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RadioShack Is Ailing but Not Dead Yet

Stocks in this article: RSH DG

NEW YORK (TheStreet) -- The ups and downs of buying distressed stocks can be thrilling at times.

These are the companies that most investors have written off, often with good reason. But depending on the ultimate outcome, there are always a few fools or geniuses who see something that few others see, real or imagined, and who are willing to take a risk on a company whose best days are admittedly long past.

I've been on both sides of that equation, the fool and the genius. As an investor, you can learn from both situations -- those that work out and those that don't. I figure that by the time I reach age 100, I'll have it all figured out.

One of the distressed stocks that I continue to own is troubled retailer RadioShack (RSH). I resisted taking a position for a very long time.

As the stock slid into single digits back in 2012 and others in the value community became interested, I still wasn't convinced. Who would want to own an electronics retailer that was seen as a dinosaur by consumers? I didn't, at least at the then current price.

But when RadioShack became a net/net -- a stock trading below its net current asset value -- I took a position. It wasn't that I believed that RadioShack could ever regain its former glory, but rather that the company was valued so cheaply that any signs of life, or improvement, would drive the stock higher. In my view, there was time, given the company's liquidity.

Although the stock showed some life in 2013 trading above $4 as late as this past September, it's been mostly downhill since. Results have not only been poor the last two quarters, but even worse than expected.

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