Ragnar Is A Pirate

Tom, Can you send me an email?

2012-05-29T07:32:28.038-07:00

Tom,

Can you send me an email?

@jeff Regarding the MEPPs, there is a Credit Suis...

2012-05-29T07:21:46.387-07:00

@jeff

Regarding the MEPPs, there is a Credit Suisse report on them that I found posted online somewhere, but I can't find the link right now. The WSJ article below references the CS report.

http://online.wsj.com/article/SB10001424052702304331204577356210545503368.html?KEYWORDS=jakab+pension

Anyway, for me this is an easy pass - but you may be able to figure it out.

Cheers,
Tom L

Why am I uncomfortable with the dividend that is l...

2012-05-25T18:53:16.464-07:00

Why am I uncomfortable with the dividend that is less than 1/5 fcf.

1. Same store sales and margins have been declining for years. I would SVU to error on the side of conservatism.

2. The metrick ignores wear and tear of the stores (i.e., depreciation).

2. Most of the Save-a-lots are franchised...... I would like to see SVU own and operate them.

3. Getting rid of the dividend would make a symbolic message to all stakeholders that all stops are being pulled to ensure a successful turn-around.

4. Finally, as SVU refinances this debt in a couple of years, their financial rating will be less than it otherwise would have been if they had focused on debt reduction.

5. Lee Enterprises is a good example of a Company kept the dividend too long and ended up going into a pre-packaged bankruptcy. Mind you, LEE neither had nor has any trouble making interest payments. But the street judged in unsafe and balked at offering decent terms (the lowest tier now has a 15% coupon Warren Buffet has been buying).

6. 3 years out, SVU could be in the same situation as LEE was.

Just my 2 cents. (I am also long LEE.... a lot in common with SVU).

Why are you uncomfortable with a dividend that'...

2012-05-25T03:05:21.954-07:00

Why are you uncomfortable with a dividend that's less than a fifth of FCF (some would say much less)?

SVU was trading very strongly after earnings.... t...

2012-05-24T20:16:03.316-07:00

SVU was trading very strongly after earnings.... then Goldman came out with a $5 share target/downgrade...Poof to 300,000,000 in market cap. I think the risks are high....but at this price, the rewards are much higher... I am putting a buy in tonight. The shorts may be overplaying their hand.

Multi-employer plans aside.... I am not comfortable with SUV 7.75% assumed rate of return.

I always thought I would wait til they suspended the dividend to wade in..... but this appears to already be baked in to the price.

Finally, why did Herkert not make all these personell changes two years ago.

Going Long tomorrow.

I have been adding SVU in size this past week. Sho...

2012-05-24T18:49:00.726-07:00

I have been adding SVU in size this past week. Short interest too high, no big debt till mid-2016, still managable,, net income grew in FY 2012 excluding goodwill, and Ebitda remains good.

Tom, Is this the article you speak of? http://on...

2012-05-24T18:30:30.684-07:00

Tom,

Is this the article you speak of?

http://online.wsj.com/article/SB10001424052702304203604577393941108053800.html

You are right, that is a huge risk. Last year, the unfunded liability increased hugely . However, the way I figure it, is that even if SVU gets hit hard by this, they are still trading for such a small multiple of cash flow that they won't be destroyed for quite sometime, as a lot of the liabilities are far down the road. Even when you throw in the increased unfunded liabilities, they still are generating a sizable amount of value relative to their market cap.

I would also say that it is fair to say that the company wil be keeping this in mind in the future. For example, with their Save-a-lot stores that are fueling growth (and are often franchised) they shouldn't be getting a larger liability from the pension. Furthermore, it really does seem like they are turning things around.

Time will tell. What are your thoughts?

Hi Jeff, Great blog. For SVU, have you investiga...

2012-05-24T17:48:05.581-07:00

Hi Jeff,

Great blog. For SVU, have you investigated the multi-employer pension liability? This sounded pretty awful to me when I read about it. The WSJ ran an article recently about the MEPP disaster.

Just trying to help you identify all of the risks. I have no position.

Cheers,
Tom L

I'm looking forward to part 2! Tom L

2012-05-24T06:17:53.868-07:00

I'm looking forward to part 2!

Tom L

My ears were burning.. This post obviously hits cl...

2012-05-21T06:08:51.913-07:00

My ears were burning.. This post obviously hits close to home for me. Unlisted/unregistered stocks are endlessly fascinating. I had seen the news about the new 1200 shareholder limit as well. I think we're going to see a lot of movement in this space, and hopefully some profitable going private transactions as well.

I think banks are the best way to dip a toe in the market because as Anon says everything is on the FDIC website quarterly. Even still most of these dark companies aren't all that dark if you're willing to pick up the phone. I've only had one company refuse to send me the annual report when I requested it. I ended up getting it a few months later when they mailed it to all shareholders, so no problems there.

What I love about unlisted stocks is this is an opportunity to invest in smaller companies that aren't running the company to play by Wall Street's rules. The other nice thing is after making the initial buy decision you can usually forget about the company for a year until the next annual report comes out, these are low maintenance stocks.

I agree that JG Boswell is a bit of a poster child for the unlisted world. I read the book King of California that was basically a company biography. All said the company isn't as fascinating as a lot of the other companies that are flying even deeper under the radar. While JG Boswell is standoffish towards investors there are plenty of unlisted companies that are shareholder friendly selling at much more attractive discounts.

This comment isn't complete without agreeing with Anon that knowing and understanding management is key on these companies. Managers who are looting the organization are to be avoided unless the discount has priced that in.

Glad you guys enjoy my blog, I have no shortage of companies to write up in this space!

Nate

Sorry it came off as derisive...not meant to be. ...

2012-05-20T09:59:17.396-07:00

Sorry it came off as derisive...not meant to be. I invest in Pink Sheet companies myself, but usually 5 - 10 years after delisting as the stock has been forgotten.

One correcition in my previous post.. Banks file data with the FDIC, not the SEC. I own a couple of banks (IOFB and one I am trying to build a position in) that don't file.... appear to offer superior value.

Boswell is an interesting case study. There is a considerable following on value blogs. I believe one of them has gone so far as to try to sell you spreadsheet detailing there financial results. This is an outlier in Dark stocks...usually very limited information on the web.

Great blog!

Anon, A few paragraphs of my thoughts on the whol...

2012-05-18T13:51:43.517-07:00

Anon,

A few paragraphs of my thoughts on the whole subject of common stock de-listment is hardly enough to address the plethora of issues at hand. If you are comfortable with a management team and they view shareholders as partners, your point will generally (there may be exceptions) be void. Generally, this is something that I would look for when investing in that sort of company.

Even if a company only sends out reports to shareholders, there may still be a market for shares and wild swings in price to be taken advantage of. JG Boswell comes to mind as one where it is super hard to get info, but, there is a decent market for the shares (and to some degree large swings in price).

Oddball stocks is one of the best investing blogs out there.

All that said, I appreciate your concern, even though it came off as a touch derisive.

I think you are missing the point. Sure... they s...

2012-05-17T19:20:31.032-07:00

I think you are missing the point. Sure... they say there is going to be this cost savings...less red tape...etc.

What they don't tell you is they will probably no longer file a proxy detailing executive compensation (guess where the savings is going??!). Good chance that ONLY shareholders will receive periodic financial reports (so much for trying to find a market for your shares).

The good thing about banks is that there is great quarterly information they have to file with the SEC.

Before investing in any Dark Companies.... read some of Oddballstocks.com coverage of some of these stocks....

Best of luck

Very interesting post. Im very interested in thes...

2012-05-16T07:57:28.992-07:00

Very interesting post. Im very interested in these types of situations. It is really difficult to find original content like this. Keep up the great work!

Thanks for reading, anon. I don't care about ...

2012-05-02T17:19:55.863-07:00

Thanks for reading, anon.

I don't care about historical price fluctuations, as they have nothing to do with the intrinsic value of the stock... While often stock prices do follow, IV, I don't believe this to be the case with SYTE. After having seen the properties that they are investing in, I am very confident in the future of the company.

I just found your website and seen this post but i...

2012-05-02T12:36:48.110-07:00

I just found your website and seen this post but is it just me or is it not too wise to invest a company that has had free cash flow of:

2008 ~ ~2.5 M
2009 - ~2.0 M
2010 - ~0.5 M
2011 - ~- 1.0 M

On top of a share price that has gone no where for 10 years which is usually at least relatively close to intrinsic value changes over such a long time period since the market is no where near 100% inefficient.

I just sent him an email. Thanks!

2012-04-30T19:39:59.698-07:00

I just sent him an email. Thanks!

this might be the guy - you could ask him? J.E.Mel...

2012-04-30T16:53:05.852-07:00

this might be the guy - you could ask him?
J.E.Mellor@Bradford.ac.uk

Ragnar - I just found your blog from SA and am new...

2012-04-17T12:28:53.328-07:00

Ragnar - I just found your blog from SA and am new to both sites. I appreciate your coverage of UWN as the Yahoo message boards don't do it for me.

Anonymous - I agree completely. While I don't have a lot tied up in UWN, I'm disappointed with the company thus far in terms of shareholder appreciation. This may and probably will be a sideline pick until greater earnings follow but not making money on UWN right now, that's for sure.

Thanks both of you for your insight

I am somewhat let down by UWN's latest earning...

2012-04-15T15:24:28.251-07:00

I am somewhat let down by UWN's latest earnings.

I would prefer that they start with what they have on their plate. Start "digesting" what they have acquired and expand revenue, cut costs, improve customer experience and start making money.

Management has down a pretty good job so far, but they need to start EARNING money. They don't have to hit a home run, but I would like to see quarters of earnings of $.00, $.01, & $.03 a share in true earnings.

If they can expand to VLT in WA, great. If they can open the racetrack casino in Vegas, great. If they can pick up a tuck acquisition in WA, great...

BUT PLEASE FOCUS ON GETTING SOME EARNINGS OUT OF WHAT YOU'VE GOT.

I will still be holding no matter what for the next few quarters. After that, I might consider redeploying capital to more promising ventures...

Looks like you're seeing a lot of green on you...

2012-04-10T15:29:46.400-07:00

Looks like you're seeing a lot of green on your screen between SVU and SYTE.

I just wanted to say thanks for staying on top of your SVU posts. I read yours Sunday, studied it hard Monday morning and put 7.5% of my portfolio in it at about $5.20.

Can't wait to read about your apartment deal... sounds very interesting.

-Billy M

To me, their cash flows, present and future, justi...

2012-04-10T11:26:17.124-07:00

To me, their cash flows, present and future, justify the debt.

Jeff, Don't you think that Nevada Gold just h...

2012-04-09T08:27:36.984-07:00

Jeff, Don't you think that Nevada Gold just has a lot of debt. How do you get your head around it? I know it has been rescheduled to 2014/2015, but still.

2012-04-08T11:50:31.145-07:00

This comment has been removed by a blog administrator.

Great point about the negative feedback loop regar...

2012-04-08T11:42:43.523-07:00

Great point about the negative feedback loop regarding the goodwill, really interesting stuff

one thing that might have some impact from a technical perspective is that SVU is comfortably the smallest company in the s&p 500 by market cap (1.1Bn vs 1.8Bn for # 499, first solar). since market cap is often used as the criteria to remove stocks from this index, the next time a spin-off stub remains in the S&P 500, and they are looking for something to remove, SVU could be the obvious choice. could be some additional selling pressure if/when that happens