Alloy, Inc. (NASDAQ:ALOY)

TMFDeej (99.22) Submitted: 7/30/2010 4:58:14 PM : Start Price: $9.50 ALOY Score: -16.92

Recently agreed to be bought out by ZelnickMedia for $9.80/share in cash. As a straight Merger Arb play, that represents a 3.26% gain from this level in what I expect to be a fairly flat market...not bad.

However, there might be something more than that going on here. Whitney Tilson and Glenn Tongue's hedge fund T2 Partners recently filed an activist 13D after acquiring 669,946 shares of the company, 5.2%, mostly in the $9.50/share range.

It's possible that T2 is just playing the merger arb game here, but there might be more than that going on. It sounds as though many of Alloy's shareholders feel as though the buyout offer that management accepted is way too low. Several law firms, including Goldfarb Branham and Faruqi & Faruqi, have even filed suit against Alloy on behalf of shareholders in an attempt to block the deal.

I have a feeling that there's more upside left in this one, but I'm going to have to do some more investigating first. No time for that now...it's almost Happy Hour on a Friday. Is anyone out there familiar with this situation?

Deej

shastashadow (95.42) Submitted: 11/27/2009 5:14:35 PM : Start Price: $7.88 ALOY Score: +1.51

A great stock that does ad marketing to people aged 14-24. It is a niche market and they are one of the big dogs in the market. Huge potential to dominate this market, especially since 200 Fortune 500 companies are doing business with them.

SupBooks (< 20) Submitted: 11/23/2009 9:06:05 PM : Start Price: $7.52 ALOY Score: +9.14

Trading at book with no debt

Jchoiboy (24.53) Submitted: 11/5/2007 10:50:07 PM : Start Price: $8.35 ALOY Score: +23.94

Go aluminum

NeroSagetrade (93.97) Submitted: 10/24/2007 12:10:05 AM : Start Price: $8.72 ALOY Score: +19.17

It only took eight years, but the valuation on ALOY has finally reached a level to which I can call this marketing company undervalued. ALOY has been steadily growing revenues in the mid-single digits for the past two quarters but their margins are improving and expensing is down. Particularly of interest, they are trading well below price to book and price to sales valuations. Their forward earnings show a forward P/e of just 12.5 and they have 25M in cash with very little debt. Their long-term chart is a disaster but I cant foresee the stock heading much lower with an earnings warning, and I dont see any warnings in the near future. The valution catalyst is now there, so let it run!

Nero

Sagetrade

CTrading (41.81) Submitted: 8/16/2007 2:48:10 PM : Start Price: $8.01 ALOY Score: +20.91

MFI CAP 88 TOP 50 8/16/07

alexs85 (48.83) Submitted: 6/8/2007 7:33:20 AM : Start Price: $10.58 ALOY Score: +2.48

http://shadunskymethod.blogspot.com/2007/05/stay-away-from-this-magic-formula-stock.html

NetscribeRetail (91.97) Submitted: 1/16/2007 1:21:50 AM : Start Price: $11.45 ALOY Score: +14.18

Alloy is a youth oriented media and marketing services company, targeting customers aged between 10 and 24. Its promotion segment specializes in the event and field marketing, sampling and acquisitions programs, internet design services, and consumer research. Media segment comprises entertainment media assets, including its out-of-home, internet, database, specialty print and entertainment businesses, and the placement segment provides advertising placement solutions for marketers.

Competition in the industry is intense since the target population is the fastest growing demographic with 35% of the US population under the age of 24. Also, adults and teens spend considerable time watching television or surfing internet. Led by surging growth in the online sector, global entertainment and media sector is set to grow at a compounded annual growth rate of 6.6% till 2010. However, Alloy has not managed to capitalize on the opportunities in this money-spinning market. The company’s peers Omnicom or WPP Group have progressed much faster in this flourishing industry.

Alloy’s overall performance has been pretty mediocre with meager turnover growth. The growth of media segment that contributes about 26% has seen huge downslides in revenue growth. Also, placement segment is not in a good shape with substantial tumble in top-line. Revenues also suffered due to the termination of mall marketing sponsorship programme at the end of fiscal 2005. Though, leverage has improved, it was primarily due to slide in placement revenues that has higher variable costs. Besides, prior acquisitions of Dan’s Competition and dELiAs by the company have been a failure. Woeful tale continues as their Sconex acquisition appears in doldrums with massive decline in page views since April 2006. In the light of all these facts, the ailing stock seems to have hardly any upside potential