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Universal
Capital Management - The Best Of Both Worlds |
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It's
been a while since we last looked at Universal Capital Management (OTCBB:
UCMT). They've been busy though, putting together their year-end results,
which were just released a few moments ago. The first word that came to
my mind was 'impressive'. One word that didn't come to mind was 'surprising'.
Before we get to that though....
If
you were around in April, then you may already have a handle on what Universal
Capital Management is. If not, I recently tripped over (not literally)
a succinct yet complete way of describing why you might want to own some
shares of this business development company.
The
nature of Universal Capital Management's structure is unlike almost anything
else out there. It's a stock, in that the company itself derives revenue
by performing a service for its portfolio companies. But, it's also like
a fund (an ETF actually, as it trades in real time) in the sense that the
value of an investment in UCMT is affected by the value of the underlying
portfolio companies. The ultimate goal, however, is to develop the non-publicly-traded
portfolio companies into IPO-ready entities, and to enhance the valuation
of the public companies.
In
many ways, owning UCMT offers the best of both worlds. Why? Because it
gives investors two ways to win.....through the appreciation of its portfolio
companies, and/or through the income generated by Universal Capital Management
itself, which can be used to add other holdings to the portfolio. A mutual
fund or an individual company stock only offers one or the other.
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The
More, The Better |
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The
old saying 'less is more' is used to describe instances when small and
subtle can be more powerful than big and blatant. This, however, is not
one of those times - Universal Capital Management is growing its revenue
base in addition to its asset base. Both are good for investors. In fact,
the more both grow, the better.
 Take
revenues and operating income for instance. For the year ending on April
30th, Universal Capital Management pulled in revenues of $3.2 million,
and generated operational income of $989,883. That was, respectively, 262%
better than 2006's revenues of $894,745, and more than 1100% higher than
2006's operational loss of $96,057.
And
unlike a traditional mutual fund, that corporate-level income actually
benefits UCMT shareholders.
At
the same time, there are now seven underlying companies Universal Capital
Management's investors have a stake in. This is where shares of UCMT start
to also have the qualities of a fund...if those stocks collectively appreciate,
so too will UCMT's value.
Perhaps
more importantly, Universal Capital has grown on this front too. As of
the end of April, the company's investment assets were worth $6.3 million.
That's 79% stronger than last year's figure of $3.5 million.
There
are a couple of more details added in the press release below, but there's
just one point I want to make here and now....those numbers say growth
to me, plain and simple. Plus, with almost a million bucks in operational
income, I'm convinced they have the means as well as the know-how to keep
that growth trend going.
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When
A Stock Isn't Just A Stock |
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What
I find more amazing than anything else about true business development
companies (a rarely-used entity defined by the Investment Company Act of
1940) is their total transparency...something you really don't get from
traditional mutual funds.
So
what are you investing in when you own UCMT? A piece of all the companies
they currently have some ownership in, plus some of the companies they
add to the portfolio in the future.
Speaking
of new investments, their newest addition was SP&S (Scientific Products
& Systems, Inc.). SP&S manufactures precision liquid dispensers,
called 'OnePump', for the medical community. However, current customers
have requested SP&S also develop a processing platform for the pump.
The need is there, and for a significant stock position, Universal Capital
can help the company take their dispensing equipment revenue to that next
level.
TheaterXtreme
Inc. (OTCBB: TXEG) is
another of Universal Capital's key holdings. This one already publicly
traded. TheaterXtreme sells and installs large-screen home theaters, targeting
middle-income consumers. With Universal Capital's help, the company has
started to add franchises at a very brisk pace.
The
other portfolio stories are just as compelling. I suggest you take a look
at the company's website for all the
details.
 Yes,
I know UCMT hasn't traded well lately. The thing is, that's exactly how
it should have been - the underlying stocks have, for the most part, traded
the same way most other small caps have. Frankly, it doesn't bother me
a bit, and here's why...
Everything
ebbs and flows, though when it comes to the market, not everything ebbs
and flows at the same time. Large caps have been leading lately, while
interest has been diverted from most small caps. I think that will change
though, and possibly change in the very near future.
I believe
the nice part about UCMT is instant diversity. If you want a stake in the
small or micro cap market but don't want to decide on which stock or stocks
you want to own, you don't have to - Universal Capital can take care of
that choice for you. Even better, they'll work directly with those companies
as consultants to maximize the potential of each holding in the portfolio.
The
part I like most of all? Universal Capital has access to the privately-held
opportunities you and I wouldn't even know about, let alone be unable to
invest in.
So
to me, the question of whether or not to own UCMT now - at unbelievably
low entry points - is a direct function of whether or not the large cap
rally will be sustained indefinitely. Considering nothing has lasted forever
yet, I don't know why it would now. Besides, as I've said before, sometimes
the best time to become an owner of something is while nobody else is thinking
about it - before the next wave of demand gets here.
Here's
the news release for your review...
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Universal Capital Management,
Inc. Reports Year-End Financial Results - Revenue Up 262%, Total Net Assets
Up 95%
Universal Capital
Management, Inc. (OTC BB:UCMT.OB
- News), a specialty
finance company, which provides emerging growth companies with management
and strategic resources for successful growth, reported its financial results
for the year ended April 30, 2007.
Financial Highlights
for the Year:
-
Revenue from management
services for the year ended April 30, 2007 was $3,236,636 vs. $894,745
for the year ending April 30, 2006, an increase of approximately 262%.
-
Income from operations
for the year ended April 30, 2007 was $989,883 vs. $(96,057) for the year
ending April 30, 2006, an increase of over 1100%.
-
Total assets at April
30, 2007 were $6,353,346 vs. $3,546,337 at April 30, 2006, an increase
of approximately 79%.
-
Net assets at April
30, 2007 were $4,379,464 vs. $2,243,790 at April 30, 2006, an increase
of approximately 95%.
-
Net asset per share
at April 30, 2007 was $.81 vs. $.46 at April 30, 2006.
Mike Queen, the CEO
of Universal Capital Management (UCM) said, "Our financial results throughout
our last fiscal year have been tremendous and speak for themselves. We
have been able to almost double our value, which is very hard to do. We
achieved this while also issuing a dividend to all our shareholders of
record. However, I believe we have the real potential to even exceed these
financials over the next several years. The quality and potential upside
of our current portfolio companies, along with the planned additions, is
what should make UCM a quality long term investment."
Queen added "Due
to the fact that UCM is a very tightly held company, we believe supply
and demand play a key role in our stock price. Market awareness of our
business plan, financial results and growth are a top priority for our
management team in the upcoming year."
Universal Capital
Management, Inc. is a publicly traded business development company under
the Investment Act of 1940. Its purpose is to provide an opportunity for
its shareholders to diversify risk by investing in a fund that assists
its portfolio companies to grow and increase in value.
The entire financial
report can be accessed at http://www.sec.gov.
Please visit the
company's website for additional information at http://www.unicapman.com
Forward-Looking
Statements
The information
contained in this press release may contain "forward-looking statements."
You can identify these statements by use of the words "may", "will," "should,"
"plans," "explores," "expects," "anticipates," "continue," "estimate,"
"project," "intend," "believe," and similar expressions. Forward-looking
statements involve risks and uncertainties that could cause actual results
to differ materially from those projected or anticipated. These risks and
uncertainties include, but are not limited to the following which could
affect Universal Capital Management, Inc. or one or more portfolio companies:
general economic and business conditions, effects of continued geopolitical
unrest, competition, changes in technology and methods of marketing, delays
in completing various engineering and manufacturing programs, changes in
customer order patters, changes in product mix, continued success in technological
advances and delivering technological innovations, shortages in components,
production delays due to performance quality issues with outsourced components,
and various other factors beyond the Company's control. The Company assumes
no obligation to update publicly or revise any forward-looking statements.
Contact:
Wall Street Resources
Mr. Gerald Kieft
(772) 219-7525
gkieft@wallstreetresources.net |
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