BUY Recommendation-CCEL.ob

Cryo-Cell International (Bulletin Board-CCEL.ob)
Price August 6, 2010-$1.27

We missed out on recommending both OSTE and VRAZ recently. We bought both of them, but waited too long before writing about them. OSTE got a take-over offer at $6.50 a share and VRAZ has more than doubled to $1.34 from the $.58 we bought it at (it is merging with a private company, but will remain public). We sold OSTE, and are holding VRAZ (although maybe not too much longer).

So rather than dither around on this one, here it is.

Interesting deal here. On August 23, 2010 CCEL announced that they had retained Morgan Joseph as their investment bank to “explore strategic alternatives”. On September 23, 2010, they announced that they had received an unsolicited bid from DW Healthcare Partners, a private equity firm for $1.50 a share. This offer was promptly rejected as inadequate. We agree. Out valuation is $3.42 per share.

Second quarter results (May 31, 2010) were a bit disappointing. Sales down 9% to $4.2 million but they made $.03 per share. They had $8.1 million of cash and $3.75 million of debt for a net cash position of $.37 per share. They are moving into China through a partnership with a private Chinese company.

The stock was trading at about $.90 before the offer was made, so there is some downside risk here. But we are guessing that a strategic buyer will pay a lot more than a PE firm.

Average trading volume is only about 16,000 shares a day, so careful buying is required here. Trading at 37% of our valuation.

About Cryo-Cell International, Inc.
Based in Oldsmar, Florida, with nearly 215,000 clients worldwide, Cryo-Cell is one of the largest and most established family cord blood banks. ISO 9001:2008 certified and accredited by the AABB, Cryo-Cell operates in a state-of-the-art Good Manufacturing Practice and Good Tissue Practice (cGMP/cGTP)-compliant facility. In November 2007, the Company launched Celle (pronounced “C-L”), the world’s first-ever commercial service allowing women to cryopreserve their own menstrual stem cells. Website-


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