PDH - Premier Diversified Holdings Inc.

[augustabound]

The PPM also indicates you are "The net proceeds of the Offering will be used to fund expansion of the Company's premier

diagnostic medical clinics in China and Canada, as well as for general working capital and investment purposes." 

In the (albeit limited number) of offering documents I've read, this seems standard.  A kind of legal standard of saying the company will allocate the capital as it sees fit.

 

I'm pretty sure Biglari's most recent offering had the same wording and his followers are their for his capital allocation, not his managerial capabilities of running restaurants or magazines.

[Junto]

The PPM also indicates you are "The net proceeds of the Offering will be used to fund expansion of the Company's premier

diagnostic medical clinics in China and Canada, as well as for general working capital and investment purposes." 

In the (albeit limited number) of offering documents I've read, this seems standard.  A kind of legal standard of saying the company will allocate the capital as it sees fit.

 

I'm pretty sure Biglari's most recent offering had the same wording and his followers are their for his capital allocation, not his managerial capabilities of running restaurants or magazines.

 

Not a material point on the language. I am more concerned on the value which appears to be way overvalued based on current value, shares outstanding, options, warrants, and the ability to close gap.

 

Biglari and Parsad is a poor comparison. Biglari's track record going into Western Sizzlin I am quite confident was better than Parsad and there was a salvageable company in all this investments. I am not sure this is the case with Premier. Look at the revenues versus the built up losses. I am not sure this ever was a viable company.

 

I have not met Parsad and hold nothing against him. Purely looking at this as an investment option given the data in front of us and what has been shared by the company and Parsad. The gap required to make acceptable returns and dilution prospects are too large for this to be a good investment at these levels.

[LC]

Here is a business already licensed etc and with connections and experience doing business in China in an industry that from my inexperienced opinion probably has more tailwinds than headwinds.

 

Fix the cost problem (easier), re-focus the sales/revenue effort (harder), and good things may happen. That's my very simplified two cents.

[Kraven]

I lived in Montreal for 6 years and the only French I managed to learn was Arret.

 

Oh and also how to introduce myself to women. However being recently married I have, of course, quickly forgotten that.

 

Sure, LC, sure...

lol ;)

 

This is just step 1 in Kraven's program to create a happy and fulfilling marriage. Next week I'm learning the 100 uses for kale!

 

You're well on your way, Grasshopper. Next step is to tell your wife that she has great friends. They're so attractive and fun to be around.

[augustabound]

 

Biglari and Parsad is a poor comparison.

I used the comparison for convenience sake since Biglari Holdings has been posted about frequently here.

In no way do I compare Sanjeev to Biglari. I wouldn't trust Biglari in any way in business or if he was my neighbour....................he may petition the town to re-survey the property lines and steal my property.  :P

[CorpRaider]

That's $.18 in loonies right?  ;D

[doc75]

I was watching this one before the PP news hit, because I saw from filings that Parsad was involved and figured this was his vehicle.  There were 100000 shares on offer at .06, but I'm a cheapass and thought a 20% premium over all the recent options grants and converts was too much.... My order at 0.055 wasn't filled. :)

 

Can anyone comment on all the dilution at 0.05 to insiders, very quickly followed by a PP near .20?  One one hand, I get it:  If you think you can place shares at $2, then go ahead and do it.  But the timing seems very strange to me.  Is this actually a pretty common thing?  Nobody on here aside from Junto seems to find it weird.

 

Please note that I'm not making any accusations here -- just curious, because if I imagine such a thing happening with a bigger company then it feels offside. 

[JBird]

I'm trying to just get an understanding of the valuation being placed on Premier if the offering is subscribed in full.

 

52.7 million shares currently outstanding. Plus at least an additional 3 million shares for dilution. "August 5, 2014 the company issued "700,000 options to purchase shares of the company, as well as 3,000,000 common shares at a deemed value of $0.05 per share to a director of the Company as a signing bonus."

 

So we're at 55.7 million. Now if the offering is fully subscribed there are an additional 50 million shares issued. So we're up to 105.7 million shares.

 

The private placement is taking place at an .18 cent per-share valuation, or $19.02 million on the whole company.

 

If the equity currently negative 1 million, and the full subscription adds 9 million in equity, were looking at net assets of 8 million.

 

Sanjeev, am I overlooking something something here? Assuming a full subscription, are we looking at net assets of about 8 million and a valuation of about 19 million?

[wescobrk]

Sanjeev,

 

Can you explain for shareholders in Premier your views on dilution?

Are they anything similar to Buffett's and viewing them as a colonoscopy? Or are they very different?

Are you getting more in intrinsic value than you are giving up to employees at 5 cents per share?

Thanks1

[Parsad]

These numbers are not in thousands. June 30 (before PPM) shares outstanding 52,934,978 before considering numerous warrants and options outstanding.  The kicker is that on August 5, 2014 the company issued "700,000 options to purchase shares of the company, as well as 3,000,000 common shares at a deemed value of $0.05 per share to a director of the Company as a signing bonus." Awfully close to the PPM raise.

 

You haven't got the slightest clue what you are talking about!  You think these were granted to me or Alnesh?  What an idiot!

 

Now you have to cover the spread with new revenues, reduced expenses, or additional businesses.  If you return ~10% of the raised PPM money, the company breaks even. If you reinvest in the business, it looks like good money after bad (the company has never been profitable and has amassed $14 million + in losses). If you invest in other businesses, you have to cover the drag of the existing operation plus return an acceptable amount to shareholders who will be diluted significantly to the benefit of the pre PPM shareholders, directors, and debt holders. Show me the history to support the potential market out-performance from investment prowess and business knowledge to drive market beating returns? I didn't see an answer to those questions on the board or in the filings.

 

Again, someone with zero knowledge of what is happening at the company level, assumes that the existing businesses are stagnant, and that operating costs and capex are fixed.

 

Andy, you state that you have 8 years of business experience in your Covestor portfolio, yet you only show results from September 2009.  Talk about cherry picking and what doesn't pass the smell test!

 

http://covestor.com/andy-schornack/financial-services

 

Again good luck, but I am not sure why you wouldn't start from scratch if you wanted a public investment vehicle versus working through this company.

 

Because numbnutz, we had already injected some capital into the company, and to salvage that capital I had to force terms on the company to save it.  Once that was in the process, the company's future relied heavily on a change in management.  This wasn't the route we expected, but the route we ended up taking because of the existing management's failures to save the ship! 

 

[Parsad]

Biglari and Parsad is a poor comparison. Biglari's track record going into Western Sizzlin I am quite confident was better than Parsad and there was a salvageable company in all this investments. I am not sure this is the case with Premier. Look at the revenues versus the built up losses. I am not sure this ever was a viable company.

 

You have no idea what you are talking about.  Do you even remember Western Sizzlin?  I was one of the investors in it, and it was running up losses like any other distressed business.  Sardar closed stores, cut costs, aligned compensation, adjusted pricing of the menu, and RAISED CAPITAL BY ISSUING STOCK BELOW BOOK FOR WORKING CAPITAL AND INVESTMENT PURPOSES.

 

I have not met Parsad and hold nothing against him. Purely looking at this as an investment option given the data in front of us and what has been shared by the company and Parsad. The gap required to make acceptable returns and dilution prospects are too large for this to be a good investment at these levels. 

 

Again, you have no idea what changes are happening at the company, and I cannot disclose anything because it is a public company, so your opinion is one without all of the data and facts.  In other words, you have stressed an opinion when your analysis is completely inconclusive!

[Parsad]

Sanjeev,

 

Can you explain for shareholders in Premier your views on dilution?

Are they anything similar to Buffett's and viewing them as a colonoscopy? Or are they very different?

Are you getting more in intrinsic value than you are giving up to employees at 5 cents per share?

Thanks1

 

Those shares Junto referred to weren't issued to me or Alnesh.  Dilution is very important and I would prefer not to issue shares unless we are getting back more in intrinsic value than we are giving up.  The person that those shares were issued to is going to add far more in intrinsic value than we gave up.  That's about all I can say on the subject.  Cheers! 

[LC]

Seems like the critics are taking historical losses and simply projecting them. Of course the company was losing money, but we don't invest backwards into history.

 

The company in the midst of many changes as Sanjeev has mentioned. The share placements and option issuances are obviously to facilitate that change in lieu of cash from operations.

 

You have a company with industry tailwinds and a great person we all know to embrace those tailwinds. Getting worked up over past management's crappy performance or the capital raises to facilitate the change become moot points: the real issue is whether you think the company can turn around. Given Sanjeev's experience and the tailwinds in the industry I thought it was a good bet. Bought shares.

 

 

 

 

[LC]

Also I'll say it's rare to get such feedback from management. Sanjeev is candid and lays out his plan. Moreso than from the majority of CEOs out there. This automatically improves the odds because you don't have to discount management or quality of information you receive as an investor. In fact it may warrant a premium IMHO. How many managers out there do you know you can trust?

[Junto]

These numbers are not in thousands. June 30 (before PPM) shares outstanding 52,934,978 before considering numerous warrants and options outstanding.  The kicker is that on August 5, 2014 the company issued "700,000 options to purchase shares of the company, as well as 3,000,000 common shares at a deemed value of $0.05 per share to a director of the Company as a signing bonus." Awfully close to the PPM raise.

 

You haven't got the slightest clue what you are talking about!  You think these were granted to me or Alnesh?  What an idiot!

 

Now you have to cover the spread with new revenues, reduced expenses, or additional businesses.  If you return ~10% of the raised PPM money, the company breaks even. If you reinvest in the business, it looks like good money after bad (the company has never been profitable and has amassed $14 million + in losses). If you invest in other businesses, you have to cover the drag of the existing operation plus return an acceptable amount to shareholders who will be diluted significantly to the benefit of the pre PPM shareholders, directors, and debt holders. Show me the history to support the potential market out-performance from investment prowess and business knowledge to drive market beating returns? I didn't see an answer to those questions on the board or in the filings.

 

Again, someone with zero knowledge of what is happening at the company level, assumes that the existing businesses are stagnant, and that operating costs and capex are fixed.

 

Andy, you state that you have 8 years of business experience in your Covestor portfolio, yet you only show results from September 2009.  Talk about cherry picking and what doesn't pass the smell test!

 

http://covestor.com/andy-schornack/financial-services

 

Again good luck, but I am not sure why you wouldn't start from scratch if you wanted a public investment vehicle versus working through this company.

 

Because numbnutz, we had already injected some capital into the company, and to salvage that capital I had to force terms on the company to save it.  Once that was in the process, the company's future relied heavily on a change in management.  This wasn't the route we expected, but the route we ended up taking because of the existing management's failures to save the ship!

 

Giant leaps there Parsad. On the Covestor front, I don't manage the site and it is only a financial services portfolio (no leverage or options) reflected there since Covestor started allowing people to subscribe to the portfolio. I actually started with Covestor tracking back in 2007 or so when the site first launched and have been investing much longer. http://site.covestor.com/about-us to learn more about the company.

 

The post response illustrates two things to me. One I was asking questions about the company and its prospects/financials. What I got back was redirected comments about my personal investment history and business acumen which is not only way out of line but also ridiculously inaccurate. Two, realization that none of my questions were answered directly and still no clarity to prospects and financials.

 

The comment on the Director post has nothing to do with you. It has to do with management as a Board issuing options and shares at $0.05 one month before a PPM at $0.18.  The other dilutive actions taken speak for themselves.

 

Please direct your responses to the business and your plans.

[tombgrt]

Also I'll say it's rare to get such feedback from management. Sanjeev is candid and lays out his plan. Moreso than from the majority of CEOs out there. This automatically improves the odds because you don't have to discount management or quality of information you receive as an investor. In fact it may warrant a premium IMHO. How many managers out there do you know you can trust?

 

For all you know you are already paying a very rich premium to fair value. What is your investment basis other than "the turnaround will work under good management"? How long will it take before things stabilize? Before they get decent returns on invested capital? This will impact your return tremendously.

 

This stock price explosion is little more than speculation and a result of a 5-year old extreme bull market, exploded board membership and idolization of permanent investment vehicles and great investors. No offense to anyone. After all, speculation can still make you serious money when done right.

 

Full disclosure: If I could invest with Sanjeev through his funds, I would. I think he is a great investor and has the potential to become a great manager.

 

 

I'd love to be shareholders with Sanjeev but I don't understand how this company is worth $10 million as of today.

The financials don't appear to support it.

I'm sure it can grow into that market cap over time but I don't see how it is worth it today.

 

I'll look to buy after a large drop.

Good luck to the buyers at today's prices.

 

I bought a starter position here, and hope to get more in the private placement. This isn't a value investment, it's a bet on a value investment manager. You're paying ~1.8X current business value, if you assume the current business isn't worth anything, but you're getting Parsad and his team, and their ability to raise money above the current value. That has a bit of a reflexivity to it, as if they raise more money at 1.8X current business value, that raises business value for current shareholders. Plus, you get their ability to leverage your money (via reinsurance) and invest it.

 

I think it's pretty likely they'll be able to invest my money better than me over the long term, which is why I think it makes sense to buy now. Over very long periods you'll get approximately their ROE no matter what P/B you buy at.

 

Unless your very long periods are extremely far out in the future, it does matter a lot. Especially when ROE turns out to be lower than anticipated, you could get burned badly by paying way too much. But I'm glad for Sanjeev that he is able to gather capital this easy, more power to him! 

 

 

[ECCO]

I must admit it amazed me to see the stock price jump to .10$, .15$, and 20$... People buying at these prices does not have a clue of what they are doing because information available is too old. That is pure speculation, not investment.

 

Many comments from people, but as long as we dont have more informations, right now Sanjeev is the only one who know what he is talking about.

Sanjeev, when do you expect pp documents to be available?

 

[alertmeipp]

Damn, just saw this run like 400% in matter of days. Good for those who spent time doing a quick name search on the filing site! Congrats.

 

 

[original mungerville]

I have all the confidence in Sanjeev to create success and shareholder value over the long-term.

 

Having said that, I have one very superficial ratio I am having trouble with at this point: the revenues are less than $1 million and the implied market cap for Premier (at $0.18 per share) seems to be about $10 million. I mean even if costs are cut, etc, perfectly (which I have no doubt will happen under Sanjeev's leadership), how do earnings at current revenues get past say $500K after-tax?

 

Is the valuation implying a P/E of over 20 times for Premier (where even that 20 times p/e is predicated on a successful restructuring)?

 

Then I have to believe revenues and earnings will triple to get to a 15% ROE on the implied valuation.

 

Now, on the other hand, it seems Sanjeev intends to roll Corner Capital into this however I presume this transaction will happen at fair market value and won't be some sort of gift to private placement Premier investors for investing at 10x sales.

 

So this is what it looks like at a superficial / 1000 foot view of the deal - which I think is the reason for some negative comments on this thread.

 

------

 

Now, counteracting all this is, this is a two pronged deal. Premier is one prong, the future allocation of the $10 million in new capital is the other prong: the reinsurance deal I am sure will be interesting from a value perspective as well as other investments with that $10 million. The more money that is raised at this 0.18 per share, the more the future returns will be based on that new money that is raised; whereas the less money that is raised, the more the future returns will be dependent on Premier's business and the above noted valuation.

 

So to me, one risk seems to be that the full $10 million is not raised (eg, taking it to an extreme, if $100 million was being raised, only 10% of the total market cap would relate to Premier at the valuation of 0.18 per share - this would be good as the bet would be purely on Sanjeev's ability to allocate that capital at a valuation of around 1.1x book value assigning no value to Premier - I have no doubt that if this was the case, returns would be excellent). The other risk is the implied valuation of Premier at 0.18 per share (note: I know nothing about Premier other than what I noted above). If this implied valuation was lower (eg, taking it to another possible extreme, let's say 0.04 cents a share, the implied market cap for Premier at that valuation would be around $2 million or so, and if ony $8 million was raised - this would also be good as the bet would be purely on Sanjeev's ability to allocate that capital at a valuation of 1.25x book assigning no value to Premier).

 

Again, the above comments are based only on extremely superficial knowledge of Premier (I wouldn't even call it knowledge - just the revenues versus implied market cap) and the high-level way I am looking at this deal. If Premier is a huge success from a growth perspective going forward (where high growth requires very little capital investment to sustain it), or if there are hidden assets on its balance sheet, then much more value can be assigned to the Premier portion of the deal.

 

-----

 

Anyway, I have no doubt Sanjeev will be successful and that he will treat all shareholders fairly on a long-term basis while working diligently and honestly throughout.

 

 

 

 

 

 

 

[alertmeipp]

One can assume Sanjeev will treat all comers fairly (including the current PDH shareholders who probably don't deserve much).

 

So, I have this proposal for the company name  Priendly and Fair Holdings (PFH) where P stands for Parsad  ;D.

 

cheers!

shalab

 

Would be fair if the PP priced same as MPIC's cost basis.

I will go all in.  ;D.

 

[Otsog]

I was watching this one before the PP news hit, because I saw from filings that Parsad was involved and figured this was his vehicle.  There were 100000 shares on offer at .06, but I'm a cheapass and thought a 20% premium over all the recent options grants and converts was too much.... My order at 0.055 wasn't filled. :)

 

I grabbed the 91,000 block @.06 :)

[Parsad]

Giant leaps there Parsad. On the Covestor front, I don't manage the site and it is only a financial services portfolio (no leverage or options) reflected there since Covestor started tracking results. I actually started with Covestor tracking back in 2007 or so when the site first launched and have been investing much longer. http://site.covestor.com/about-us to learn more about the company.

 

This was actually the most accurate statement made in the whole discussion, as you only show results from 2009, but operated from 2007...you were questioning my investing acumen and said that the whole thing smelled funny...buy my entire record is out there, while yours isn't.

 

The post response illustrates two things to me. One I was asking questions about the company and its prospects/financials. What I got back was redirected comments about my personal investment history and business acumen which is not only way out of line but also ridiculously inaccurate. Two, realization that none of my questions were answered directly and still no clarity to prospects and financials.

 

You should know better than anyone that I can only say certain things about a public company.  I cannot give material financial information to people where it has not been disclosed to other shareholders.  As such, you can slander me any way you feel, but I'm beholden to shareholders reading quarterly and annual filings 6-12 months out after you make such statements.

 

The comment on the Director post has nothing to do with you. It has to do with management as a Board issuing options and shares at $0.05 one month before a PPM at $0.18.  The other dilutive actions taken speak for themselves.

 

To attract someone of quality to assist in the turnaround, we had to make a sacrifice in compensation, since we didn't have cash sitting on hand to sign this person up.  Adding this individual changes the face of part of our business due to history and performance.  You would have suggested we sit there and do nothing!

 

If investors feel my addition, changes to the board, the addition of this other talented individual, all of the things happening at head office in the last 3 months, do not warrant the higher private placement price, they don't have to subscribe.  It's as simple as that.  None of these things existed at the company 3 months ago...they do today, including other things in the works.  The private placement price is based on these changes in our estimate.  Investors have every right to do what they think is prudent.  Cheers!

[Parsad]

One can assume Sanjeev will treat all comers fairly (including the current PDH shareholders who probably don't deserve much).

 

So, I have this proposal for the company name  Priendly and Fair Holdings (PFH) where P stands for Parsad  ;D.

 

cheers!

shalab

 

Would be fair if the PP priced same as MPIC's cost basis.

I will go all in.  ;D.

 

MPIC is participating in the private placement like any other partner.  We will be putting in the maximum we can of $1.5M.  Cheers!

[wescobrk]

I grabbed the 91,000 block @.06

Nice job otsog!

 

Within less than five days the damn thing tripled.

You paid a market cap less than three million!

 

Sanjeev, how many months will it be until you can disclose more financial information?

Thanks.

I hope the Dow drops at least five percent this week about the Fed.

[TorontoRaptorsFan]

Sanjeev,

 

You have always had a great reputation, and have been honest and fair with your dealings with myself and everyone on this board.

You will always have my support.

 

TRF

-> PDH Shareholder  :)