Travelzoo (Ticker: TZOO) An Explosion Waiting to Happen or a Hasty Retreat?

In the book “the Winning Investment Habits of Warren Buffett and George Soros” author Mark Tier does a great job of painting a picture of George Soros philosophy of investment humbleness (my words, not his). Soros believes strongly in the fallibility of everything, humans, governments, and most applicable in this case, investment decisions. So in that spirit let me say about this position, I COULD BE WRONG. Actually, that applies to anything I’ve posted or will ever post on this site. My only saving grace as far as investments go, like Soros, I’ll try to ‘beat a hasty retreat’ (Mark Tier’s words, not mine) when I’ve blown it. So, with that disclosure neatly disclosed, here is what I see in Travel Zoo.

To start with, Travelzoo’s website is not all that impressive. I know people who use sites like this but I never have. It wasn’t the website that piqued my interest first, as usual, it was the stock chart. The chart looked as if the stock could explode to the upside at anytime. In late 2004 the stock traded above $100 a share after a 1500% run in eight months. Not that past history is any indication of future performance, but it does say something about the volatility this stock is capable off. What are impressive are the companies’ sales growth (31.40% year over year), profit margin (21.55%), Total Cash of 28M, and no debt. Then there are very low float 2.94M shares and high insider ownership (83.65%) and high institutional ownership (32.10%), and the icing on the cake is that 32.90% (1.68M) of the float is short. Here is what income and gross profit looked like over the last few years.

• I bought shares last week for two accounts I manage.