Case Study

AEI Corporation : Attractive Risk And Reward


AEI Corporation is not new to me. In fact, since my days in university, this did pop up on the screen then. And that was more than a decade back. Incorporated since 1983, the company's operations include the import and export of aluminium products used within the electronics industry and also in the buildings and infrastructure segment. As you can guess, it should be considered a cyclical, moving and ebbing with the flow of economic activity. However an operational history of more than 30 years tells an inferential story of management doing an at least okay job at keeping the business alive through 1997 crisis, the dotcom bubble and the subprime crisis of 2008.  

The price to book value currently stands at a paltry 0.35 at the time of this writing. Since then, it has moved lower to 0.27.  This is not going to be an in depth analysis. Neither is it going to be a recommendation to buy or  sell. I suppose what I am trying to drive at is that bargains are beginning to appear and this could be a possible bargain since the advent of the decline in oil prices. The market is always forward looking and of course, not to mention a manic depressive, which should work to the smart investor's advantage. That being said of course, it is up to investor to recognize opportunities around them.  The recognition of potential opportunities, putting them on watchlist, studying them and waiting for the right entry price which represents a margin of safety is what all investors ought to do. But many don't.