How Not to Name Your Company

by Kaiser Edamame

In my unending search to uncover undervalued and badly named stocks I came across: “CAPEX SA” (CAPX.BA). CAPEX is an Argentinian electric utility serving the completely deserted but somehow still under-penetrated Patagonia region of South Ameria. We are initiating coverage of CAPEX with a SELL rating. CAPEX has a strong track record of raising and spending capital but that seems to be where the story ends.

A classic CAPEX investment:

capex facility

CAPEX’s power plant in Neuquén Argentina; shown here along with the 10 people who actually live in Neuquén Argentina

If investors insist on putting money to work in the “companies named after financial statement line-items” universe, we recommend Revenue AG (which has a compelling top-line growth story) as well as Synergies Inc (which we view as a likely acquisition target).

We also reiterate our underweight rating of Diluted, Shares, & Co. which looks expensive as a result of perpetual equity offerings and excessive option issuance.

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