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Vulcan International Is The Epitome Of A Dark Company

Jan Svenda profile picture
Jan Svenda


  • Vulcan Corp.'s value is predominantly in a large stock portfolio amassed in the past three decades. They are hiding it from investors as shareholders are required to sign NDAs.
  • The lack of information is no longer a significant problem as their 2016 financials recently surfaced.
  • Their liquid stock portfolio is discounted by the market by at least $22 million. If we add their real estate assets there could be an upside potential of 76% here.
  • The management is happy with the status-quo and disrespects the minority shareholders. While they do not actively burn the value of the company, they are not utilizing it.
  • The situation might change. VULC is likely liable to file 13F form which could add transparency without the need of change in management’s attitude. This would act as a catalyst.

Investment Thesis

I believe that Vulcan International (OTCPK:VULC) is presenting investors with an attractive opportunity even despite having one of the most obscure corporate setups out there in the ‘public’ OTC market.

The company is deregistered from the SEC and forces shareholders to sign a non-disclosure agreement (NDA) when they want to see VULC’s financials. The family that still owns a significant stake in the business is not open to minority shareholders and defends their secretive way of operating the business in court. In other words, VULC is the epitome of a ‘dark company’.

However, there are clear signs that at the current share price the business is still undervalued as the 2016 financials has recently surfaced and allowed the broader public to see what the company owns.

  • While the company is operating a small rubber & foam manufacturing facility, the core value is in its stock portfolio which has materially appreciated since the financial crisis. It provides both a material dividend stream and a clear upside potential for investors. In 2016 the portfolio provided the company with $3 million in dividends and is now likely valued at around $161 million as per updated Nate Tobik’s assessment. This compares well with the current market capitalization of roughly $106 million.
  • The portfolio is not the only valuable asset. Their real estate holdings are overdepreciated. Despite the fact that the manufacturing facility is losing money, the underlying real estate is likely to be valuable and could be worth at least $4 million as per property tax assessment. They also own large timber holdings in around Michigan which could add up to $14 million. Lastly, they develop real estate from time to time which is troublesome to track without the update financials but could add at least $7 million (based on property tax assessment) to the valuation.

This article was written by

Jan Svenda profile picture
I am an investor and analyst focused on two fields. Deep value in the Over-The-Counter (OTC) space and short-selling on the listed markets. The first focus has involved me running my own newsletter for the past two years. Compiled database of research and stocks can be found on my website - https://jansvenda.com/. I am now working on various special situations within the OTC space. The short-selling focus is for now confined to my own research and weekly analysis of Short ideas for Seeking Alpha PRO+ community. From time to time I also contribute to Safety in Value's marketplace 'Microcap Review'.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in VULC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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