Rex Store (RSC)

**grapes** Thu Aug 09, 2007 7:44 pm

Rex Store (RSC)
Blast,

RSC has large hidden real state at cost in balance sheet and making a movement in its buisnesss. Rex Store Corp. (RSC). Did you had a look of this one before?

Just want to share some of my initial findings. The company selling electronics like Best Buy. The management of this company is selling stores (sell-lease back) and invests into green energy business. I don't quite understand the alternative engergy thing (guess you know better). But so far it looked the management is shrewd as they sold some old investment and make good profit. With recent market correct, RSC is selling at around $16 and less than 0.8 of its book value. Since real state is at cost, it is actually even cheaper than this.

**blast_investor** Thu Aug 09, 2007 8:59 pm

Hi grapes,

This stock sounds and looks very fishy. I would stay away from it.

First of all, its asset has huge % in inventory. Electronic stuff inventory is not worth that much. DVD CD can not be sold at 50% of original price if the stuff is out of popularity.

Second of all, a retail company going into alternative energy is enough of warning by itself. Businessmen usually stay at their circle of competency. I don't believe retail businessmen understand energy that much.

**grapes** Thu Aug 09, 2007 9:14 pm

Then what is the difference between RSC and the picked one (better not to disclose it here I guess)?

The only thing is that in picked one, the did not sell the property yet, but in RSC, they do and put it into another line of business. Their original business both just break even. Both are cheap by balance sheet measures.

By the way, RSC also has significant ownership by the CEO and this is similar to the picked one controlled by the activist. In fact, I felt activist may not be as good a catalyst as CEO with huge ownership.

blast_investor wrote: Hi grapes,

This stock sounds and looks very fishy. I would stay away from it.

First of all, its asset has huge % in inventory. Electronic stuff inventory is not worth that much. DVD CD can not be sold at 50% of original price if the stuff is out of popularity.

Second of all, a retail company going into alternative energy is enough of warning by itself. Businessmen usually stay at their circle of competency. I don't believe retail businessmen understand energy that much.

**grapes** Thu Aug 09, 2007 9:18 pm

What is more, RSC CEO previously invested some of RSC money into alternative energy and make some good profit, roughly doubled the money. I just don't understand the alternative energy thing. However, it sounds a lot speculation there, but none is as cheap as RSC for most did not realize RSC is also a player there.

grapes wrote: Then what is the difference between RSC and the picked one (better not to disclose it here I guess)?

The only thing is that in picked one, the did not sell the property yet, but in RSC, they do and put it into another line of business. Their original business both just break even. Both are cheap by balance sheet measures.

By the way, RSC also has significant ownership by the CEO and this is similar to the picked one controlled by the activist. In fact, I felt activist may not be as good a catalyst as CEO with huge ownership.

blast_investor wrote: Hi grapes,

This stock sounds and looks very fishy. I would stay away from it.

First of all, its asset has huge % in inventory. Electronic stuff inventory is not worth that much. DVD CD can not be sold at 50% of original price if the stuff is out of popularity.

Second of all, a retail company going into alternative energy is enough of warning by itself. Businessmen usually stay at their circle of competency. I don't believe retail businessmen understand energy that much.

**blast_investor** Thu Aug 09, 2007 11:23 pm

grapes wrote: What is more, RSC CEO previously invested some of RSC money into alternative energy and make some good profit, roughly doubled the money. I just don't understand the alternative energy thing. However, it sounds a lot speculation there, but none is as cheap as RSC for most did not realize RSC is also a player there.

Well, that would be different. I did not do that much research on RSC so that I don't know that much on its business.

If that is case, then this is stock is really about a new ethano start up company.

It is tough to make call on ethano company startup, when the CAPEX building time could be couple of years. In this case, I don't believe the cash from any hidden assets will be returned to shareholders. New plants probably will require lots of cash on that.

Have you done any calculation whether that RSC real estate worth is higher than current stock price?

I would mark that inventory as zero value (DVD or electronics is not worth that much) to do the hidden value calculation.