Seeking Alpha: Digital Cinema A Tricky Mix Of Opportunity, Risks, And Uncertainty

Once you've been active in the markets for a while, you'll notice that certain business models are used over and over again. One of the more common ones is the roll-up model where a company executes multiple M&A acquisition transactions (typically of much smaller companies) to consolidate a market and achieve meaningful benefits of scale. Provided that the multiples paid stay under control (particularly relative to the cost of capital) and management doesn't lose sight of expenses, this strategy can produce some pretty significant growth.

That brings me to Digital Cinema Destinations (DCIN) - a small, but growing, operator of all-digital movie theaters. On one hand, I really like the company's strategy of acquiring small independents and trying to boost full-week revenue through alternative programming. On the flip side, I'm concerned about how much capital the company will need to reach its goals, the compensation promised to the CEO, and the absence (so far, at least) of any institutional investors on my short list of savvy micro-cap investors. I do think these shares are undervalued and waiting for these risks to abate could lead to surrendering a lot of upside, but this is definitely only a stock for "consenting adults."

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Digital Cinema A Tricky Mix Of Opportunity, Risks, And Uncertainty