On a Certain Candle Company’s Complex Cash Management
What strange times we live in when a candle company’s 10-Q reads like an investment bank’s:
The Company invests in a number of financial securities including debt instruments, preferred and common stocks, a joint venture, and a limited partnership that primarily invests in other limited partnerships who invest in real estate investment trusts and marketable securities…Certain preferred stocks are bought and sold on a short-term basis with the sole purpose of generating a profit on price differences…These securities are valued based on quoted prices in inactive markets… the Company held…ARS classified as available-for-sale securities. Auction rate securities are generally long term debt instruments that provide liquidity through a Dutch auction process that resets the applicable interest rate at predetermined intervals in days.…The recent uncertainties in the credit markets have prevented the Company and other investors from liquidating their holdings by selling their securities at par value… In the first quarter of fiscal year 2009…auctions for substantially all of our auction rate securities portfolio…began to fail due to insufficient buyers.
The candle company in question is Blyth (BTH). Jonathan Heller, formerly writing as Clyde Milton, recently wrote about Blyth. I wrote about the company back in September of 2006.
Despite Blyth’s ability to find imaginative new ways to lose cash, the stock is worth a look.
There may be a lesson in all this. There are certainly a number of bad puns.