I bought a couple hundred shares at 30 a month or two ago thinking I had a conservative dividend paying stock with a good future. I'm now thinking I made a mistake and should cut my loses to two bucks a share.
Well, this message was the very last on my first page of topics today, so it's probably time to take old COKE out for his ritual annual flogging. He bought shares at about $30 reporting it to us on April 9, 2010 as he was discouraged to find the price down at $28 or so. Thinking maybe he should sell. Let's see what his results would have been had he held on (and I presume he didn't since he has not posted here again).
In the last two years an investment of $3000 would have spun off dividends of $2.66 for almost 10% return over two years, or 5% per year. In addition, our price is down to $70 today so he would be able to sell those same shares for $7000 or up 133%. Thus he would have gained 50% per year for just over two years so far. How many other companies do you suppose COKE has shares in which did so well? And my guess is that there is still plenty of potential in RAVN stock even if a bit pricy right at the moment. Or he might have done as I did and sold rights to buy his shares at $75 for the next 6 months for $6 a share. (some of my shares. And I notice my sale of both those batches are the last sales recorded on my Yahoo portfolio as of today. The price is down enough that I suspect no one would pay so much for a $75 call this week--but there are a lot of trading days before December and February, 2013).
Recently on the SLI board, but also still on the ACO board. I sold my SLI last year at a decent profit, but it looks cheap again, so I picked a few shares again. I would have been just as well off keeping the shares I had, but, oh well.
L, I posted most of this message as a reply to Algo on another message board, but some of the info applies to your message also.
I am almost 100% invested in the market again, so this current rally is probably going to fail. Below is my list of holdings starting with the smallest position first and largest last. LATI is just a gamble from a message board tip. They have no revenues yet, but claim to have a disruptive technology for cleaning water used in frac wells and other industries. It's still on the pink sheets and is not for widows or orphans.
THFF is my old bank stock that I just keep for old times sake and the 3% plus dividend. I would say I have about 2/3 of my holdings in companies that pay dividends. I think GGG, EMR, and ACO will be long term holdings, like Raven, but you never know. The other one worth mentioning is MGRC. The dividend is generous and they could be on the verge of a couple year growth cycle if the economy doesn't drop off the cliff. It might be worth going to their website and listening to their latest presentation at the analysts.
I still think my HURC (CNC machine tools) will be good if Europe doesn't fail. We talked about this one earlier and you did some research on it at the time. Since my CRFT was recently bought out, I had some cash to reinvest and added more of HURC.
I have been adding OFI on the recent fall in the share price, but it's time for them to show some results. This is a food service company that supplies to Jenny Craig, Panda Express, and other restaurants. They also make and sell Boston Market frozen dinners as well as frozen dinners at Safeway and Target under store label names. They have been talking about improving earnings and revenues for a year now and nothing good has happened.
There is a complimentary review about Jeff Immelt at the New York Times today. I happen to own more GE than RAVN and I suppose that would be considdered wise by most observers. I actually like Raven more and feel closer to it. Probably because I've actually seen their managers in action and shaken their hands. Also it's a bit easier to grasp what's going on in a smaller company even if the divisions are somewhat diverse. Finally, I am fairly sure there is not a plant somewhere which is out of control and going to create huge problems somewhere in the future.
In any case there were quite a few times in the article when I compared the people and company to RAVN. Take a look at these two paragraphs:
"....Noel M. Tichy, the co-author of the coming book, “Judgment: How Winning Leaders Make Great Calls,” and a longtime G.E. watcher, spoke to Mr. Immelt not long after 9/11. Mr. Welch had made G.E. “faster-moving and more entrepreneurial,” the incoming C.E.O. said. “But it doesn’t have the heart it needs, and it doesn’t have the context it needs. That is what I want to do in the next 20 years.”
An advantage Mr. Immelt has is that he does indeed expect to stay in the job for 20 years; that’s just the way it’s done at G.E. Jack Welch used to say that it takes a C.E.O. five years to learn the job, and General Electric is the rare company that wants its chief executives to be around for decades in order to leave their mark. There isn’t another C.E.O. in the land who has that luxury. Another advantage is that, as with every other General Electric chief executive, he’s been there his whole career. He understands the company in his bones. And he loves it, to use his own words, “completely and deeply.”
The URL for the article which I picked up from Yahoo is:
Ron used to say many of the same things about Raven which are attributed to Immelt like justifying the conglomerate structure. Not in the old 70's sense of financial engineering (like LTV or Litton) but in terms of always having a route to growth. Some division is always doing well at Raven even if the others are in crisis.
But what I wanted to comment on was that I'll bet we all can think of at least one other company in the world where the CEO can count on being around for 20 years. And for the same good reasons.
Like Jeff Immelt, Dan Rykhus has been involved with RAVN virtually his whole career. He has picked up the culture of his predecessors. That culture of straightforwardness and honesty and high standards impressed me so much about Raven. They seem to get and retain good people who are happy and proud of the company.
And that's why I'm very glad I chanced upon this investment and this company. And I'm glad it is nearing 10% of my portfolio right now.
And, of course, I really expect that Aerostar division will do very well for the next few reports. The only thing there is that they are still quite a bit smaller than EF or AT so that a good quarter for them might only add $1mm (.055) or so of operating profit compared to much more at the bigger divisions. I am very pleased that we still have Aerostar and that it is now a division and has discarded some of it's riskier activities (hot air balloons).
Q-3 is normally a slightly larger than average quarter though Q1 is typically the highest op income quarter. The last report, which did blow out projections, was the smallest quarter in most years. But last year RAVN did much better than most companies but not so well that by comparison this year should look good. Raven has earned as much as .46 for Q3 and last year earned .40, so I'm expecting we will get another pretty fair comparison at the end of this month. But again, I don't want to get my expectations for the company to get too high as Dan Rykhus gets established. He may have to do some things which require resetting the EPS--like the new technology center and Mr West's new responsibilities there. Some of that will be capitalized, but what has made this such an outstanding company for me has been the accounting which would not automatically assume everything is going to work out at the new center. It's a different approach which needed to be done to compete with bigger players. Raven is getting close to a billion dollar valuation and I suspect people like Trimble are starting to notice what they are doing and will begin aiming their efforts directly at this new upstart now challenging their position.
That guess I made of Aerostar only adding a million or so operating profit turned out to be wrong. Q3 turned out to be BLOWOUT for them. Never before has this division sold over $11.7mm in a single quarter and usually 4-6mm. They turned in $15.9. A good part of that was the parachute order, but didn't I hear Tom say that they had pretty much reached their predicted run rate of $4mm per quarter for those? That would leave more sales ($11.9mm) of other stuff than they've ever sold in one quarter before. Aerostats? Weather balloons? Maritime navigation devices? Macy's day parade balloons?
I don't know but I wish I'd thought to ask just how much aerostat devices with tethering systems have added to sales recently. I suspect a lot more than was brought out in this conference call.
That was sales at Aerostar. Op profit of $3.6mm was far more than any quarter in my handwritten history back to 2004 and probably more than they've ever made. A huge increase from $1.3mm last quarter and $1.3mm in Q3FY10.
I still don't have my corporate expense columns filled in, so it may be that some R&D has come off the divisions and gone to corporate making some of this amazement overdone.
Now, with a few days of experience behind you, you will see that Raven recovered to well above your purchase price at $30. And today when the whole market was down, Raven held up relatively well.
I think the point is that many Raven shareholders are unwilling to follow the market and rely upon their own judgement instead. Or maybe they are all at work and haven't found out yet that everyone was scared today. Whatever the reason, Raven often marches to a different drummer.
But then, in my opinion, the company also follows it's own counsel. I might get lucky and buy some cheaper in a few days. Or I might not.
Best regards, L.
One reason I really want to own Raven right now is that I expect inflation to take away some of my assets. I am earning very little on my cash at the moment as I'm sure you can appreciate and don't know where to invest my money for appreciation. A well cared for factory which has proven to be profitable in good and bad times will increase in value along with inflation I think. And Raven is such a factory.
Another of those supposed analysts came out with a report on companies which had high price to book ratios and Raven was among them at about 4 times book. I agree that the price is high, but I also think the value is high with clean, well maintained assets, well trained employees, and tough managers. I actually drive by the factories whenever I get in the neighborhood of Sioux Falls and have always been impressed by the condition of the grounds. Wholly owned with no debt, little good will on the books and intangibles have all been depreciated. And I am confident that Tom Iacarella and Ron and Dan are writing down assets to accurately reflect their value unlike most other companies I own stock in. That's what I would like to tell you if you are not from near Sioux Falls--these are just excellent people as far as I can tell who use accounting as it is meant to be used--as a language to communicate the values of the company accurately.
I still believe when I received the dividend yesterday, I was transferring assets from one pocket to the other. However, the market for Raven common is apparently not that efficient since I currently have the $1.41 in my accounts plus the stock is hitting new highs for the year. I still believe that in the long run the market becomes efficient. My holdings of Raven are increasing so rapidly that even though I did not have as much as I wanted last year, if this keeps up Raven will indeed make up 10% of my portfolio.
I do think Raven is near fully valued now since we are not sure how Dan Rykhus will perform. I think we can easily see earnings of $2.00 per share and a PE of 20 is justified in the present state of uncertainty-mostly of the market, but also of the management transition. Most likely all will go well and Raven will continue to grow as it has been for 10 years and several years of consolidation in the stock price provides some room for increases. If our economy continues to stabilize I can imagine the price going to $50 quite easily. In a double dip, I could imagine $25 again. Either is OK by me.
After writing the reply above, I wondered whether you might have seen some sort of news which might be interpretted negatively and went to my e*mail reports on Raven. Sure enough--there was one of those silly supposed analyst reports which was so bad that they wrote it comparing RAVN to circuit board manufacturers. That shows that they know nothing about the company and any analysis is inappropriate. I don't normally read the things, but since I was thinking of you I did so. Believe me, if that is what is bothering you, it shouldn't. I don't really pay attention to any analyst since I feel my judgement about RAVN is as good or better than theirs, but we do have a couple of pretty knowledgeable analysts at Dougherty and Co and Piper Jaffrey.
Thank you for your responses to my question. My problem is that I watch my stocks too closely. I have all my stocks in my IRA account so I can trade continuously with no paper work at the end of the year for the IRS. With these new online broker sites (I'm with Scottrade) you can put up a portfolio of 20 stocks and see every trade. A few down ticks and I think I made a mistake and am ready to sell. I also sell too early on the upside. But it is fun. I'm retired now (73 yrs old) and play golf 3 x a week. That gets frustrating also. Hey let's have a good year. I'll hang on to RAVN now (maybe buy more Monday), thanks for your confidence
That is a strange opinion to my way of thinking. You bought RAVN when the dividend was $.14 a share and now it's $.16 a share, the company has had an earnings report which was much better than I would have expected, and cash has been growing to about $3.00 a share in a company noted for returning excess cash to investors in the forms of special dividends and also stock buybacks.
Why in the world would your opinion change now in a negative fashion? I will agree that you paid a fair price for the shares and could have done a bit better. I bought some more at $29 this week which is higher than I really wanted to go, but I want the shares badly as I don't have a full 10% of my portfolio in this upstanding company.
If you just become discouraged by a less than 10% drop in the price, I'd suggest you won't get much sympathy on this message board. If I were you I'd have another order in to buy some more someplace below $30 and in fact I have one at just under $27 at this point. I was trying to buy at $25 and got a few there and below, but not nearly as many as I wanted.
Study the company and I think you'll find it is one of the best companies you own a part of. Honest, competent, straightforward managers who run the company well enough that no acquirer would assume they could milk it for quick cash or improve the operations. And a hostile buyout would be the very worst outcome I can imagine and in that case you would probably get a premium of some sort to your $30.
I'm still hoping to buy some at $25 or less, but don't dare count on it. Unless maybe you insist upon selling a million shares or so at whatever the market will pay (gg). Best, L.
Raven stock is up again and nearly 5% to $45 today. That seems quite expensive to me for earnings of $2 or so and a manufacturing company. I also have many other stocks hitting new highs and I have many calls being sold on them.
So would I be wise to sell some of my Raven common?
I notice that Raven has just completed it's fiscal third quarter at Oct 31. If I had been in Sioux City I could probably have driven by the EF plant and seen how much activity there was and how much stock piled up outside. And perhaps even some Raven blue disaster film awaiting shipment. Those kinds of clues might well convince me that Raven is going to report another blowout quarter since a good part of sales and fairly high margin sales if volumes are up significantly or special types of multilayer film is being sold. Remember that Raven had just completed a big expansion of their capacity for engineered films as we went into the recession and that capacity is available for high margin growth. I don't have that knowledge as I've not been in Sioux Falls.
And if a person had some special insight into the performance of Applied Technology he might assume they were also going to blow out the doors. I don't have much of that knowledge either. A slight clue though;
Some of you may remember my story about how my sister got my beautiful Raven blue cap from me shortly after the 50th anniversary celebration. I told that story to a friend of mine who happened upon a Raven booth at an Ag show someplace. That's not hard to do since Raven has always looked sharp obviously thought about good locations plus been willing to spend the money for them. So apparently Bob told the salesman at the booth about my cap and since Bob collects caps, he asked if they had one he could have. Next thing I know, Bob calls me and in a teasing voice says that he has something I don't--a Raven cap. It turns out that it is not the 50th anniversary beauty I hope to get back in my Sister's will if I can just manage to outlive her, but probably a precision ag cap in a simpler version. Bob tells me the salesman said he didn't have one at the show, but that if Bob would leave his address the sales person would mail him one. A week or two later here came a cap along with a couple other promotional items in Raven blue. Having manned a couple of those booths in my time, I am surprised the salesman remembered and did as he said, so that is one more evidence of the quality of Raven personnel.
Bob felt a little guilty about taking a gift like that when he obviously wasn't going to buy a tractor or ship, so he sent the salesman a check for the shipping. The salesman quite properly told Bob he could not accept that and sent it back. Meanwhile I got a package in the mail from Bob--Oh boy! My Raven cap. Wrong!!! A Raven blue miniature football ("Simply improving your position" under a plain Raven logo--just the kind of tasteful advertising I expect from Raven) and one of those cup holder things with the same message. Bob is keeping the cap. But he is much older than me and I expect that one I'll see before too long. He just wants to taunt me a while longer.
So $45 might be a fair price and maybe I won't sell yet. Plus I'm not up to 10% of my portfolio yet. Close though. 8%. Best, L.