But one thing I like to do is hold for a long time and forever evaluate. I'm constantly reading press releases and filings. Checking over and thinking what might be next. I'll buy more when it makes sense and hold out for brighter days. Rarely do I sell.
Recently I made back almost all the money I had lost on MINM. That stock I first wrote about as ZMTP in 2016. I've held for years and bought a lot when Minim took over the company in early 2021. Look at the bloodbath that followed (note there was a 1-25 stock split this year so I was buying at more like $4 than $100).
It was my type of setup. Small unloved company with new management. Adding in software and AI products, targetting higher margins. New management had a great prior exit selling their company Dyn and I thought they could repeat.
Sadly I was wrong and MINM turned into my largest dollar loss ever in 2022/2023. I had made it a large position and mistakenly bought the rising stock right at the top. I sold out in May 2023 in a spike that sent the stock up 10x in a day, taking the opportunity to show myself the door. Down ~90%. But I kept reading and following. The company is circling the drain and started talking about the possibility of bankruptcy in August.
I bought back in at ~$0.90 a couple months ago after they announced a new investor was buying up a controlling stake for $2.4m which "would be used for the sole purpose of settling all of the Company’s and its subsidiaries’ liabilities". The market cap had dropped to $1.2m for a company doing ~$50m in revenue. Not a lot of details in the filing but hey if $2.4m gets control and paid off debt then I could take a flyer on some stock valued at half that.
The stock quickly dropped into the $0.70s putting me down again but then it happened. Nov 29 after hours I saw some volume and thought I need to watch this tomorrow morning. I always check after hours and before market open, looking for activity. On Nov 30 something woke me up early at 5:30am. I remembered MINM and checked my phone. The stock was up 700% on insane volume! I ran down to my computer and sold most of my shares. After the open I sold the rest, missing the top but what can you do.
Look at that volume on a stock with 1.4m shares outstanding! No news. In an instant I made back 90% of my MINM losses. This is why I continue following year after year, why I like a low share count, why optimism wins. You just never know.
On SLGD I am pretty much breakeven at this point. I've held for many years, first buying in 2016 and holding through a near triple then adding during the decline. In mid 2022 the stock dropped under $0.50 and I've made it one of my largest positions between $0.20-$0.40.
There is change afoot. In Apr 2021 the CEO since 1990 Mark Goldstein retired, leaving Dan Roller as the new chairperson of the board. In Dec 2021 their distribution agreement with Church & Dwight Co expired without renewal and they sold the Dryel product line. They terminated China distribution in July 2022 and sold Prell in Dec 2022. In Jan 2023 they even sold the Scott's Liquid Gold product! In June 2023 they sold off Alpha skin care and BIZ, using the money to pay off loans.
All this while Dan Roller of Maran Capital has been buying. Having been in the stock since 2020, he has averaged down heavily. He held 5.7% of the stock in the 2020 proxy then 12.8% in 2021, holding flat until recently. He got Goldstein's shares in June for $0.33. He bought out another 5% shareholder in July 2023 for $0.33. He now owns 41% at an avg price of $0.68.
For me I'm looking at the bright side. SLGD may be down but it's not out. New blood is pushing the company forward. Let's see where this leads.
--Dan
disclosure: long SLGD
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Sadly I was wrong and MINM turned into my largest dollar loss ever in 2022/2023. I had made it a large position and mistakenly bought the rising stock right at the top. I sold out in May 2023 in a spike that sent the stock up 10x in a day, taking the opportunity to show myself the door. Down ~90%. But I kept reading and following. The company is circling the drain and started talking about the possibility of bankruptcy in August.
I bought back in at ~$0.90 a couple months ago after they announced a new investor was buying up a controlling stake for $2.4m which "would be used for the sole purpose of settling all of the Company’s and its subsidiaries’ liabilities". The market cap had dropped to $1.2m for a company doing ~$50m in revenue. Not a lot of details in the filing but hey if $2.4m gets control and paid off debt then I could take a flyer on some stock valued at half that.
The stock quickly dropped into the $0.70s putting me down again but then it happened. Nov 29 after hours I saw some volume and thought I need to watch this tomorrow morning. I always check after hours and before market open, looking for activity. On Nov 30 something woke me up early at 5:30am. I remembered MINM and checked my phone. The stock was up 700% on insane volume! I ran down to my computer and sold most of my shares. After the open I sold the rest, missing the top but what can you do.
On SLGD I am pretty much breakeven at this point. I've held for many years, first buying in 2016 and holding through a near triple then adding during the decline. In mid 2022 the stock dropped under $0.50 and I've made it one of my largest positions between $0.20-$0.40.
There is change afoot. In Apr 2021 the CEO since 1990 Mark Goldstein retired, leaving Dan Roller as the new chairperson of the board. In Dec 2021 their distribution agreement with Church & Dwight Co expired without renewal and they sold the Dryel product line. They terminated China distribution in July 2022 and sold Prell in Dec 2022. In Jan 2023 they even sold the Scott's Liquid Gold product! In June 2023 they sold off Alpha skin care and BIZ, using the money to pay off loans.
All this while Dan Roller of Maran Capital has been buying. Having been in the stock since 2020, he has averaged down heavily. He held 5.7% of the stock in the 2020 proxy then 12.8% in 2021, holding flat until recently. He got Goldstein's shares in June for $0.33. He bought out another 5% shareholder in July 2023 for $0.33. He now owns 41% at an avg price of $0.68.
SLGD put out a 10Q a month ago and I think all they have left is pets, doing ~$4m rev per year. Book value is $0.45 per share with $0.36 of that being straight cash. The division sales paid off all debt and I'm told Roller is trying to sub-lease to pay down their lease liability. Roller has turned the balance sheet into a strength. He's been selling off division after division over carrying value and I'd bet in a liquidation this gets $0.70 today.
As we all know the question to ask is what does the future hold. We have major change happening with most of the business being sold off. New management in place and motivated since Roller is down 40% even still from current prices.
The question is what will he do with it. He is trying to turn it into a win for himself and his investors. No dividends or distributions have come out. I think he'll try to buy up something new. Maybe a merger or acquisition. SLGD only has until Jan 23, 2024 to use the Scott's Liquid Gold name so something has to happen.
The risk is Roller doesn't know what he's doing. I mean he is already down on this. Maybe he makes a bad acquisition or pays himself all the excess cash as compensation. So far he seems to be on the up-and-up but who knows.
As we all know the question to ask is what does the future hold. We have major change happening with most of the business being sold off. New management in place and motivated since Roller is down 40% even still from current prices.
The question is what will he do with it. He is trying to turn it into a win for himself and his investors. No dividends or distributions have come out. I think he'll try to buy up something new. Maybe a merger or acquisition. SLGD only has until Jan 23, 2024 to use the Scott's Liquid Gold name so something has to happen.
The risk is Roller doesn't know what he's doing. I mean he is already down on this. Maybe he makes a bad acquisition or pays himself all the excess cash as compensation. So far he seems to be on the up-and-up but who knows.
For me I'm looking at the bright side. SLGD may be down but it's not out. New blood is pushing the company forward. Let's see where this leads.
--Dan
disclosure: long SLGD
Subscribe to all NoNameStocks posts here: https://forms.feedblitz.com/erd
Do they disclose anywhere on how much they sold those businesses for? (Amount and multiple?)
ReplyDeleteyes when they have had sales they announce the purchase price. like here: https://www.sec.gov/ix?doc=/Archives/edgar/data/88000/000095017023038558/slgd-20230731.htm and https://www.otcmarkets.com/filing/html?id=16781638&guid=yND-kHGQCb9mB3h
Deletebut not multiple. And they haven't broken out financials per each one of those divisions to easily know the multiple.
the stock is way down. I haven't paid enough attention to write downs over the years. If you go back in old filings they is some information about how much they paid years ago
Apologies yes I found the dollar amounts after I posted.
DeleteYeah no worries. I ask because it would be interesting to see the multiple paid as I am skeptical that microcaps deserve the same multiple as a larger comparable. I suspect that, all else equal, a small business trades at a much lower multiple due to things like key man risk (no founder, no business), customer concentration, and a multitude of other factors that essentially render the TV in a DCF doubtful.
not sure what to say on that. maybe someone out there has done research on buyout multiples vs market cap
DeleteDidn´t follow enough MINM, lost opportunity. Another will come, maybe SLGD.
ReplyDeleteGreat post. Thanks for sharing
Have you ever looked at Trucept? It is very cheap, with a P/E of 1, a P/S of 0.14 and a P/B of 0.13. However, the accounts are unaudited and I do not really understand them. It seems that the company does not generate any cash.
ReplyDeleteI own some Trucept - its super interesting if it isn’t a fraud 😉
DeleteThe market capitalisation is very small and the stock is illiquid. In the 2019 financial statements, the company reported equity of USD -1'059k, in the 2020 financial statements the equity from the previous year (2019) is reported as USD +14'329k. The income statements are also different. Apparently a substantial restatement was made, but this is not explained. Also, they are making high profits, but they don't seem to be making any cash. Strange. If this were a Chinese stock, I would say it is a clear fraud. But it is not. The company could be real and in that case extremely undervalued. So far I did not buy it.
DeleteI've definitely looked at TREP in the past but never bought in. It's had some giant spikes. I need to check it again
Delete"interesting if it isn’t a fraud" lol
DeleteAre you still holding $PIRS, Dan?
ReplyDeleteyes still hold all of it. Now that I've made back money on MINM, PIRS is probably my all time biggest dollar loss. fun stuff
Deletemerger just announced: https://www.businesswire.com/news/home/20231224412067/en/Scotts-Liquid-Gold-Inc.-Announces-Definitive-Merger-Agreement-With-Horizon-Kinetics-LLC
ReplyDeleteIs there any possibility to value this merger deal?
DeleteI'm not sure what to make of it. SLGD is becoming a huge investment management company. 8k says $6-8b under management and SLGD shareholders will own 2-4% of the new co
Deleteappendix A of the 8k has a table to help with the valuation. new co value = legacy SLGD value + horizon tangible assets + horizon operating biz. Looks like they are giving legacy SLGD stock a value around $1.25 which assumes a $200m value of the horizon operating biz. that $200m I suppose is the question. Looks like they are using about 3% of AUM to come up with that
Deleteat an SLGD stock price of $0.80 that is assigning about zero value to the horizon biz. or maybe assuming the deal won't go through.
Thanks for clarifying. The deal results me very cumbersome.
DeleteNo offer price?
ReplyDeleteit's an all stock transaction. SLGD is becoming a new co. you can sell if you want but there's not cash buyout
DeleteCpngrats man, got to know your write up through david flood, really happy for you
ReplyDeleteWow, congrats Dan. Looks like another huge win for you.
ReplyDeleteSadly I was meaning to buy in the new year but that train has left the station without me.
Great post! Unfortunately, I didn't see it until a couple of days ago.
ReplyDeleteWould you buy at below $1.00/share given the deal values the shares at $1.25? Seems like Horizon Kinetics should be a stable business.
At price would you sell?
using appendix A of the 8k you can make an equation of how different SLGD stock prices assume the valuation of the horizon operating business. I bought more the day the deal was announced in the mid 0.80s since that values horizon ops at nothing which has to be too low.
DeleteSLGD stock price of $1 implies a horizing ops value of $50-100m. Only you can answer if that's correct or how incorrect it is for you to buy
selling price depends on the action all the time. I watch constantly. it's now my 2nd or 3rd largest position since this move up so I might start selling some as it gets closer to the merger arb 1.25 area. but we'll see. I'm interested in the new biz though as it looks like there are smart people behind it.
I emailed the company and for sure the horizon financials will be included in the upcoming vote packet.
ReplyDelete