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  • Update: Artal Purchases Of Weight Watchers Indication Shares Are Undervalued
    Yesterday, 7:24 AM WTW 4 Comments

    Summary

    • Artal has always been a net seller of Weight Watchers shares since the IPO in 2004 and has never purchased shares on the open market.
    • Artal purchases are said to be in anticipation of equity-based award dilution, but dilution will occur over three years, not immediately.
    • Artal has high insider knowledge so the share purchases on the open market up to another >1% of outstanding shares is material and an indication shares are undervalued.
  • Update: Efficiency Driving PostNL
    Yesterday, 6:09 AM PNLYY Comment!

    Summary

    • PostNL reached our original thesis and due to other more attractive opportunities we exited at the end of last year.
    • Cost cutting measures are being achieved quicker than the company initially anticipated and is likely to continue.
    • The company is likely to be earning much more operating cash next year and a likely credit upgrade will catalyze a higher share price.
  • Update: Resolute Forest Products' Pension Liability Continues To Decrease
    Yesterday, 6:04 AM RFP 2 Comments

    Summary

    • Pension liability continues to contract with a higher discount rate.
    • Still some downside in worse case scenario, however, the company is likely to reach profitability next year.
    • Continues to trade for low EV/trailing EBITDA multiple although the company is likely to achieve much more in the future.
  • Winmark's 'High' Book Value Caused By Economic Goodwill
    Tue, Aug. 19 WINA Comment!

    Summary

    • Standard accounting is misleading with companies that earn high returns on very little net-tangible assets.
    • Economic Goodwill is real and is hard to quantify but estimates using market rates gives a ball-park idea of a company's true net asset value.
    • Winmark does not trade at 20x book, but 1.6x including Economic Goodwill. Historically, that is a lower multiple to pay for the company.
  • Update: Winmark Leasing Portfolio Growing, And Share Repurchases Continue To Indicate Shares Are Undervalued
    Thu, Aug. 14 WINA 3 Comments

    Summary

    • Lease income timing is masking true growth.
    • The lease portfolio grew at 33% annualized, and is on track for further growth.
    • Company share repurchases and open market purchases by John Morgan continue to indicate shares are undervalued.
  • Update: Wesco Aircraft Holdings Even More Attractive Valuation
    Thu, Aug. 14 WAIR Comment!

    Summary

    • The market's short-term nature has sent shares in this high quality business further down.
    • It will take time for the integration of Haas to bear fruit.
    • Tom Bancroft's Makaira Partners continues to purchase shares and holds Wesco as one of their largest positions at ~16.5% of fund as of the end of last quarter.
  • Update: Bankwell Business Quality Still Intact
    Thu, Aug. 14 BWFG 1 Comment

    Summary

    • CEO and board member Peyton Patterson resigned, share price rises.
    • Latest-quarter performance indicates business quality still intact.
    • New leadership is likely to be quality, since the board continues to own 30% of the bank.
  • Platform Specialty Products: Rare Opportunity Continues To Be Available
     • Thu, Aug. 14 PAH 5 Comments

    Summary

    • PAH has deep bench of high quality, unconventional managers.
    • Agriphar acquisition fits the roll-up strategy.
    • Mr. Market continues to not fully understand the opportunity and assigns an average price for an above average business and management team.
    • The risk/reward for long-term investors is very appealing.
  • Mr. Market Might Be Mistaken With Creative Learning Corporations' Auditor Change
    Wed, Aug. 13 CLCN 6 Comments

    Summary

    • CLCN changed their auditor, yet looks to be related to KLJ merger, not a result of bad accounting.
    • Franchises have been growing at a fast clip.
    • Earnings yield is above 10% and the company is likely to continue to add to their cash pile.
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward
     • Thu, Aug. 7 FHCO 14 Comments

    Summary

    • Uncertainty in the new strategy and the forced selling from dividend seekers makes this a disaster de jour.
    • Recent earnings re-iterates that FHCO's business quality continues to be intact.
    • FHCO has limited downside at today's price and significant optionality if marketing is moderately successful.
    • Certainty from an upcoming detailed strategy on marketing as well as a potential large share repurchase could send shares much higher.
  • Avante Logixx: Mr. Market's Unwarranted Reaction Has This Quality Security Roll-Up On Sale
     • Mon, Jul. 28 ALXXF 9 Comments

    Summary

    • Avante Logixx has an edge in technology and the M&A experience to roll-up the highly fragmented industry.
    • The security business model is quality with high FCF, recurring revenues and negative working capital; all are attributes that are good ammunition to "chase a few more rabbits".
    • Market's reaction to the decline in non-recurring revenues and lack of acquisition insight is unwarranted providing compelling opportunity.
  • Post Holdings: Great 'Cereal' Acquirer Meaningfully Undervalued
     • Tue, Jul. 22 POST 23 Comments

    Summary

    • Post Holdings is rhyming much of the history found in Ralston Purina's annual reports from 81-00.
    • Bear thesis overlooks the secret sauce of Bill Stiritz and the corporate culture he creates.
    • Post Holdings is trading for a forward 10x EBITDA, which we believe is a very fair price.
  • Update: Dividend Cut Provides At Least 50% Upside For Female Health Company
       • Thu, Jul. 17 FHCO 37 Comments

    Summary

    • Dividend suspension has sent yield seekers to the exit and is likely the only reason for the 24% drop in the last two days.
    • Company is actively searching for ways to diversify operations and proper marketing could lead to strong consumer franchise.
    • Zero debt and quality operations should allow moderate leverage for a large dutch tender at an extremely attractive price.
    • FHCO is also an attractive acquisition target for large consumer product companies.
  • Bankwell Financial Group: Significantly Undervalued While Outsider CEO Crafts Encore Performance
       • Tue, Jul. 1 BWFG 11 Comments

    Summary

    • Peyton Patterson fits the outsider CEO mold described by William Thorndike and is repeating her success with a much smaller bank.
    • The community banking environment is ripe for consolidation in the Connecticut and surrounding areas.
    • Mr. Market has been selling BWFG off because of media headlines allowing one to purchase the bank at 1 times tangible book.
    • Upcoming catalysts should quickly close the discount to intrinsic value.
  • Creative Learning Corp: Attractive Education Franchise Systems
       • Wed, Jun. 25 CLCN 2 Comments

    Summary

    • Creative Learning Corp's franchise opportunities focus on an attractive market with sustainable long-term demand.
    • CLCN is run by Brian Pappas who has extensive experience running and growing franchise businesses, which is an advantage over competitors.
    • Although Pappas is the largest shareholder, we question some related transactions.
    • CLCN is trading at a fair value and if one overlooks related transactions, the business franchise should provide ample margin of safety.
  • Winmark Corp: Win Is A Common Theme For John Morgan
       • Wed, Jun. 25 WINA 15 Comments

    Summary

    • John Morgan has turned Winmark into a capital compounding machine with returns over 24% annualized compared to the measly 2% achieved by S&P 500 over the same period.
    • Both the franchise and leasing businesses are quality with high returns on little capital and there is plenty of growth in both left.
    • John Morgan has been recently purchasing shares on the open market and share repurchases provide a catalyst.
    • The company is currently trading at a slight premium to the current leasing portfolio and franchise businesses. We get the growth in the leasing business for free.
  • Female Health Company: Sustainable Moat Through Education
       • Fri, Jun. 20 FHCO 20 Comments

    Summary

    • FHCO's focus on education and training is a significant advantage in attaining continuous usage by females who need it most.
    • Public health organizations are not focused on lowest price.
    • Growth in the consumer global condom market will be difficult but provides significant growth optionality.
    • Valuing the NOLs and ongoing business strictly in the global public sector, FHCO is trading at a significant discount to intrinsic value.
  • Commercial Bancshares: Mighty Little Bank Meaningfully Undervalued
       • Wed, Jun. 18 CMOH 6 Comments

    Summary

    • Quality assets and operation that were able to grow market share during financial crisis.
    • Bank continues to grow and be profitable with consistent ROA of nearly 1% and ROE of 10%.
    • Management and board own significant stake in company and have continued to purchase shares in the open market.
    • Bank trades at a discount to book and multiple of earnings.
  • Cherokee Group's GARP: Growing Attractive Royalty Profits
       • Wed, Jun. 18 CHKE 1 Comment

    Summary

    • Quality business model: asset-light, low operational risk, high returns on minimal capital.
    • Expanding global economy provides organic growth, and acquisitions will add further growth.
    • Past three acquisitions have been accretive, and the company announced an 11% share repurchase program, which would be accretive at current prices.
    • Plenty of downside protection, with $85 million in minimum royalty guarantees.
  • Southside Bancshares And OmniAmerican Bancorp Merger Insights
       • Thu, May. 1 OABC, SBSI 3 Comments

    Summary

    • The combined bank would continue to outperform peers on an performance basis.
    • The combined bank would continue to have high asset quality.
    • The market's negativity has driven down the shares of SBSI, but negativity could be temporary.
    • OABC shareholders could potentially get a better offer, however, the combined bank would be powerful in the long-term.
  • Harvard Illinois Bancorp: Stilwell Might Win The Proxy Marathon
       • Fri, Apr. 25 HARI 1 Comment

    Summary

    • Joseph Stilwell is currently in his third proxy contest with HARI to appoint a nominee to the board.
    • Despite HARI's focus on share increase since 2/1/2012, the bank has been performing below savings institution peers.
    • The bank continues to trade below book value, because the market thinks that excess capital will continue indefinitely and does not factor in a potential for a sale.
    • A 45% chance of a merger in the near term would equal 24% upside.
  • Platform Specialty Products: AgroSolutions Acquisition Is Just The Beginning
       • Thu, Apr. 24 PAH Comment!

    Summary

    • Acquisition of Chemtura's AgroSolutions is immediately accretive to earnings, cash flow and margins which should grow significantly over time.
    • AgroSolutions is a new vertical for PAH to build in and produces stable cash flows, with low capex needs, that provide ample ammunition for acquisitions.
    • PAH continues to trade for an average multiple which could look very undervalued a few years out if company is successful in their acquisition strategy.
  • Greer Bancshares: You Get Much More Than You Pay For
       • Tue, Apr. 22 GRBS 4 Comments

    Summary

    • Greer Bancshares has a dominant deposit market share % in an attractive local economy.
    • GRBS' asset quality trends are positive while the bank has adequate reserves available.
    • Market overlooks this little bank's profitability at a sustainable $4 million.
    • GRBS has $6 million in deferred tax assets or 1/2 the company's current market cap.
    • GRBS is trading significantly below tangible book at 0.8 times and intrinsic value is at least double today's price.
  • First Business Financial Services: Small Bank With High Quality
       • Sat, Apr. 12 FBIZ Comment!

    Summary

    • The bank has a unique operating structure that has led to significant organic revenue growth.
    • Further cross-selling of services to clients will lower cost of deposits and increase NIM while further solidifying sticky client relationships.
    • The bank is trading at a reasonable price and management/board owns more than 10% of the bank.
  • Catalysts Present For Northeast Community Bancorp's 2nd-Step Conversion Offering Attractive Risk-Adjusted Returns
       • Fri, Apr. 11 NECB 4 Comments

    Summary

    • Mutual thrift conversions continue to provide investors a time-tested way to earn attractive risk-adjusted returns.
    • Northeast Bancorp management miscues have led to poor performance post first-step conversion.
    • Joseph Stilwell's continued lawsuit provides a catalyst to add additional board members who will institute a second-step and better shareholder value in the near term.
  • FNBH Bancorp: Recent Re-Cap Could Spell Upside
       • Tue, Apr. 8 FNHM 4 Comments

    Summary

    • A recent recapitalization puts the company in a good position to rid itself of the OCC Consent Order.
    • Financial sites overlook the dilutive effects of the preferred shares and skew the true market cap of the company.
    • Positive economic growth in Livingston County, MI and higher interest rates could mean that shares are very undervalued, although with risks.
  • Amcon Distributing Co: Increasing Shareholder Value In A Conservative Low-Risk Fashion
       • Sat, Apr. 5 DIT 7 Comments

    Summary

    • Amcon seems to go unnoticed for the industry in operates in, small size, % of cigarette sales but has sustained high margins for a wholesale distributor.
    • Christopher Atayan has shown to be a competent owner operator increasing book value significantly under his tenure.
    • Amcon trades at a significant discount to the closest peer and trades near the pre-tax multiple Buffett bought MacLane Co.
  • Wesco Aircraft Holdings Distributes Attractive Risk/Reward
       • Fri, Mar. 28 WAIR 5 Comments

    Summary

    • Business is characterized by sticky long-term recurring revenues and many competitive advantages.
    • Managed by owner operator that has proven to be highly successful over the long term.
    • Potential synergies of recent Haas acquisition seem to go under appreciated by the market.
    • Protection against capital impairment and significant growth/synergies could produce large gains in the next two years.
  • BNC Bancorp: Big Community Bank, Premium Price
       • Tue, Mar. 25 BNCN 4 Comments

    Summary

    • BNC has been successful in acquiring several banks over the past two years.
    • Focus on small to mid size businesses provides a competitive advantage over regional and smaller community bank peers.
    • Management has skin in the game but current valuation is well above peers and there seems to be little margin of safety at the moment.
  • First Security Group Continues Transformation, Yet Still Undervalued
       • Sat, Mar. 22 FSGI 2 Comments

    Summary

    • Recapitalization has allowed the bank to restructure the balance sheet.
    • Management's four niche loan initiatives, along with lower costs set the bank up for profitability this year.
    • Shares continue to trade at a discount, and a buyout could be possible in the near-to-mid term.
  • Update On Resolute Forest Products: Wood In Hand Still Worth Two More In The Forest
       • Sat, Mar. 15 RFP 3 Comments

    Summary

    • Pension obligation continues to decline and replacement of pension deficit corrective measures is positive for RFP.
    • Fourth quarter business performance is an indication that RFP's business performance is improving.
    • Shares continue to trade at a discount to intrinsic value and RFP continues to be Prem Watsa's largest equity holding.
  • Weight Watchers: Free App Fad Will Soon Dissipate
       • Thu, Mar. 13 WTW 28 Comments

    Summary

    • Free weight loss apps are essentially a fad effecting Weight Watchers in the short-term but not in the long-term.
    • Weight Watchers business model has proven to work through previous fads.
    • Weight Watchers could potentially earn 24.8% annual returns over the next decade.