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Howie Man  

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  • John B. Sanfilippo: Severely Mispriced With Significant Near-Term Upside [View article]
    Thanks for the question.

    The consumer nut category is consolidated among 5 companies. There haven’t been any noteworthy new entrants in decades. The primary factors that determine success and provide barriers include:
    - Access to a finite supply of raw nuts through contracts and relationships with a fragmented base of growers (see DMND’s contract and supply losses over the last three years).
    - Processing and shelling capabilities help mitigate supply disruption (JBSS is vertically integrated).
    - Each nut has its own idiosyncratic supply/ demand drivers and pricing dynamics. Knowledge of these niche crops is critical given the frequent swings in prices (inventory management, purchasing discipline, pricing power, etc). Contrast this other salty snack categories such as potato chips.
    - It obviously takes years to build retail distribution, product awareness among consumers and everything that goes into managing a food brand.
    Mar 27, 2015. 10:22 AM | 2 Likes Like |Link to Comment
  • Black Diamond: A Very Attractive And Timely Short With A +50% Near-Term Return Potential [View article]
    The below 8K dated 7/28 lays out the pro forma numbers. As you'll see EBITDA goes from $11.0M to -$6.5M following the Gregory sale. Not sure where you are getting your EBITDA margin info.

    http://goo.gl/OeyHK1
    Oct 23, 2014. 10:26 AM | Likes Like |Link to Comment
  • Even Close To Its All-Time High, John B. Sanfilippo & Son, Inc. Is A Strong Buy [View article]
    The increased special dividend payout availability of $25M in the recently amended credit facility allows for up to a $2.25 per share dividend. With stable nut prices I think we'll see a payout close to that level, implying over a 6% yield. Management has indicated an announcement will take place in two weeks concurrent with the Annual General Meeting.
    Oct 15, 2014. 12:51 PM | Likes Like |Link to Comment
  • Higher One's High Potential Reward [View article]
    ONE is the only campus card provider still changing POS PIN swipe fees. If anything the ABA and other bank lobbying groups want the DoEd and CFPB to prohibit PIN fees to level the playing field. Below is a link to a recent Consumer Reports study (titled Campus Banking Products: College Students Face Hurdles to Accessing Clear Information and Accounts that Meet Their Needs). The report compares charges for all existing campus card providers. As you will see ONE is an outlier.

    http://goo.gl/UCBjdM
    Sep 30, 2014. 10:14 AM | Likes Like |Link to Comment
  • Higher One: A Terminal Short With A Number Of Ways To Win [View article]
    ONE is the only campus card provider still changing POS PIN swipe fees. If anything the ABA and other bank lobbying groups want the DoEd to prohibit PIN fees to level the playing field. Below is a link to a recent Consumer Reports study (titled Campus Banking Products: College Students Face Hurdles to Accessing Clear Information and Accounts that Meet Their Needs). The report compares charges for all existing campus card providers. As you will see ONE is an outlier.

    http://goo.gl/UCBjdM
    Sep 30, 2014. 10:12 AM | Likes Like |Link to Comment
  • Continental Building Products: A Multi-Year Bull Run Story [View article]
    Also correct. I was referring to FCF to the enterprise. No cash taxes and 65% pass-through on price increases are definitely attractive qualities.
    Sep 12, 2014. 12:21 PM | Likes Like |Link to Comment
  • Continental Building Products: A Multi-Year Bull Run Story [View article]
    If it does CBPX will generate over $150M in FCF even if vols are flat. That's a 13% forward FCF yield.
    Sep 12, 2014. 09:38 AM | 2 Likes Like |Link to Comment
  • Continental Building Products: A Multi-Year Bull Run Story [View article]
    Looks like National Gypsum announced a 20% price increase for 2015. If even half this price sticks across the industry and vol growth is modest, then 2015 will be very strong for CBPX given its high pass-through rate.

    http://bit.ly/1lXQI5Y
    Sep 11, 2014. 09:35 AM | 1 Like Like |Link to Comment
  • John B. Sanfilippo: Transformed CPG Company With Large Upside [View article]
    I think it is likely they will pursue a sale given recent transaction valuations in the nut category. The major roadblock to pursuing such a sale was recently removed when the family patriarch and JBSS founder, Jasper "Jeff" Sanfilippo (now 82 years old), left the board of directors and dropped his Chairman Emeritus title earlier this year. The third generation is not involved. I would encourage you to reach out to management for additional perspectives.
    Sep 9, 2014. 02:39 PM | Likes Like |Link to Comment
  • Continental Building Products: A Multi-Year Bull Run Story [View article]
    Fair point but isn't Lone Star ultimately driving the process and likely seeking liquidity in the not too distant future? I think we can rule out USG for anti-trust reasons, but GP and National certainly have the capacity to pay-up and presumably should be willing to do so given the attractive qualities you thoughtfully outlined.
    Sep 9, 2014. 11:23 AM | 1 Like Like |Link to Comment
  • John B. Sanfilippo: Transformed CPG Company With Large Upside [View article]
    Steffen-

    1) Total shares outstanding has been growing at slightly over 1% annually. I wouldn't consider this an item of concern. To account for this I use the FD share count in my valuation.

    2) JBSS's business requires seasonal outlays to purchase nut inventory. This is funded through FCF and off its revolver at a rate of only 2.1%. JBSS has plenty of liquidity with over $70M of availability on its revolver. Management has been pretty savvy with cash management, keeping a low cash balance given its low cost of funds.
    Sep 9, 2014. 10:12 AM | Likes Like |Link to Comment
  • John B. Sanfilippo: Transformed CPG Company With Large Upside [View article]
    Some takeaways from the recent quarter financials:
    - Revenue and EBITDA each grew 14% y/y with 70% of that growth coming from the more attractive consumer channel
    - Fisher baking nuts now has a 32% market share nationally (#1 position with DMND at 28%) and continues to take shelf space and gain distribution
    - Recent performance came despite the rise in raw nut costs (30% price increase in almonds and walnuts) further demonstrates its pricing power and margin stability
    - Won-back a large snack nuts customer (Menards) during the quarter which will set JBSS up well going into the higher volume fall and holiday periods
    - California drought is having limited impact on the almond and walnut crop as farmers have been supplementing irrigation with well reserves. Both grower groups are presently forecasting record yields and flat prices.
    - Given stable raw nut prices, a special dividend ($1-$1.50) is likely forthcoming
    - Despite the recent move JBSS still trades at about the same LTM multiples as when written-up
    - Currently 6.8x EV/ LTM EBITDA, JBSS is a $50-60 stock at the 10-12x peer multiple
    - Sale over the next 6-12 months is increasingly likely given the activity in the space and tone from management
    Sep 9, 2014. 08:36 AM | Likes Like |Link to Comment
  • Continental Building Products: A Multi-Year Bull Run Story [View article]
    The wallboard industry is still quite fragmented despite the consolidation you noted. CBPX seems like it would be a logical target for National, GP, USG or Sait Gobain. Do you have any thoughts on that?
    Sep 8, 2014. 02:35 PM | 1 Like Like |Link to Comment
  • John B. Sanfilippo: Transformed CPG Company With Large Upside [View article]
    All inventory is procured at harvest from a base of fragmented growers. Raw nuts prices are only determined annually at that time. There isn't a secondary market where prices fluctuate during the rest of the year like some ag products. JBSS sets prices based on cost and sells that inventory at those levels over the course of the ensuing year.
    Aug 20, 2014. 03:29 PM | Likes Like |Link to Comment
  • John B. Sanfilippo: Transformed CPG Company With Large Upside [View article]
    JBSS actually has a higher ROIC and ROE than all the peers mentioned other than BGS and is growing earnings at about 10%. The value of its supply chain shouldn't be understated. JBSS has contracts and developed relationships with hundreds of nut growers over the past 50 years -- providing a barrier against new competition that does not exist in most other CPG categories (eg. chips, crackers, etc.). A +10x multiple would work in an LBO particularly given the excess management overhead expenses that could be cut.
    Aug 19, 2014. 09:38 AM | Likes Like |Link to Comment
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