You are going to want to listen to the CC's if they are still posted. They are a wealth of information. The board has been promising good results for some time now and it looks like they have been delivering starting with the 4th quarter of last year. I also a added to my original position at these recent prices after originating at a little over $14 a share. The current theme is that they say they can grow the top line around 5% and that will generate a bottom line increase of 20%. The recent pullback, in my estimation, was due to the lack of top line growth in the 1st quarter. We have weak comparisons in the next two quarters so I expect to see good bottom line growth. Personally, I think you picked a good one. Time will tell.
Sentiment: Strong Buy
One more thing to add from following this company is that they underestimate sales. The Volvo sales were estimated to be $26-$30M in 2014. They came in at over $48M. We have been told that they bought out a company that would add $20M in annual sales. Since it was not publicly traded we have no way to verify that number. We have also been told they made a $2M investment that would yield an extra $10M in new sales. My point is that this company has been underpromising and overdelivering for some time. It is their style. We will revisit this point in the upcoming quarters and years to see if it still holds true.
If the same group did not buy shares when CMT was under $10 it is not likely they will do so now. They are not the best bellwether.
It looks like the yearly award of stock took place on 5/18. Only three of the nine recipients sold any stock:
O'Donovan went from 63.6k shares to 62.1k
Barnett went from 140.3k shares to 134.9k
Crowley went from 32.6k shares to 12.6k (he's 66 years old)
In years past, many have noted that selling occasionally takes place, but no insider buying, outside of a few exceptions. I think you would have to take this as bullish that the insiders are not rushing to sell their shares after this runup of the share price.
From today's release:
Recently, Core was awarded multiple new products utilizing the DCPD process, prompting the additional investment in metering equipment and molding capacity at its Matamoros, Mexico facility to meet those program needs.
From the most recent 10K (if anybody reads those things):
At December 31, 2014, a provision has not been made for U.S. taxes on accumulated undistributed earnings of approximately $6,204,000 of the Company's Mexican subsidiary that would become payable upon repatriation to the United States. It is the intention of the Company to reinvest all such earnings in operations and facilities outside of the United States.
I think we have a match. This bodes well for the long term for CMT especially with the car makers investing in MX and needing reliable suppliers in that country. The puzzle is coming together.
By reading the actual filing, it appears that Gabelli controls in excess of 13% of CMT. The 4.5% mentioned above was for only one of the four funds that he controls. That's a lot more than I have!
There is an interesting article from today that you can find by connecting: Gabelli Core Molding in a search engine. Gabelli appears to be the driving force behind the removal of the poison pill and now holds 4.5% of CMT. I noticed the stock whipsawed a bit today. This may quash the immediate potential of a takeover premium that some may have factored in to their purchase of CMT. This was lifted from the article:
Form 13D is SEC filing that must be submitted within 10 days, by anyone who acquires beneficial ownership of more than 5% of any publicly traded securities. A filer must promptly update its 13D filing in case of acquisition or disposition of 1% or more of the securities that are the subject of the filing. These filings may be a precursor to hostile takeovers, company breakups, and other “change of control” events.
My understanding is that once someone surpasses 5%, any change of 1% or more in holdings (up or down) must be reported within a set amount of time. In effect, we'll know if his company is continuing to acquire CMT shares or divesting them. How high can CMT go? It is an interesting question.
Two more things regarding earnings. When earnings are released later than expected investors think that means bad news. That has not been the case with CMT in my experience. More important, many multinational companies are reporting flat revenues this year. Investors are expecting increased revenues from CMT this year. That makes them stand out.
I thought about this carefully. How about if a mutual fund offered to buy a larger stake in CMT in exchange for killing the poison pill. Let's say they deemed the bulk of CMT's earnings too reliant on too few customers. We can all agree that the investor was not paying up for these earnings just a short while ago. It was frustrating. But if CMT could be an acquisition for someone else that concentration of earnings would get smoothed out by a larger revenue base. Killing the poison pill opened them up to this option and we saw and continue to see large volumes trade. I thought a takeover was imminent. Now I see this as a plausible alternative.