what is a realistic growth pattern for this company
I guess I don't necessarily see a lot of growth in EPS beyond returning to the $0.50 to $1.00 level.
At that EPS, the ROE would be there for very rapid growth. (Deduct cash from book value & you get about $2.70 capital invested in the business per share. Fifty cents to a dollar is a huge return on that.)
But I wonder about market opportunities. Margins are good for the space, but I'm not sure they're where they'd need to be to buy share profitably by cutting prices.
Just my opinion. I'm playing this as a stock that dipped from $10-$20 to $5 on a bad worldwide recession. I'm betting the recession was the only negative factor and that it's temporary. I'd like to hear from people who have ideas about whether that giant ROE can be put to work. I'm certainly willing to take $25 for my shares instead of $12 -- if I can get it!
Per my previous post, liquidation of land and cash was $10, with cash now being a bit more, and the co now profitable. There is now a modest probability that Koo leaves and a private equity buys the company in the next year. I expect to see at least some smoke about an investment bank being involved in at least some sort of negotiation.
That's kind of my take on the long-term outlook for NTE, also.
When I last looked (2010 proxy statement), Koo owned 5.3 mil shs (11.7%), IAT RE 5.2 mil shs (11.7%), and Peter Kellogg 5.8 mil shs (13.0%).
Kellogg was with GS&Co and I believe is connected with the IAT RE holdings as well as with his own. He and Koo have held their NTE shares throughout the entire 2008-9 downturn.
At one point, Alfred Khan had filed ownership forms for 2+ mil shares. All together (not including Khan), insiders own about 36% of stock outstanding of 44.8 mil shs.
I think Koo will get sales back to the roughly 800 mil level of years 2005-7. At that point, valuing revenues at 80 cents/dollar of sales gives the company a going concern value of 640 mil or 14/share. Add back $5 for cash in bank and you get a 19 or 20 dollar stock.
When NTE was last at 800 mil in sales, cash dividends were substantial: 1.32 (2005), 1.52 (2006) and .84 (2007). With cash at 5/ share and no debt, I think Koo will pay out most of earnings in dividends, which should at least reach a dollar/shr.
And yes, given Koo's age and Kellogg's presence, I think a corporate transaction is likely.