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Nat Stewart  

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  • Why U.S. Lime & Minerals Should Consider A $20 Per Share Special Dividend [View article]
    The EBITDA metric is the one used within the industry to value assets.

    From 2014 10K "Assuming the current level of production and recovery rate is maintained, the Company estimates that these reserves are sufficient to sustain operations for more than 75 years."

    With a reserve life that long, adding excess capacity at this point would be very wasteful unless they can do so extraordinarily cheaply - at little to no cost or (likely) in conjunction with other productive assets.
    Apr 29, 2015. 03:36 PM | Likes Like |Link to Comment
  • Mesabi Royalty Trust - A Long-Life Asset With Massive Operating Leverage [View article]
    In his conference calls, the new CLF CEO has convinced me that this is a very good long term asset. I don't see anything that suggests long term impairment. Honestly from the long term pov, I'd love to have had a serious work stoppage as that might get the price down enough to create massive optionality.

    Regardless, I see it this way. One plants some seeds such as msb where the economics are inherently extremely favorable. Most u can lose is 1X your investment, worst case. Some seeds get killed off do to a changing world, some grow to be giant oak trees. I don't worry about it.

    I did much enjoy buying under 12 and making near 25% in 2 days after the stops recently got blown out for a swing trade.
    Apr 26, 2015. 09:18 PM | 2 Likes Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    Looks like you are correct about the dividend, I looked at this summary they provide here

    http://bit.ly/1QsQtM0

    And didn't consider they were using the equity method. I guess i was too eager to jump in with a comment. However on the balance sheet under that method it is showing little over 6B for the SABMiller the stake, vs. the near 24B market value.
    Apr 25, 2015. 10:22 AM | 1 Like Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    This was a well written article and enjoyable to read.

    However, It is missing some key perspective. In a number of circumstances you mention key issues but then do not fully "connect the dots". If i find time I will attempt to provide an alternative perspective on most all of the data points that you mention, including healthcare costs (a good case can be made that on net, the govt is making a healthy profit on the industry, and has zero desire to see it disappear).

    As just one example, the company had 808M in total interest expense in 2014. The SAB miller stake paid over 1000M in dividends - in other words completely covering their interest expense. And the above does not even include the tax shield property of the interest expense which reduces its net cost. You mention this yet don't seem to reflect on how this impacts the company's financial position - indeed you still seem to see it as a negative.

    Then you failed consider that the market value of the SAB Miller Stake, worth close to 24B, it is mostly "off balance sheet" yet dwarfs the value of the company's total outstanding debt of 14.6B (2014 figures).

    In other words they have an 1 asset that fully covers the debt both in terms of principle and interest payments. This is just one example among a number of issues where this article didn't quite reflect reality, but only a partial or incomplete view of reality.
    Apr 25, 2015. 09:24 AM | 4 Likes Like |Link to Comment
  • Holy Smoke - My Favorite Idea That Everyone Knows But Doesn't Understand [View article]
    On the other hand if over 10 years inflation picks up, the debt issuance will be for all practical purposes be robbing the bank.
    Apr 25, 2015. 08:54 AM | 1 Like Like |Link to Comment
  • Consolidated-Tomoka - Major Catalysts Plus REIT Conversion Plan Will Unlock Value [View article]
    I actually emailed them about that but never heard back. I didn't notice the double confirmation with the slide deck - in the earnings release they had 58M in one part, and 50M in another.

    Ive come to the conclusion that investors by and large are not going to "get" this story until the big sales start closing and it slaps them upside the head - which I don't mind one bit.
    Apr 23, 2015. 04:21 PM | Likes Like |Link to Comment
  • A Massive Tender Offer Has Created A Solid Buying Opportunity In Winmark Corp. Shares [View article]
    They do have a few long term external shareholders that have very large positions. I can see these holders wishing to participate at least with a part of their position, if perhaps only to diversify as they must be sitting on very substantial gains. In terms of the price - I think they wanted something fair for all parties, so they set a price to ensure that. That last question is interesting, but at the moment I don't have much insight. Will have to think about it.
    Apr 23, 2015. 03:52 PM | Likes Like |Link to Comment
  • Replace The 4% Retirement Rule With These 4% Dividend Stocks [View article]
    The problem with the 4% dividend plan is that it says very little about how secure the value of your principal is, which in the case of stock investing is the value of your partial ownership in the business relative to inflation over time.
    Apr 22, 2015. 08:13 PM | 1 Like Like |Link to Comment
  • Balchem Appoints Theodore Harris President and Chief Executive Officer [View article]
    A near 2,400% cumulative return to stockholders during Mr. Rossi's tenure as CEO.
    Apr 22, 2015. 09:30 AM | Likes Like |Link to Comment
  • AAON Inc. Is Egregiously Overvalued Now [View article]
    Your gain has absolutely nothing to do with the stock splits, and everything to do with this being a great, growing company that has undergone multiple expansion. Splits are completely neutral and have zero economic value. Many people who latch on to a good growth stock feel that splits create value, but in fact it is an effect (do to managements choice of a preferred trading price), rather than a cause, of their gains.
    Apr 21, 2015. 10:12 AM | Likes Like |Link to Comment
  • A Massive Tender Offer Has Created A Solid Buying Opportunity In Winmark Corp. Shares [View article]
    Nag? I take the time to reply and that is what you call me? ; )

    There is no cult around the CEO. After following the company for at least 5 years and investing over that period, I simply think he is a good, competent person with integrity, though not (like everyone) without occasional error as I documented in my last Winmark article (along with the successes).

    The current capital allocation as I understand it to invest in the leasing business, special dividends, or share buybacks - and they make decisions at each point based upon the opportunities in each area relative to the others. It makes perfect sense to me.

    If I have any question it is if being a bit less restrictive in growing the leasing business would be worth it in terms total return - however I don't have the inside point of view needed to grasp the issue fully.
    Apr 19, 2015. 08:56 PM | 1 Like Like |Link to Comment
  • A Massive Tender Offer Has Created A Solid Buying Opportunity In Winmark Corp. Shares [View article]
    David,

    two things.

    First, private shareholders are not able to replicate a leveraged buyback for a number of structural reasons related to taxes and constraints on how collateral can be utilized to secure a loan. Never mind the fact that we don't control payout policy. If we leveraged against a different asset, well then we would be encumbering a different asset, not at all the same thing, and we would still not be able to pay interest pre corporate tax, and principle without the second layer of taxation on shareholders. Bottom line the premise to your first comment was incorrect.

    When I see this type of faulty premise my motivation to reply is fairly low, as I have limited motivation to discuss issues of a very general financial nature vs. the specific focus of my article. And even then, if or if not anyone agrees with me does not matter to me. Time will reveal who is correct and I accept that.

    Second, in terms of value u are looking at a static moment in time. U have to look at flows over time to see how value is built. Maximizing the value of equity has allot of moving parts and depends on many factors both internal (capital needs, other reinvestment opportunities, etc) and external to the company (such as interest rates available to fund purchases with).

    Bottom line in a few years our same share count will own (likely free and clear, as I expect the company to pay down the debt) 20% or so more of the company than they did before they started their massive 2014 buybacks which lead up to this tender offer. That value (the extra 20% we own) is going to compound as the company grows (and hopefully, style encore develops from its early stage to a mature business) while our 2.4% interest expense paid by the company will be linear. that is how value is created with finance and (most importantly) a sound company with great economics.

    If the company had decided to issue a 100M dividend rather than buy back shares, I would have supported that as well - only I would have wished that I owned more in my tax-differed account vs. my taxable account.

    Regardless, I believe Morgan and his team have made a sound decision. The low interest rates are an enourmous opportunity that should not be passed up by any company with reliable cash flows, IMO. That is how I see things.

    The caveat to the above is that all of these issues are secondary to the health of the business and its fundamentals. As it is, they will be able to pay back the credit facility quite quickly, the term loan fast too, and we will be left with a larger % ownership than we otherwise would have. IF the current franchises hold steady or grow a bit, and Style Encore moves out of its early stage successfully, it will prove to be a home run. These guys really care. Look at the top level managers. U will hardly ever find a company where the key executives have such a high level of stock ownership relative to their incomes. While I don't know the future and my crystal ball is quite cloudy, these are the kind of people I like to invest beside - and this is a very good business.
    Apr 18, 2015. 08:56 PM | 1 Like Like |Link to Comment
  • A Massive Tender Offer Has Created A Solid Buying Opportunity In Winmark Corp. Shares [View article]
    You have a very solid understanding of this company and its management philosophy. Thank you for commenting. If you include the repurchases made in 2014 with this tender offer, they have retired over 1M shares within the past 16 or so months at an average price of a little over 82 or so.
    Apr 18, 2015. 07:42 PM | 1 Like Like |Link to Comment
  • A Massive Tender Offer Has Created A Solid Buying Opportunity In Winmark Corp. Shares [View article]
    David, In my opinion what you are saying lacks both an understanding of basic corporate finance as well as specific knowledge of this company. We will have to agree to disagree.
    Apr 17, 2015. 07:50 PM | 3 Likes Like |Link to Comment
  • A Massive Tender Offer Has Created A Solid Buying Opportunity In Winmark Corp. Shares [View article]
    This company's free cash flow (levered) per share is very similar to its after tax earnings per share. As such when EPS goes up, cash flow per share also goes up. With an after tax cost of debt of around 2.6% this is a no-brainer. We (shareholders) will become wealthier than had this event not occurred.

    They will be able to have net zero debt within 2-3 years or perhaps even less, if they choose to do that - after which point continuing shareholders will own a larger % of the company free and clear.

    Thanks for commenting.
    Apr 17, 2015. 11:01 AM | Likes Like |Link to Comment
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