I did most of my PGNT buying a year ago and with the stock up over 200% I'm still adding. This one may keep going so let's take a look.
It's been a while since we played our favorite game, Price That Stock! Here we go. No looking at the stock price before playing. Humor me
We'll play a few rounds. What do you think it's worth? First the standard NoName stats:
- revenue $108M in 2020 vs 112.9 in 2019 vs 85.1 in 2018
- shares common 1.7M vs 1.7 vs 1.7
- no preferred or warrants
- book value $11.8M vs 8.2 vs 6.6
- net income $3.12M vs 0.99 vs 0.95 after taking out loan forgiveness
- EPS $1.84 vs 0.58 vs 0.56
But the share count, that I do have comments on. It is beautiful to see. When Sham took over in 2014 there were 1.605M shares outstanding. In 7 years Sham has increased revenue by 100M while adding 100k shares. This is how you do it. In fact PGNT went as far as amending the Company's certificate of incorporation to decrease the number of authorized shares of common stock from 20,000,000 to 4,000,000. in 2019! You don't see that very often.
On the subject of Sham Gad let me mention some good and some bad. On the good side he owns a third of the common and is still buying (100k more shares in 2020). But he has a checkered past. He had a theft charge in 2004 from a company he worked at. This company dug up some dirt on false statements made by Gad to convince shareholders not to vote him onto the board. Gad is the biggest risk in this story.
Overall my feeling is the numbers don't lie and those numbers look kinda like a snowball rolling down a hill to me. Long term it's a bet on the CEO Mr. Gad which you may or may not want to take, but man is it cheap.
--Dan
disclosure: long PGNT
"...and with the stock up over 200% I'm still adding". Interesting. I would rather not buy more because it has gone up so much. I prefer stocks which are still in the dog house.
ReplyDeletebut the stock is small, cheap and has a strong "momentum". A nice combination.
I agree but it's cheap. Most of my buying was a year ago at $2. I prepared notes for a blog post and was still buying when the stock starting moving so I just froze and did nothing. Later in the year as the CEO kept making big share purchases I bought some more. And I've been buying more since the latest annual came out showing that great Q4.
DeleteHey Dan, you are right, earnings really have been great on this one. Just one thing really holding me back has been where those cash flows have gone: currently looks like Las Vegas Real estate. Remains to be seen if this is just an astute investor making bargain purchases or something like empire building. Fingers crossed for the former, and good luck to all. Keep up the good work Dan!
ReplyDeleteWhich statements in the Rubicon letter are false?
ReplyDeletesorry that worded strangely so I've rewritten that sentence. I meant the false statements made by Gad
DeleteIt appears the three properties presently owned by Ohana are at Waldorf Astoria:
ReplyDelete- https://maps.clarkcountynv.gov/assessor/AssessorParcelDetail/parceldetail.aspx?hdnParcel=16220712030&hdnInstance=pcl7
- https://maps.clarkcountynv.gov/assessor/AssessorParcelDetail/parceldetail.aspx?hdnParcel=16220712098&hdnInstance=pcl7
- https://maps.clarkcountynv.gov/assessor/AssessorParcelDetail/parceldetail.aspx?hdnParcel=16220712118&hdnInstance=pcl7
Gad is the treasurer of the HOA: https://opencorporates.com/officers/154625524
Given his history of self-dealing and the fact that SI recently leased an office in Las Vegas, what are the odds he occupies one of the Ohana properties?
what is his "history of self-dealing"? Do you mean the $4k he stole from the store he worked at in 2004 that I linked https://www.onlineathens.com/local-news/2012-01-15/old-theft-charge-could-lead-longtime-athenians-deportation, or is there more?
Deletebtw here's a podcast Sham Gad recorded with Bobby Kraft in Sept 2020. Gad recorded it at one of their Vegas buildings and said he was there on a business trip. https://planetmicrocap.podbean.com/2020/09/
DeleteYes, I'm referring to his theft of funds that were intended to go to charity.
DeleteAnother question - when did he graduate from Stanford? The Paragon says he attended the Graduate School of Business Executive Program: https://pgntgroup.com/management-team but as recently as last year there was no mention of the same credential: https://web.archive.org/web/20200131110805/http://pgntgroup.com/executive-management/executive-officers/
It might be a shorter several month long credential type thing.
DeleteThis standard page lists someone of his name on a project team in 2019. https://www.gsb.stanford.edu/alumni/volunteering/act/projects/stanford-university-voice-initiative
This 2014 Paragon press release mentions John Molloy completed "a three month Executive Management program at Stanford University." https://www.prnewswire.com/news-releases/paragon-technologies-announces-key-executive-changes-263063931.html
Maybe Gad did the same management program Molloy did. You could contact PGNT and ask
The decision to invest in Las Vegas real estate is a valid concern. It does appear to be roughly cash flow neutral (67k loss in operating income, which should include depreciation on a rental property), so at least it shouldn't hurt the core business. I guess I would rather see them invest in an easy to manage investment than try to do something crazy, but they are probably banking much more on price appreciation than cash flow.
Deleterealized I forgot to mention one of my favorite things which is PGNT reduced the number of authorized shares from 20M down to 4M in 2019 so I've added a line about that
ReplyDeleteNice numbers.Cheap company and fantastic risk-reward opportunity.
ReplyDeleteLike very much all your ideas.
Thanks for sharing.
You're welcome. Thanks for reading and commenting back to me
DeleteI haven't dug into their recent filing, but I also purchased a while back in the 2s. Forgot about it to some degree and bought a little more this year around $5. Haven't been patient enough to get as large of a position as I'd like. I have found myself wondering what it will take to get a normal P/E on this stock....get smallish spikes on good news, but certainly seems like it should be higher than it is at this point.
ReplyDeleteI agree it's weird for the stock price to be so low. They are fully filing and have been for a long time so it's not a lack of info. I guess the market doesn't trust them. Whatever, I'll take it and wait for something to happen
Delete