What if you found a company that has $408M in cash on the books and has a market capitalization of $249M? That's like someone giving you a dollar for sixty-one cents. And you still own the company's future prospects for nothing!

Would you buy it?

Before you decide, let me tell you more.

The company is profitable with $70.8M in net income on $638M in revenue (trailing twelve months). Profit margin is 10.9%.

Return on equity is 21.9%, return on assets is 6.3%, and return on capital is 18.1% (all last twelve months).

And the company’s total debt is $13.17M.

For the last twelve months, the operating cash flow was $114M and levered free cash flow was $84M.

The company shares closed today at $8.15. That’s a P/E of 3.57.

Who is it?

Humboldt Wedag International Ltd. (NSYE: KHD), a Hong Kong based company that is engaged in industrial plant engineering and equipment supply business and has a royalty interest in the Wabush iron ore mine. The Company's industrial plant engineering and equipment supply business focuses on services for the cement, coal and mineral processing industries. KHD supplies plant systems, as well as machinery and equipment worldwide for the manufacture of cement and the processing of coal and minerals, whether for new plants, redevelopments of existing plants or capacity increases for existing plants. The Company designs and provides equipment that produce clinker, cement, clean coal, and minerals such as copper and precious metals. The scope of services also includes feasibility studies, raw material testing, financing concepts, erection and commissioning, personnel training, and pre and post sales services.

I bought a few shares last week with some of my year-end bonus.

Warren Buffett would be proud of me! This company rocks! What a great margin of safety!

Pierre Cutler
The Sacramento Executive