"You and the idiots on Salton's message board who think Salton is a great company are the ones that should own it."
I have never described SFP as a "great company". It is a troubled company that might succeed in the hands of better management, however. And a trip through chapter 11 bankruptcy wouldn't hurt the company either.
"Management is just prolonging the agony in order to keep their jobs."
"Would you like to appraise Salton's reported goodwill for me?"
It's probably close to zero. What of it? If the company files for bankruptcy, its goodwill may well disappear from the balance sheet.
Salton recently issued its postponed year-end report. It reported a loss of ($2.52) for the year compared to a loss 0f ($4.42) for the prior year. If you combine the past two years the loss is ($6.95). I must point out that these are the company's numbers. Despite how bad they look, the management is probably still reporting them in the most favorable light that it can.
I suppose you are going to tell me that because its loss decreased that this is the equivalent of an earnings increase of $1.90. Insane! Continuous big losses are not the thing NPK needs. They will not buy Salton, nor should they. You and the idiots on Salton's message board who think Salton is a great company are the ones that should own it. You are the one who thinks there are a lot of ways to make money without showing a profit.
Salton has not settled its debt issues. It is selling its businesses piece-meal to raise the money it needs to pay its debt as it matures. Unfortunately, before it can pay all of its debts it will run out of businesses to sell. Management is just prolonging the agony in order to keep their jobs. Would you like to appraise Salton's reported goodwill for me? Goodwill's value is dependent on the ability to earn an above average rate of return. Can you spy the above rate of return in the past two years results of Salton? Salton has no economic goodwill period. They should write it all off now. Then the stock would have no book value.
You said that Salton's stock price was now $4.21. Well, right now it is $2.83 and headed south. Small time plungers love to speculate in low priced near bankrupt companies. The market price fluctuations can be dramatic but they don't mean anything if the company's operations can't be righted.
Finally, you said "Maybe NPK will decide to acquire SFP, a company whose business it understands." I disagree. NPK does not understand companies who lose large amounts of money year after year and are heavily indebted. I would also say that SFP doesn't understand SFP's business.
The market shows that SFP is becoming more attractive as it settles its debt issues.
The stock is now $4.21 a share, up from a 52-week low of about a buck.
Maybe NPK will decide to acquire SFP, a company whose business it understands.
Certainly Buffet and Munger take risks, but using a lot of leverage is not among them. They use very little leverage and as long as I have watched they maintain a lot of cash even as they have great businesses and excellent management. Those descriptions do not apply to CVC, SFP and many others. You seeem to think it is fine to take a lot of risk as long as you do it with somebody elses money. Then, if management succeeds it benefits and if it fails somebody else loses. I don't like those odds, so I will continue to be a BRKB shareholder and you can have CVC and SFP.
pmlljl, you quoted Munger (yes, I've known of him as long as I've known of Buffett) as saying:
"It is a crime in America to build a weak bridge. How much nobler is it to build a weak company?"
As obvious as the point may seem, his statement is a non-sequitur.
Investors may choose to minimize their risks as Buffett and Munger always attempt to do. But the people in the business of capital formation and the people in the business of starting businesses take risks. That's the job they've chosen. And that means failure is one possible outcome.
But unlike a collapsing bridge, a failing company is usually held aloft by agencies aimed at easing the descent.
In other words, bankruptcy court. Or an extreme financial makeover. While the experience may distribute some pain to a range of parties, the goal is to do the best for everyone when things don't succeed as planned.
Over the weekend I was reading a book about Charlie Munger. He is Buffet's partner in running Berkshire Hathaway.
There was a quote by Charlie which I thought was pertinent to our extended debate about NPK. The quote was as follows: "It is a crime in America to build a weak bridge. How much nobler is it to build a weak company?"
You may think it is a crime for the Cohen's to run a company so conservatively. I think Charlie would side with me in believing it should be a crime to run a company so dangerously as CVC, SFP and many others.
Certainly there is a place for distressed investing for people with expertise who want to do some gambling without much good information.
The Cohen's don't run a company that plays close to the borderline of morality or financial daring do. I for one appreciate that. If you and other speculative gamblers want more action, there are plenty of places that you can find it.