Greetings to the bored,
MPX is a boat maker, a well run one at that. Mirroring mortgage market carnage spreading from sub-prime to alt-A, the smaller boats weakened a couple quarters ago, now may spread to the higher end (MPX's strong hold), which held up so far. It's earning dropped from $26M to $20M in 2006. Capex also lagged depreciation two years in a row. Debt's been paid down. So the company is well prepared for the softer market. It also started a share buy back program.
Everything looks good from what I can see. The question is price and timing. My hunch is that more bad news is coming on the larger boat and lesser share price may be available at some later time.
RAND is in venture capital business but claims to stick with with some sound principles. The results has been impressive. But the reported progress is not to be taken at face value as it includes a large chunk of un-realized gain without counting the tax consequence. The brighter side is that it finally got a SBA loan--spell low cost-- to triple its resource, subject to several SBA & SEC restrictions. The Bid and ask spread is high typical of the little company. I have not bought any yet, But I'll catch it below $3.5. It'll be a slow process.
More later, Sam
Alpine Group and Wolverine Tube. APNI.PK & WLVT.OB
Alpine was involved with many hands-on turn arounds. According to its own assertion:
<<The Alpine Group, Inc. (OTC Bulletin Board: APNI - News) has substantial experience in operating and actively managing companies in which it invests capital. Alpine has focused on industrial and other businesses that are underperforming, experiencing financial constraints and will benefit from operational improvements, consolidation and an improved capital structure. Alpine has actively invested in and operated leading domestic and global manufacturers of specialty materials, coatings, wire and cable products and electronic components.>>
The last of which was sold for some &50 million. As a result, it sat on a pile of cash for a whole year. Wolverine, being in business for 90 years, ran into trouble primarily due to bad management and sticker shock on copper. It lost over $100 million in two years. Alpine alone with another group stepped in with $50 million purchase of newly created covertible prefferreds, effectively took 75% stake in Wolverine. The covertible feature also doubled the value of their investment since wolverine's stock went from below $1.00 to $2 and change and the conversion price was set at $1.10. That $50 million unrealized pretax gain translates into about $30 million net. Assume alpine had 90% of the participation, on about 21 million fully diluted APNI shares(11 million shares plus 10 million shares in dilution). That's $1.3 per Alpine share. 80%, $1.2. That's on top of its year end book of roughly $2.0 per share.
The leverage is actually in the suucess of Wolverine. It has done $1.1 billion in sales last year, abate on the backdrop of high copper price. Average copper price was $3.3 per pound in 4Q, an 85% increase from the year before. With only 60 million of fully diluted shares, that's $18 in sales per WLVT share. So, if wolverine do well, Alpine will do extremely well.
I know the management took advantage of shareholders in the past. But this is just too enticing.
There is no trading in and out as the spread is huge. I traded out once, but was lucky to get back in at lower price and filled my orders in one day. Large orders tend to move the market.
I can sink even lower in market cap. Maybe later?
If I didn't send you to sleep already, good night.
On RAND, I wrote, "it includes a large chunk of un-realized gain without counting the tax consequence." I was wrong, the tax liability was accounted for.
This mico cap has only a few branches north of Atlanta. The area grew rapidly in recent years and ITYC grew aggressively. It maxed out the preffereds, etc. last yeare to fuel the growth. It even added a loan office in Raleigh. Going forward, the growth rate will have to slow as equity won't grow faster then, say, 20%.
Its format for expansion is unorthodox but makes sense to me. First, it finds a suucessful bank manager; hires him(her); set up a limited operation on a leased property in his(her) contact area; then, eventually build a branch there.
I have a few shares in CCFH. Heritage operates south of Atlanta and its 1Q is a bit weak. That may explain the weakness in ITYC shares, but I don't think Fulton County and the nearby area where ITYC operates will slow down by much.
My drifting toward the non-concentrated style requires some explanations.
I still like very much to concetrate my bet. I am also fully aware of the disadvantages and perils of diversifying too broadly. My problem came from the fact that cash is burning a hole in my pocket and I have no really good idea. All I see that offer some POSSIBLY attractive return are third tier companies. So, unknowingly, I started to engage 1% here, 2% there.
Most what I found are marginal companies experiencing some kind of turn-around. None can be had for below real tangible equity. Naturally, I can't swing to the fence on such issues.
Now that's cleared up, I'd like to continue my monologue.:-)
Do let me know if these miro-craps bother you. I'd appreciate and hope for any feed backs.
ROHI is one that rent resperators, oxygen tank, etc. I always thought it very profitable business. So, it came as a shock to have seen its financial a year ago. Everything was shot, especially in losing market share.
Upon looking at it again recently, I was happy to see some positive changes. It got an upgrade from S&P. The finance is back to order but still too much debt. It even got out from being ROHI.PK to simply ROHI. This is a business that requires little capital. The sales may stabilize at around $500 million. If my guestimation is not outright wrong, it should be able to make about 3% net. That's $15 million or $0.60 per share. For that, I can afford to wait a couple of years.
INSU--It services waste water and potable water field by rehabilitate those pipes with minimum excavation.
The bulk of business is in sewer pipe rehab. It's the largest in this field. They clean up the inside of existing sewer line, apply a coat of glue, pull a long sleeve, inflate it and blow hot air to bound the sleeve to inside wall and make it part of the pipe. Great, huh?
The lesser field is directional drilling and pulling smaller pipes. This especially beneficial in deeper line or in congested area. Neat!
Again, I thought this might be highly technical and offers huge margin. Wrong again. It's been strugling, the main problem has been the directional drilling. It lost money for at least a couple of years. So...the company finally decided this month to get out of the field. Encouraging as it is, it may take some time to execute, and some write down is inevitable. So, at 22X earnings, I'd rather wait.
More later, Sam