I have to admit to being a bit surprised over the past 6 months at just how economically sensitive demand for STG's products/services turned out to be. To management's credit, they were proactive in acting quickly to protect the P&L and balance sheet as soon as they saw the demand tapering off.
Microcap stocks such as STG have been the subject of a concerted buyers' strike over the past 18 months, meaning that it didn't take much non-discerning selling volume for stock prices to fall hard. This has been aggravated by more apparent tax-loss selling in recent weeks than for financial-year ends as far back as I can remember.
Because things had become very frothy 12-18 months ago, the majority of the microcap stocks probably deserved the comeuppance they got, but $35m of Enterprise Value for this business simply feels way too light, in my view.
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