Bottom Line

AuthenTec still a hold

There was nothing in AuthenTec’s latest earnings release and conference call to disuade, or persuade me one way or another for either selling the entire position, or holding on.

Because the stock still trades at a discount to cash on hand (even though that cash is being tapped into right now), as well as book value, and net-net assuming assets and liabilities, there isn’t a compelling reason to own shares if you don’t already own them, unless you are into deep value plays that might take months to turn around based on current market conditions.

So we are left with a stock that is stable, in a market that is stabilizing, and a sector that is bottoming out.

I’m willing to give AuthenTec a few more quarters to see if things improve as they’ve already shown, or deteriorate further.

Again, since the position is now a small part of my overall portfolio, I’ll hold on for now, until I have researched another company to put our money in that provides a much better upside potential.

Don’t get me wrong, as it stands now, there are many companies out there that fit this bill, I’m just not ready to pull the trigger yet as I feel that AuthenTec’s patents and IP are worth something to someone, at least double what the stock is right here, right now.

Bottom Line: If you own shares of AuthenTec and have ridden them down from the teens as I have, you don’t have very much equity left.

Unless you need the cash and want to put it towards more productive names, hold on for now as I feel that AuthenTec is at or near a bottom considering their cash on hand and assets/liabilities, and could be seeing a rapid turnaround in the coming months.

At the very least, their intellectual property and current client roster is very attractive to someone, and their dirt cheap valuation would make a buy out price have to come in above $3-4 per share, I feel closer to $5 per share, and still be a bargain for a deep-pocketed acquirer.

Yep, that’s what we’ve been reduced to as shareholders.

It might be time to move on from this one, so don’t be surprised if I issue a sell order within the next few months when something better comes along.

If you don’t own shares and are adventurous and know something I don’t, a small position playing a turnaround in the industry and/or AuthenTec’s product pipeline, or the chance of the company being acquired, might be worth your time, but only for a small part of your assets.

New to the AuthenTec story? 

• Read: my last quarterly earnings and conference call breakdown here.

–> Get updates and real-time stock trades you WON’T find on PeakStocks.com by following me on Twitter.

*As of 5-15-09. Except share price, all values in millions.

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