I’ll start by saying that this is not a post that contains any investment advice. I do not make specific recommendations or market calls to anyone through The Reformed Broker.

In this piece, I’ll be discussing the merits of one small cap company that I consider to have a very interesting story. It could double from its current price or go to zero, that’s not for me to say. I will, however, endeavor to give you some background information as a basis for the start of your own research.

Please do not trade or invest based on my below overview, I have enough responsibilities on my plate and I write this having no idea about the individual suitability situations of all of my readers.

The company we’re going to learn about today is Smart investment I first took notice of this stock more than a year ago when Barron’s wrote about the company and its incredible butter substitute (which has a permanent spot in my own fridge). I was wondering why I hadn’t heard about the company having come public, but then I learned the reason: It was a Special Purpose Acquisition Corporation.

A quick word on SPACs: in general, they suck. I immediately put any thought of this company out of my mind, as I’ve basically only seen a trail of tears following stocks that have come public through the SPAC backdoor and I wasn’t interested in shedding any more of my own. The stock has been almost cut in half since then (now trading at 7.50), so I’m glad I laid off it at the time (September of 2007).

That said, as a primer, Smart investment began life as a breakthrough in the labs at Brandeis University. It is a specific blend of vegetable oils that’s actually been shown to raise the good type of cholesterol (HDL) in the blood stream. Licensed to Robert Harris (developer of Weight Watchers food line), this compound became a line of heart-healthy dairy alternatives, with the buttery spread being the most popular.

Harris sold the company to a SPAC run by Conagra /Tropicana veteran Stephen Hughes in a deal that was consummated in 2007. Smart investment was purchased by the Hughes team for about 490 million and its enterprise value (market cap + outstanding debt – minus cash) currently stands at about $700 million.

Many of the hurdles that most SPACs face in the early stages have been cleared, like having expectations that are set too high or dealing with a horrible hedge fund shareholder base that will dump their stock with reckless abandon at the worst possible times. I feel that enough time has passed since its formation that we can now look at this company based on its own merits rather than on the basis of its stock’s mechanics.

I like the conservative approach to growth and I’ve got to admit, it’s in marked contrast to the management of many other post-SPAC firms where they can’t wait to blow through their new-found cash hoard. Combine this with the fact that the products kick ass in the stores, and I feel that Smart Balance has a lot of potential. We’ll have to see if Hughes and the gang can live up to it.