ELXSI Corp.'s Outlook is Bright, But Who Will Benefit? - ELXS
alluvial.substack.com
ELXSI Corp. has been on my radar screen for years. The company's primary subsidiary is a fast-growing, very profitable business in an industry with a great demand outlook. The company's less-profitable subsidiary is winding down and becomes less and less relevant as time goes by. Gross margins, operating margins and returns on capital are all reaching new heights, and the company has built a solid cash buffer. With all those positive dynamics in place, just what is it that has kept me out of ELXSI? The answer is one word, the same word that keeps me out of many otherwise attractive small companies: management. ELXSI's history is riddled with exploitative related-party transactions that have resulted in a massive value transfer from ELXSI's minority shareholders to company insiders. More on that in a bit. For now, let's examine ELXSI's corporate history.
ELXSI Corp.'s Outlook is Bright, But Who Will Benefit? - ELXS
ELXSI Corp.'s Outlook is Bright, But Who Will…
ELXSI Corp.'s Outlook is Bright, But Who Will Benefit? - ELXS
ELXSI Corp. has been on my radar screen for years. The company's primary subsidiary is a fast-growing, very profitable business in an industry with a great demand outlook. The company's less-profitable subsidiary is winding down and becomes less and less relevant as time goes by. Gross margins, operating margins and returns on capital are all reaching new heights, and the company has built a solid cash buffer. With all those positive dynamics in place, just what is it that has kept me out of ELXSI? The answer is one word, the same word that keeps me out of many otherwise attractive small companies: management. ELXSI's history is riddled with exploitative related-party transactions that have resulted in a massive value transfer from ELXSI's minority shareholders to company insiders. More on that in a bit. For now, let's examine ELXSI's corporate history.