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  • Platform Specialty Products: Rare Opportunity Continues To Be Available [View article]
    ross,

    Bill Ackman is a close friend of Martin Franklin, the chair of PAH's board, and invested in the original SPAC Platform Acquisition Holdings because Ackman knows very well of Franklin's track record. It is likely Pershing will be in it for the very long-term as a passive shareholder. Mid-term and long-term price targets are hard to gauge with a serial acquisition company, but I think there is a very good chance the company will be much larger than today in 5-10 years. If Franklin and Leever can continue finding acquisitions that accrete >20% in immediate value, then there is a very high likelihood the stock will produce the same results.
    Sep 4 09:15 AM | Likes Like |Link to Comment
  • Wizard World: Obscure Marketing Machine Offers Attractive Risk/Reward [View article]
    dragonkrys,

    Good points. According to the latest Q Philadelphia, Chicago, New Orleans, Columbus, Portland, Nashville, Austin, and St. Louis have reached operating profitability. New shows are likely to take time in reaching full profitability unless the company is able to successfully draw in attendees quicker.

    The number of comic cons per market is a good question. The company has previously stated that they do not plan on putting on shows in the markets where there are established events such as non-profit San Diego's International comic con since those events already have a following and competition would be high.

    Since the smaller shows do not attract the same caliber of celebrities, I see how there can be room for a big player in the 52 week schedule for an area. You are right that smaller shows might not have the same economics as existing shows but of all of the new shows announced only Greenville, Rosemont and Ft Lauderdale are under 200k population. So, the mix of new shows is likely to be similar.

    The juries out on sustainability of expansion, and you are right profitable growth could be hard to come by. I see this as a marketing roadshow/tour for celebrities and others, so this could also possibly be changed into other formats as well.
    Sep 3 11:38 AM | Likes Like |Link to Comment
  • Wizard World: Obscure Marketing Machine Offers Attractive Risk/Reward [View article]
    I agree that dilution is never the best for all shareholders, however, the capital was raised to get the company rolling. We'll see how dilution happens in the future, but I'm guessing dilutive equity raises are likely not to persist too often in the future, since the company is on the cusp of continued profitability, will generate large cash flows and needs little capital to expand.

    Hard to say exactly who was a part of the both offerings but management and affiliates were a part, but not whole part. There were 12 individuals in the second preferred and warrant offering so likely there were other individuals as well. Note that management owns large stakes, but CEO purchased shares for a ridiculously low price. Affiliates like Bristol Investment is also a large shareholder buying on the open market, participated in the offerings and was fine with the dilution.
    Sep 2 08:11 PM | 1 Like Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    Derek,

    Good comments. Will respond to each:

    1. Valid and would agree on the previous dividends.

    2. Buy back is less of a risk than executing an acquisition profitably. Refer to our reply from 8/10 #3. Do agree that using too much money in a buy back could risk the company, however, FHCO management likely has better insight to the likely near term orders and cash than the market.

    3. You estimate an extra $2 million in cash by the end of the year. Curious where that number comes from.

    4. Agree that inventory management should be more efficient, but we have to remember three important factors. Global health organizations will be buying from the female condom producer that has the capacity to fill large orders giving FHCO the ability to continue receiving the largest orders above Cupid and the Chinese competitors. Also, unlike many other items that are manufactured FHCO has to test their condoms before shipment leading to greater lead time and longer time on the balance sheet. Lastly, Female Health Company is actively seeking ways to increase their ability to efficiently monetize their inventory through marketing to global consumers. Again, they have utilized nearly 0 marketing in the past so this is a large lever for the company to pull. The market has yet to see the plan so the uncertainty is priced in. It is likely efficiency of inventory turnover will be unlike the past.

    “Operating margin improve this quarter was manipulated they pushed back an investment or had a higher expense the last quarter.”

    Can you back this statement up?

    “2014 EPS will be about 15 to 20 cents. Company enterprise value is at about 105mm (current market cap less cash at year end) which is a net income yield of about 5.5%, why would I own this at such a low yield with no dividend, bloated inventors, high receivables and only one product with no idea what the next product is going to be.”

    This is what the market is saying, but the true value of the company is not based on the earnings in the next few quarters but in the long-term. Undoubtedly the new marketing program will need time to ramp up to see the potential, but the market is ascribing no value to it and is even more pessimistic to the prospects of the public health division than it was in the last year. Why? Lumpy earnings and a dividend cut.

    “Do you believe the management has the ability to improve the the operations to reduce inventories and receivables?”

    We’ll see, but the decision to suspend the dividend to spend more on marketing is a good indication that the company is headed in the right direction.

    “Do you believe the new marketing person is really going to do a better job of marketing their current product and whatever new product they plan to have?”

    Again we’ll see, but FHCO spent only $2.5 million on marketing for the last 14 years or an average of $178k a year. That sets the bar very low. The company did not have to market before, so having a dedicated person to lead a marketing strategy and say a yearly $1-2 million in budget is likely to easily outperform FHCO’s previous marketing.

    “What are your expectations for sales next year? Will it be higher, flat or lower and if so why would I pay so much for a flat or down next year? At this price the sales would need to be at least 20% higher to justify the current year owner yield given how low it is.”

    Expectations for next year should not be our focus. Expectations for cash in 5 years is what we look for and in the short-term use the lumpiness and negativity to serve us as an opportunity. Instead of trying to lob up a number, which is likely to be off widely, a company majority owned by insiders, with quality economics (consistently ROA and ROE above 20% since FHC2 and even during FHC1), with first mover advantage, underfollowed micro-cap, uncertainty in the details of the strategy and a recent sell off due to a dividend cut is likely to lead to undervalued shares. I could be wildly off the mark, but FHCO could have more than $100 million in revenue in the next 5 years.

    Anyway, thanks for your thoughts.
    Sep 2 01:46 PM | Likes Like |Link to Comment
  • Wizard World: Obscure Marketing Machine Offers Attractive Risk/Reward [View article]
    New Capital,

    Thanks for reading and the comments. Using the trailing shares number is misleading since prior to Dec 2010 the company was GoEnergy, a shell company with no real operations. Subsequently on Dec 2010 KTC Corp, the Wizard related company with comic con rights, was acquired and an exchange agreement was enacted where 33.4 million of KTC shares were exchanged. The rest of the dilution is mainly from a preferred share conversion and warrant conversion on Aug 2013.

    http://1.usa.gov/1lFSGbc

    http://reut.rs/1lFSFnz
    Sep 2 08:09 AM | Likes Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    Nat,

    Thanks for the link. I agree, RoosterNY definitely looks like it could get some attention. Will be interesting to see who FHCO picks, and I'm guessing the strategy is likely to be announced in the next few weeks.
    Aug 29 06:20 PM | Likes Like |Link to Comment
  • Tracking Small-Cap Super Investor MSD Capital - Q2 Update [View article]
    Looked back and you are correct. Interesting that the filing did not show up in the 13F's after the 13G was filed and only in the most recent 13F many quarters later. I'll have to make an edit.
    Aug 26 09:09 AM | Likes Like |Link to Comment
  • Tracking Small-Cap Super Investor MSD Capital - Q2 Update [View article]
    jlb, thanks for pointing that out.
    Aug 25 10:46 AM | Likes Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    bradlewski,

    That 15 million a year is capacity.

    According to Cupid they recently announced "orders on hand" of Rs 5.7 Crore to supply South Africa. That translates into <$1 million USD and is in addition to the Rs 7.7 Crore order in Nov 2013 from South Africa. It is likely the cause of the recent share price surge for Cupid's stock. Add the orders up and it is ~$2.4 million. Outside of this order, I do not think Cupid has gotten any other orders in the public health market (I could be wrong) and does not sell at all to global consumer market.

    http://bit.ly/1ohZq9n
    Aug 22 01:24 PM | Likes Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    I'll take this with a grain of salt - they could have added since - but 15 million pieces per year found on Cupid's website
    http://bit.ly/1nfYjHT

    Compare that with FHCO's 100 million current and potential for 200 million.
    Aug 21 04:51 PM | Likes Like |Link to Comment
  • Female Health Company: Disaster De Jour With Attractive Risk/Reward [View article]
    morb1lee,

    Good question. FDA approval makes it easier to get orders from governmental organizations. Also, having FDA approval already gives FHCO the ability to sell direct to consumers in the US, which is likely to be happening any day now.

    Cupid had an insignificant part of the South African tender, so I don't think they are stealing sales away from FHCO at this point. Mr. Market mistakens lumpy sales as market share loss. The buyers are more interested in purchasing from a company that can fill their large orders, which FHCO is the only one capable of doing currently. My guess is the small purchase of Cupid's condoms was only a trial for South Africa.
    Aug 21 02:40 PM | Likes Like |Link to Comment
  • Mr. Market Might Be Mistaken With Creative Learning Corporations' Auditor Change [View article]
    Florida,

    The company is likely to only show franchises that are fully up and running. The number I referenced from the 10Q shows the number of franchises that have been signed and it takes time for the brick and mortar stores (think up to 24 months) and time for the mobile franchises too. Think each franchisee has to buy materials, learn how to teach the classes, etc,.

    Not sure about the website linking problems.

    Curious to know the attrition rates as well.
    Aug 20 06:18 PM | Likes Like |Link to Comment
  • Update: Artal Purchases Of Weight Watchers Indication Shares Are Undervalued [View article]
    Agree with you on Artal doing the best thing for their shareholders.

    "Dilution from executive compensation? Yes, but possibly also dilution from an equity raise (to be announced???)"

    An equity raise to other non-Artal investors could only be 2% to maintain Artal's 51% ownership. That would only raise ~$30 million. That does not seem like a significant amount to lower debt or pay a dividend to Artal and the company has plenty of FCF and cash on hand to pay debt, so a small equity raise does not seem to make sense for Artal.

    I don't deny they could do an equity raise here, but if they were to do an equity raise by repurchasing back shares they sold in the dutch-tender in 2012, then they would be increasing their stake if they are the sole purchaser. So, front running their own equity raise just to maintain control (51%) does not make sense. Ex. 10 million shares issued and purchased by Artal would increase their ownership to 39 million and shares outstanding would be 67 million making their ownership 58% post dilution.

    Like you said, Artal is looking out for their shareholders, so they will buy low and sell high meaning that anytime they purchase on the open market means that shares are low. They could take the company private but they would have to pay off the debt to do so, which would somewhat negate the reason why they took the debt in the first place and they would need something like $2.7 billion to do so.

    Curious, where do you get $12 a share from?

    I agree the growth will benefit from any Obamacare mandate to cover weight loss services, but we shouldn't forget the NIH in the UK is already close to potentially providing WTW and Slimworld memberships for overweight/obese in the UK for free.
    Aug 20 06:07 PM | Likes Like |Link to Comment
  • Update: Winmark Leasing Portfolio Growing, And Share Repurchases Continue To Indicate Shares Are Undervalued [View article]
    Oxboro,

    You point out possibly the biggest reason why most investors stay away from this company, yet is actually the reason why there is an opportunity.

    Accounting has its short-comings and goodwill is sometimes not accurately reflected with certain companies. Some companies produce huge returns on net tangible assets because it is hard to quantify brand assets, relationships with customers, etc,. Winmark earns over 100% after-tax on net-tangible assets after the special dividend and share repurchases. These returns are very special and can be a result of goodwill or intangibles not truly reflecting reality, only GAAP standards. I think that the company is truly returning 9-10% which would mean that there is hundreds of millions of hidden assets not on the balance sheet. Since this is a key reason why there is an opportunity, I'll write up a longer article to address this. Thanks for reading and commenting.
    Aug 18 11:50 AM | 1 Like Like |Link to Comment
  • Platform Specialty Products: Rare Opportunity Continues To Be Available [View article]
    Marc,

    Thanks for the comment. Although we have limited visibility on exactly how extreme tax planning at PAH gets, having a CEO inspired by John Malone is unconventional in corporate America and indicative of what might come.
    Aug 14 11:37 AM | Likes Like |Link to Comment
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