Exited $VOXX – 93% Gain in 6 Months

I recently exited VOXX Intl stock (VOXX) at $12.56/share. The stock was originally purchased on Aug 31, 2011 and with subsequent purchases there after, my average cost in the stock was $6.48/share. This sale netted me about a 93% gain in a little over 6 months of holding. This includes the commissions paid.

The original thesis for VOXX was based on its balance sheet strength. The stock used to be a net-net stock until it acquired Klipsch last year. The company took on debt to make the acquisition and used a good chunk of its cash on the books. This acquisition meant that VOXX was no longer at a net-net valuation, which is when a number of value investors decided to leave the stock. As far as I know, Seth Klarman of Baupost Group also sold out sometime last year.

This exodus of investors created an attractive buying opportunity. Further, my research showed that the acquisition was well done and will result in margin expansion and should be accretive quickly. I further concluded that the ROI on the acquisition will be close to 20% after accounting for debt servicing. As a result, VOXX was an opportunity that was hard to pass up. The company continued to execute well and my predictions on margin expansion were proven to be correct and the stock responded.

At this time, the stock is still a good value, but not as attractive as it was at the time of the purchase. The company continues to grow and recently purchased Hirschmann in Europe that gives them an entry in the luxury auto audio systems. I have no doubt that the company will do well in the short to intermediate term. There are just better opportunities for my investment dollars.

Coincidentally, Zacks today recommends VOXX as a strong buy. But this value investor has already made his gains and is moving on.

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