Any thoughts on my first original stock idea?

[almostbusto]

This is the first real stock purchase I have made as a result my completely independent research. So I thought I'd post here to see if I could get any thoughts regarding how smart this kind of thing is.


Bexil Corporation

symbol: BXL
website: http://www.bexil.com/


The Basics:


Basically this corporation sold off its only asset in May-06, as a result of this sale BXL has ~39 million in cash. It is looking to purchase a company to develop.

right now, the market capitalization for Bexil is 29 million. This gives the stock a very favorable price
to book ratio.


On May 2nd 2006 the company stated its acquisition parameters as:

1) A proven track record with demonstrated earning power.

2) Sales of between $10 million and $50 million.

3) A seasoned business with solid customer relations.

4) Good return (at least 15%) on equity, little or no debt.

5) Solid management must remain. Audited financials required.

6) Particularly interested in a “spin-off” from a larger company.


http://www.bexil.com/press-release050206.html


which to me seems reasonable enough.


The management of this company directly or indirectly owns the majority of this company. The Winmill’s (the CEO and chairman of this company) also run tuxis (TUX) and Winmill & Co. Incorporated (OTC:WNMLA) and both of these companies own a considerable amount of BXL. So it is definitely in the best interests of the management for this company to do well.



My conclusion:
The very low price to book and liquidity of the company’s assets, as well as the management’s large stake
in the company, ensures that there is minimal risk in this company losing value. Despite its low market
capitalization and liquidity (liquidity of the stock, not the companies assets). However, this company
has a lot of upside, once they acquire a company and start making money. I suppose the major risk is that
they make a poor acquisition. It would have to be a fairly poor company though because I purchased BXL at a big discount to its book value. Ultimately this stock seems like a good speculative play with limited downside. reader's probably shouldn't take my advice though because I am a huge novice at this kind of stuff, so buyer beware.