I must admit I'm not really much of a pure Graham & Dodd guy. I've always thought that not considering the quality aspects of a business and looking purely for the cheapest valuation metrics is a bit like buying a car with a clapped out engine, no doors and only one wheel because "my god it's so cheap compared to book value!" and then being surprised when it doesn't drive. However, on the twin axes of Quality and Value, sometimes I find something so ridiculously cheap on the value axis that I'm compelled to buy it despite significant quality misgivings, like when I bought PVCS because it was quite clear they could pay out the entire market cap in cash and still be a viable business (and they did!). PFLM falls squarely in this category.

Powerfilm floated back in 2006 at 125p. They reached a high of 485p back in 2007 on the back of euphoria about their products and market potential. Since then they have become a member of the -99% club as I managed to pick up some shares at 4.3p back in the end of November (I really need to get faster at doing write ups...). The shares last traded at 7p. I've learned to cease being surprised at how drastic the swings of euphoria and despair can be in equity prices.

Historically, Powerfilm has been the equivalent of a busted flush draw. Their expected explosive growth never happened and sales have, given the recent trading update, been essentially flat since 2007 at $8.2m. Reported profitability has deteriorated too, and the company haven't made a profit since 2008. The company is a ‘developer and manufacturer of thin flexible solar panels’ and their consumer products are quite cool, although the market is pretty saturated and price competitive hence the lack of profitability. The company has made the sensible decision to focus more on smaller niche markets where they can try to achieve pricing power and recent R&D and sales efforts have been in the Military and custom OEM
markets (although trying to sell in to the US military right now isn't the easiest of tasks).

The attraction for me at the current share price isn't the operating business (which looks like it's struggling in a pretty competitive environment) but the assets. Against a last traded price of 7p you're…

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