INTG

InterGroup is a thinly-traded holding company whose value flows through a 75.9% stake in Portsmouth Square (the 544-room Hilton San Francisco Financial District) plus sixteen apartment complexes concentrated in Texas and Southern California. The headline 12.1x P/E is misleading: it is computed on FY2021 diluted EPS of $4.06, a figure four years stale. On actual recent results the company has lost money every year since — net income of -$8.72M (FY22), -$6.72M (FY23), -$9.80M (FY24) and -$5.35M (FY25). There is no current earnings stream to value, so the 'cheap' multiple is an artifact, not a margin of safety.

The balance sheet is the core problem. Stockholders' equity is negative -$86.1M and getting worse (-7.2% YoY), total liabilities of $218M exceed total assets of $104M, long-term debt is $241M and rising (+6.6%), and the accumulated deficit is -$68.0M. The hotel cannot cover its own capital structure: the MD&A shows operating income before interest/D&A of $8.73M on $46.4M of hotel revenue, but mortgage interest of $10.68M alone produces a $4.17M net loss from hotel operations, and total interest expense climbed to $13,556,000 — swamping the consolidated $7.64M of operating income. Operating cash flow of $5.89M (down 13.5%) barely services this. The improvements are real but fragile and partly one-off: the smaller FY25 loss leaned on a $1.416M gain on debt extinguishment and a waiver of default interest tied to the March 2025 mezzanine refinancing — the kind of distress-resolution event that flatters the trend rather than signaling durable earning power.