last year.

Why I Bought IEHC

Recently I bought IEH Corp (IEHC), my sixth small cap. IEHC is really a tiny company, only $7 mil market cap! I came across this in the value blogsphere and found it very well suited to my style. It is extremely profitable (relative to market cap) and it is trading at net net.

Below is the summary of the financials.

IEHC, like so many of the attractive net nets serve a niche in the US military complex. IEHC makes special electronic connectors that can stand the stress of movement and require little force to install. The company appears to be very good at its product, but it is quite dependent on the military. I think that is one reason the company's price is discounted. Recently the company has tried to branch out to commercial applications, and it now has 31% of its sales in the commercial space.

Because this is such a small company I have very little source of information. The company's website says the business goes back 80 years. IEHC used to be listed on the NASDAQ, but moved to the OTCBB in the 1990s because it was too small. The company has been in the connectors business since the 1990s. It is amazing that a company can make the same type of connectors for so long and be growing so much. But then I think of it, my most common computer problem has been the connections. In fact, recently my computer failed because of a loose harddrive connection that eventually disconnected over time.

The company website says that the company was founded by the forefather of the current CEO Michael Offerman. The company used to be called Industrial Heat Treating Company. Somewhere along the line it changed to making electronic connectors. It wasn't doing that well in the 1990s and the stocks was regularly below the $1 range. The company was sometimes losing money, sometimes making money in that decade. Then starting in the early 2000's sales and profit really took off. The following chart shows its yearly profits.

In 2000 Offerman owned 17% of the company. At that time the company was only worth $0.5 mil! Then suddenly he upped his stake to 41%. Talk about getting control of a company on the cheap! The bet didn't pay off right away but it did a few years later. Virtually all the money in the 2000s went into equity which then is reflected in the stock price. The stock price at the very least follows the net net value. The company hasn't used its cash flow for anything but capital expenditures, paying off debt and for inventory. If the company keeps the earnings up, eventually it will build a cash hoard, then it'll be interesting to see what management does with the money.