I hate to say this but if maximizing the share price was Ed's goal he probably would have just sold his entire company four years ago. But he didnt. He wants to be king. He wants to donate shares to wildlife preserve and then buy them back at 100% premiums to the current stock price. He wants a place to go each day where people tell him how important he is and bow down to him even as they laugh behind his back.
He knows if he merges the voting class he isnt going to be CEO very long or even still be with the company. If he ever decides to sell it would probably just be a transaction and see you later. Otherwise, he values your opinion and regarding the stock price frankly he doesnt give a .....
I thought Ed had pledged 500,000? I dont think he owns 3 million shares. But it does feel like forced liquidation and now the shares are being redistributed. But I dont have the story.
This one has a interesting chart retracement going on. Here at 5.36 its between the breakout from the mid fours at the end of 2010 but no support on the chart from 4.5 to 5.36. Of course, the chart ignores all the earnings of the last few years. So how far back is it going to pullback. Dont really know which makes this retreat hard to predict.
Would think the same thing but someone had to take them. Without a filing soon then its possible the price drop was for them to hold while the shares get sold over the next few days. But I agree with your point unless it was prearranged with the new owners.
If he could buy back three million at 5.5 that isnt saying much about what he would be willing to pay to take it private...whoever sold it will have to disclose it eventually and immediately if its Gates. My theory is that it was sold to market makers who slashed the price to hold in inventory until its redistributed . We should find out next week.
selling continues after hours.....only Gates has this many shares unless its more then one seller. Gates would have to file immediately since he is a 10%
That was a good reply. I think we also have to look at the history of this company. Before they sold off the assets and raised all this cash the company had almost 45 million in debt and a lower book value (I used the 2010 10-K) but it also had earnings. Look at the stock chart and we have retraced into the five's. that the stock was trading at and it goes into the 2's during the financial recovery and the subsequent recovery of the stock price in 2009-2010.
But the other dynamic IMO are shareholders rushed into the "new" Richardson Electronics that appeared so undervalued. Gates owns 25% of this thing and have to believe a large holder is liquidating (Blackrock?). Might see something after August 15 re a filing. But this group is now trapped in a falling knife and it appears ED is content "rebuilding" his little kingdom without regards to profitability or squandering of assets (or at least it is certainly being perceived as such). It isnt a liquid stock so the pain could be real. Anyone owning may be justifying the selling by saying a tax loss that saves me 35% might be better then holding on and watching everyone continue to sell. First out is better then last out. Sell now, buy later if you cant resist.
So the stock price is really just repeating historical rhythm of being a controlled stock, exacerbated by a number of five percenters and surely others who bought in at much higher prices.
The stock is now yielding over 4% and selling at an even higher discount to book.
Now what about the board responsibility? What is to stop Ed from doing a offer or share buyback at 6.25? Well nothing really. Most companies use the last 30,60,90 day window to justify pricing. The bottom line is nobody should tender on a buyback and you would have to seek a remedy in court on a privatization. Dont think Gates would be to happy with that kind of an offer. Some other investors would have to push the board and Ed to offer a higher price.
It would be nice to see management list in detail what they think these assets are worth today and how they intend to monetize everything. On paper, management's decline of book value over the last few years at a time when most assets have appreciated is almost unfathomable. Nice to see investors turning up the heat although it would have been better if the Board would do its job. No confidence in these guys what so ever.
What I dont understand is why UCP isnt the company to own? Its selling for almost a 35% discount to book. I realize it needs to be sold instead of trying to be a stand alone. While PICO seems to be over valued considering its most transaparent asset is UCP, it has to taken a big loss on the canola processing and who knows how or when it can monetize the water rights.
You almost figure he did that to protect himself from the large holders filing lawsuits. If that last call was any indication the heat is on....
Went back to the 2011 10k and look at the selected financial data summary-for years 2008, 2009 the equity was near 300 million and yet the stock price even back then was between 6-8 discounting Ed's management and of course the equity structure. Look at the stock chart for those periods. So this isnt new.
The sale fattened the balance sheet with cash which got everyone excited. Value investors chased.
Meet the new boss....
You were right! Read the transcript and that was one of the more hostile calls that I have read and Ed gave every one of them the Heisman at the end of each missile. Ed said they need to be at 190 million for profitability and that wouldnt happen until fourth quarter of fiscal year 2017!!!
So good luck with that.
Of course, investors will run. Then Ed will tender for a million shares and laugh, laugh, laugh. But he does appreciate your opinion.
They just published May 31 financials. Subtract the cash for the June 15 purchase and you have what you need.
It looks like Ed is basically unwinding his sale and deploying the cash without changing his capital structure. Looking back at the chart if this breaks 7.3 its right back to six and you have all these shareholders trapped with large losses. Trace the chart down and this stock traded at these levels prior to 2010 for a long, long time.
The obvious thing is the company should be selling itself but Ed wants to keep it going and it doesnt seem he really cares to sell and the shareholders cant do a damn thing about it.
What the earnings report could look like-huge inventory writeoff (maybe half), write off of capitalized software and some equipment, and the thing that would hurt the most=projection for a large earnings loss for the year. The first two arent back breakers but the third is what the street is really looing for or the price wouldnt be at 2 with 3 in tangible book which would allow for the inv writeoff and the ppe writeoff isnt in tangible...