I don't usually touch stocks that are considered loss making, but I have made quite the exception for CLBS making it the third largest position I have ever held.
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97% customer retention rate
Dividend
Share buyback
No debt
$30m in the bank
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Why am I this confident? The current market cap is covered mostly by cash on the balance sheet. The company has zero debt and reported \~$30m cash in the bank.
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At just under 80p a share the company's share price has fallen swiftly from the last momentum swing up that took it to just over £1. I could have banked an easy and quick profit, but I believe there's true value to be had here with the accounting change which has made this company appear to be loss making, when quite frankly this isn't the case.
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Previously the company would report 100% of the revenue received from a multi year contract in the year they received it, which is fine. But they have now changed to an annual reoccurring revenue model, which splits that revenue over multiple years. Why this change appears loss making is due to the fact they are not allowed to re-report the same income that they already reported in previous financial years. So although they already have the money paid in the bank for those contacts, they cannot split that revenue into their new accounting system.
Now how big a loss did they put on paper? $0.2m.
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There are other positives the company has, such as the very active share buyback scheme or the attractive dividend at around 4%, but I'm more interested in what happens if they can keep growing their new annualised reoccurring revenue model which could demonstrate the stability this company needs.
The CEO openly admitted it was a poor quarter for them, in which they missed out on finalising a few key contracts (possibly delayed due to the war, we shall see) but the major plus is that they had a 97% retention rate of their customer base.
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97% retention rate
Dividend
Share buyback
No debt
$30m in the bank
​
I added a few thousand shares yesterday at 80p.
It won't let me add a photo for some reason, but check out the share buyback activity. This company values itself at £1.20 and has aggressively bought at these low levels.