Last month at this time, there were six net/nets including Systemax ( SYX), which I featured in an April column. SYX now trades at slightly more than its NCAV, at 1.07, having risen 8% since that column ran. That does not necessarily mean that SYX is now expensive; it just happens to have popped back above its NCAV.
In fact, I often peruse the ranks of companies trading at between one and two times NCAV, in order to see which names might become net/nets in the near future. Since many of these names are smaller and more volatile, market pullbacks tend to hurt them more than the bigger names, and it does not take a huge downside move to put them back in net/net land. SYX data by YCharts
In case you are wondering, the only net/net that has a market cap of more than $100 million is none other than Trans World Entertainment ( TWMC), which operates 358 entertainment retail stores, primarily under the f.y.e brand. Many of these are mall-based stores, selling videos, music, video games and other entertainment products. Given the changing landscape of entertainment retailing, it is easy to see why the company has been banished to net/net land. For a time, the market believed that TWMC would disappear, as the stock traded for less than 60 cents in early 2009. TWMC data by YCharts
Bringing a mall-based entertainment retailer back from the brink is an impressive feat; that is not an easy business, and one that most believe is dying. Despite the stocks run since 2009, however, the market is still not impressed, given the discount to NCAV. The question now is what will TWMC do with all that cash. Stay tuned. At the time of publication, Heller had no positions in stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.