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National Presto Industries Inc. Message Board

  • cheapskate387 cheapskate387 Sep 29, 2000 12:38 AM Flag

    In below 30

    I've been watching this stock for years and never
    bought. You know why. But with the market cap now equal
    to the cash balance and a 7% yield, I just don't see
    how I can lose here. The operating business is worth
    $10-15. I think I'm looking at 30-50% upside with no
    downside risk here, and a dividend north of a bond yield
    for as long as I have to wait.

    I know
    management is not shareholder friendly, but they're not
    thieves, and they pay a generous dividend. They have also
    recently done something they had never done before - buy
    back shares. Not aggressively, but it is a

    This is a no-brainer in my book.

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    • <<<But with the market cap now equal to
      the cash balance and a 7% yield, I just don't see how
      I can lose here... I think I'm looking at 30-50%
      upside with no downside risk here, and a dividend north
      of a bond yield for as long as I have to

      Many closed-end funds trade at significant discounts
      to net asset value for years at a time. This is true
      for fixed income closed-end funds that pay nice
      dividends like NPK. It might be safer to buy an fixed
      income mutual fund (open or closed at a discount) and
      avoid the operating and management risk of NPK.

      • 1 Reply to Rincon_PR
      • This stock is trading around book value. Sadly,
        the company repurchased a good chunk of shares over
        the last year. NPK may have bought about 350,000
        shares. Now, the number of shares outstanding is a hair
        over 7 million. It was 7.35 million last year. Despite
        the repurchase, the stock is going down. Recent
        insider purchases all occurred at prices above the
        current market price. Also, aside from two major
        stockholders, the other officers appear to own very little
        stock. That should tell outside investors a lot. Time
        will take its toll here, in many ways. Too bad for
        stockholders that management can't bring itself to do the
        right thing!

        Are there any hidden values here?
        Does the company have idle facilities sitting on
        valuable real estate? At the current stock price, the
        kitchen appliance business has no value. But maybe the
        factories are worth something. Here's an idea: Sell the
        operations, put the cash into a few more municipal bonds,
        slash the workforce and make the leap to a closed-end
        fund. If the new fund continues to trade at a discount
        to net asset value, switch to the open-end format
        and erase the discount!

        This Christmas could
        be a big loser. With fuel prices at today's levels,
        NPK is going to feel some pain. Those energy costs
        are coming out of NPK's already declining margins!

    • A visit to the NPK website is an eye-opener. And
      a quick look at NPK's history, as told by NPK,
      let's investors know there's trouble in River

      The following statement appears at the end of the NPK
      history link.

      "Forecasting the needs of the
      American consumer and seeking to fill those needs through
      a consistent program of product innovation, quality
      manufacturing, and aggressive marketing has been the objective
      of National Presto Industries for over 90 years and
      it will continue to be in the years

      Despite NPK's desire to develop new gadgets, the company
      is fresh out of new ideas. Its website issues a call
      to all "inventors" to bring their ideas to Eau
      Claire for a test run. Judging from the on-line catalog
      (which does not offer on-line sales), it looks like all
      those Gyro T. Gearloose characters out in the garage
      are fresh out of ideas too!

      The pizza cooker
      is the great hope of the new Millennium. But it
      looks too small in the picture. Let's hope the years of
      research behind this product at least led to designing a
      gadget of the proper size. But will it sell? We've
      started the fourth quarter of 2000. NPK always books more
      sales in this quarter than any other. At this time, how
      many orders does NPK have for the pizza

      Going back to the warm and fuzzy tale of the company's
      history, NPK introduced its first products in the early
      part of the 20th century and caught a big break in
      1917. At that time canners were required by law to
      adopt certain standards which led to a windfall for

      About 20 years later, a few new products were
      introduced. Then World War II broke out and the company began
      producing munitions. From the rhapsodic tone of the
      company's puff piece, it seems as though that may have been
      the peak period for NPK. The War was followed by the
      Fifties and everything conjured up by that term. The
      Eisenhower years were good for business.

      The Sixties
      were somewhat of a bust however. Apparently the chief
      event of that decade was listing the stock on the New
      York Exchange. NPK colored the moment as though an
      NYSE listing carried the same level of gravitas as
      Queen Elizabeth's coronation. And though World War II
      was a bright shining moment for NPK, Vietnam did not
      warrant a mention. The Korean War was also overlooked.

      Product development accelerated in the Seventies. But,
      according to the official history, the pace dropped off to
      one major appliance per decade in the Eighties and

      The following passages are also part of
      NPK's corporate history.

      "The success of any
      industrial organization closely parallels its ability to
      meet the needs of the consumer on a consistent and
      continuing basis."

      NPK also mentions that WalMart
      will trim its orders. That haircut will slice 14% off
      total revenue. Since WalMart accounted for 44% of NPK's
      sales, it looks like WalMart has cut its orders by about
      one-third. Shareholders haven't heard a peep about NPK's
      attempts to recapture those sales. And if WalMart is
      cutting one-third, you can imagine that further cuts are

      NPK disingenuously states that the WalMart cuts will
      have no material effect on fiscal 2000 results.
      However, the cuts are scheduled for fiscal 2001. Thus,
      shareholders should be told what to expect for that year! It's
      obvious that without the door opening at some new venue
      (like Target), fiscal 2001 will be a tough year for
      NPK's appliance operations.

      Three of NPK's
      competitors were acquired in the last year. The companies
      were purchased on generous terms. Yet NPK languishes
      because its management could care less about shareholders
      outside of the company. The stock price continues to edge
      down, evidence that Wall Street believes the appliance
      business is worth nothing.

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