Guest Schwab711 Posted October 4, 2014 Share Posted October 4, 2014 http://seekingalpha.com/article/2537575-self-storage-group-reits-can-be-terrible-investments-but-this-new-reit-could-soar What do you think? Link to comment Share on other sites More sharing options...
Fat Pitch Posted October 4, 2014 Share Posted October 4, 2014 I wish I had the president's job here. You just sit around and collect 44% of the rental income. He's a parasite and needs to get booted out, but alas there's a poison pill to ensure he feeds at the trough uninterrupted. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 4, 2014 Share Posted October 4, 2014 I wish I had the president's job here. You just sit around and collect 44% of the rental income. He's a parasite and needs to get booted out, but alas there's a poison pill to ensure he feeds at the trough uninterrupted. Haha I like your cynicism, I can't believe I didn't at least mention this. The poison pill was originally enacted when the stock was trading well below NAV as an investment company and I assumed they didn't want to sell assets for less than fair value. They don't give too much info in the ARs so I'm not sure how many employees those costs are spread over and how much of that is one-time consulting fees. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 5, 2014 Share Posted October 5, 2014 I wish I had the president's job here. You just sit around and collect 44% of the rental income. He's a parasite and needs to get booted out, but alas there's a poison pill to ensure he feeds at the trough uninterrupted. Also, if they earn $2.5m in rental income before expenses, @44% Expense rate, is $1.4m in Net Dividend Income. Current MC is $26m for $35.5m in net assets. $7m in other liquid investments to be sold and cash returned in near future means Effective MC is $19m for $28.5m in net assets and 1.4/19 = 7.4% yield on cost. Effective Gross Rental Income yield is 13.2% however, making this an incredible acquisition target. I could see a P-E firm offering 80% - 100% premium to the current $3.75 stock price. Link to comment Share on other sites More sharing options...
Fat Pitch Posted October 5, 2014 Share Posted October 5, 2014 I wish I had the president's job here. You just sit around and collect 44% of the rental income. He's a parasite and needs to get booted out, but alas there's a poison pill to ensure he feeds at the trough uninterrupted. Also, if they earn $2.5m in rental income before expenses, @44% Expense rate, is $1.4m in Net Dividend Income. Current MC is $26m for $35.5m in net assets. $7m in other liquid investments to be sold and cash returned in near future means Effective MC is $19m for $28.5m in net assets and 1.4/19 = 7.4% yield on cost. Effective Gross Rental Income yield is 13.2% however, making this an incredible acquisition target. I could see a P-E firm offering 80% - 100% premium to the current $3.75 stock price. Compensation and benefits have been increasing at a much faster rate than investment income. Remember these are storage center sites... you can run them on autopilot with a camera system and a part-time employee. There's no reason why they are spending close to 1mm per year on compensation and benefits. There's no doubt the assets are cheap compared to the market capitalization, but it is cheap for the right reasons. I can point to other companies that are extremely cheap, but management is siphoning all the cash flows. Look at all the dividends the company has paid since 1998 and compare it to the stock price decline... yeah that's what parasites do to shareholder's money. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 7, 2014 Share Posted October 7, 2014 I wish I had the president's job here. You just sit around and collect 44% of the rental income. He's a parasite and needs to get booted out, but alas there's a poison pill to ensure he feeds at the trough uninterrupted. Also, if they earn $2.5m in rental income before expenses, @44% Expense rate, is $1.4m in Net Dividend Income. Current MC is $26m for $35.5m in net assets. $7m in other liquid investments to be sold and cash returned in near future means Effective MC is $19m for $28.5m in net assets and 1.4/19 = 7.4% yield on cost. Effective Gross Rental Income yield is 13.2% however, making this an incredible acquisition target. I could see a P-E firm offering 80% - 100% premium to the current $3.75 stock price. Compensation and benefits have been increasing at a much faster rate than investment income. Remember these are storage center sites... you can run them on autopilot with a camera system and a part-time employee. There's no reason why they are spending close to 1mm per year on compensation and benefits. There's no doubt the assets are cheap compared to the market capitalization, but it is cheap for the right reasons. I can point to other companies that are extremely cheap, but management is siphoning all the cash flows. Look at all the dividends the company has paid since 1998 and compare it to the stock price decline... yeah that's what parasites do to shareholder's money. Fatpitch, I get what you are saying but I think you have made the operating expenses % a bigger deal than it should be seen as. If you look at dividends since 2000 (from 2013 AR), they have returned over $5 to shareholders while the stock is more or less flat (and BV is actually UP since 2000). They have dramatically changed their investment strategy from active management in the mid-2000's to the current 7 self-storage facilities (and thus, 0% turnover). I'm not even sure whether the same management is in place or when current management came into power. Over a period where the S&P 500 is ~ +20%, the stock has returned 150% of the current share price in dividends while the stock price itself is only down ~ -20% (while BV is UP and P/BV has declined steeply). I think the stock is cheap because it trades OTC and the business model changed dramatically in the past 18 months and not because management is a terrible steward of shareholder funds. I would even argue that management has attempted to steer the company so that shareholder funds could not be as easily mis-spent. Their climate-controlled self-storage facilities has a $/Unit that is nearly 2x industry average. This is because they are known for security which means they have a need for more staff than normal facilities. I imagine we will see expenses as a % of revenue decrease over-time. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 13, 2014 Share Posted October 13, 2014 Anyone know anything about the spike? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted January 5, 2015 Share Posted January 5, 2015 I wish I had the president's job here. You just sit around and collect 44% of the rental income. He's a parasite and needs to get booted out, but alas there's a poison pill to ensure he feeds at the trough uninterrupted. Also, if they earn $2.5m in rental income before expenses, @44% Expense rate, is $1.4m in Net Dividend Income. Current MC is $26m for $35.5m in net assets. $7m in other liquid investments to be sold and cash returned in near future means Effective MC is $19m for $28.5m in net assets and 1.4/19 = 7.4% yield on cost. Effective Gross Rental Income yield is 13.2% however, making this an incredible acquisition target. I could see a P-E firm offering 80% - 100% premium to the current $3.75 stock price. Compensation and benefits have been increasing at a much faster rate than investment income. Remember these are storage center sites... you can run them on autopilot with a camera system and a part-time employee. There's no reason why they are spending close to 1mm per year on compensation and benefits. There's no doubt the assets are cheap compared to the market capitalization, but it is cheap for the right reasons. I can point to other companies that are extremely cheap, but management is siphoning all the cash flows. Look at all the dividends the company has paid since 1998 and compare it to the stock price decline... yeah that's what parasites do to shareholder's money. I still want to believe share price will eventually reach NAV within a few years and that they will sell off their non-core investments and return that cash to shareholders. If they did both then I might be able to get reasonable returns (20%+). However, the more I think about this the more I realize I'm betting on management I've never met and whose track record is suspect. Judging by recent announcement, I might get lucky when I exit this but I think I was overly optimistic/ideal in my thesis. Thanks for pointing out what I didn't want to see haha. Link to comment Share on other sites More sharing options...
Fat Pitch Posted January 5, 2015 Share Posted January 5, 2015 Anytime! That’s why I enjoy this forum, people can post their ideas and have others take a look at it. The last thing I want is validation from my peers... I rather have my ideas ripped apart so I make sure I didn’t miss anything. Even with that mistakes still happen, but that’s just part of the learning process. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted January 27, 2015 Share Posted January 27, 2015 NAV up to $5.14 (6% from 06/30/14) as of 12/31/14. This does not include the $0.065 paid out during that time so the true increase in 6 months is ~7%. They have 7,416,766 shares outstanding and a $0.35 increase in NAV resulting in a $2.6m increase in Net Assets. Storage facility stocks were up ~10% during these 6 months and SELF has $7m in storage facility securities resulting in a $700k gain from these ($0.10/sh). The only other assets are the storage facilities who just recently reached 90% occupancy (standard for storage facilities). This may mean that the storage facilities are generating $1.9m in net investment income for the storage units minus whatever dividends the storage facility securities provided (100k at most?). I really want to see the AR because if this is true then SELF is generating $3.5m - $4.0m in net investment income on the storage unit which gives a 10% yield at current MC (and dividend is already sustainable). Once the other investments [in other storage companies] is divested, SELF will be earning $3.5m - $4m ($0.47 - $0.54/sh) with 90% being paid out as a dividend (that is likely tax-free for a period of time) against a $28m MC for a 12.5% - 14.3% effective yield. I guess I'm glad I haven't had the opportunity to sell yet. If the actual results match what this NAV increase seems to imply, then expense ratios went way down and most new revenue is falling to the bottom-line. I'd like to re-allocate this money to new ideas but I still can't shake the idea that this is an excellent risk/reward situation and I don't want to walk away if nothing fundamental has changed (or if it just improves). Thoughts Fat Pitch? http://www.selfstoragegroupinc.com/pdf/SELF2014SAR.pdf http://www.selfstoragegroupinc.com/index.html Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 16, 2015 Share Posted March 16, 2015 SELF recently reported $2.175m in income from the storage facilities alone (FY14). Thus the $0.26 dividend is fully protected and still has room to grow as occupancy is 87% (from 79% at FY13) vs. ~90% national average for storage facilities. If the $1 distribution occurs (they will within the next 3 months be completely de-registered as a closed-end fund with SEC) then at current $3.50 share price, cost-basis becomes $2.50 and you have a 10.4% yield with additional growth potential! Also, the $1 distribution should be tax-free because it's a return of capital (depends on your situation of course). EDIT: Just so I don't mislead, current dividends have been fully taxable as the only remaining ROC-eligible dividends is from the $1 distribution. SELF really only makes sense in a tax-free account. This is a better deal than Awilco! http://www.selfstoragegroupinc.com/pdf/150301SELFAR2014.PDF Link to comment Share on other sites More sharing options...
jawn619 Posted March 16, 2015 Share Posted March 16, 2015 Very interesting, thanks for the post. Link to comment Share on other sites More sharing options...
Nnejad Posted March 16, 2015 Share Posted March 16, 2015 It's a Winmill enterprise. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted March 16, 2015 Share Posted March 16, 2015 It's a Winmill enterprise. Not familiar but it sounds negative. Care to elaborate? Link to comment Share on other sites More sharing options...
Morgan Posted March 16, 2015 Share Posted March 16, 2015 It's a Winmill enterprise. Not familiar but it sounds negative. Care to elaborate? I think he's referring to the CEO/President/Director Mark Winmill. I don't know anything about the guy. Nnejad, care to elaborate further? Link to comment Share on other sites More sharing options...
Nnejad Posted March 16, 2015 Share Posted March 16, 2015 Just think it's worthwhile to be aware that there are several other publicly traded companies run by the Winmills, all at equally stark discounts to book value. Bexil, in particular, comes to mind. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted May 30, 2015 Share Posted May 30, 2015 NAV is up to $5.25/shr (from $4.86 when I first mentioned this idea; +8% Y/Y). Dividend is $0.26 (7.3% yield with potential to increase substantially) annually and now fully covered by self storage operations. SELF recently completed their transition to REIT status and they should be selling off the common/preferred equity portfolio soon and returning proceeds to shareholders. If they do (as they said they would), then the new cost basis would be $2.54 and the yield would increase to greater than 10%. Also, if the $1 distribution occurs, appreciation to NAV would represent an appreciation of 67%. Occupancy still has potential to increase as it stands at 87% (from 79.3% last year) while the national average is slightly greater than 90% for self storage (and even higher for climate controlled facilities like SELF has). Finally, 2014 saw a double-digit decrease (as a % of self storage income) in compensation & benefits which is definitely in the right direction. Link to comment Share on other sites More sharing options...
eclecticvalue Posted May 30, 2015 Share Posted May 30, 2015 Nice idea, I found out they own another self storage company called Tuxis. I wonder if they have thought about merging both companies. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted May 30, 2015 Share Posted May 30, 2015 Clearly Mark Winmill is either overpaying himself for the time he is committing to these enterprises or he is misleading/lying about his time commitments. Also, all of his companies (except SELF?) seem to have a corporate structure that drain the companies of any profit before reaching shareholders. SELF drains profit through over-inflated salaries relative to his time commitment. Does anyone know what shareholders rights are in these cases? Does anyone have any precedents of attempted or successful forced change ? Poison pill makes this difficult, but it looks like 7-8 activists working in unison (or at least 7-8 separate, un-affiliated LLCs) could create a significant amount of value. Link to comment Share on other sites More sharing options...
Fat Pitch Posted May 31, 2015 Share Posted May 31, 2015 SELF recently reported $2.175m in income from the storage facilities alone (FY14). Thus the $0.26 dividend is fully protected and still has room to grow as occupancy is 87% (from 79% at FY13) vs. ~90% national average for storage facilities. You forgot to subtract the 1.3mm in corporate overhead. Shareholders are only making 900k in rental property income. You got of course the price appreciation from the properties, but that only becomes tangible if shareholders are able to get their hands on it. There's also the securities that I hope they will distribute back to shareholders. What really makes this idea stand out is if you look at the liability side of the balance sheet... you notice there's nothing there. An unlevered REIT... man that's a rare animal in this market. Theoretically shareholders can extract 15mm via a mortgage of the properties and the remaining co will be financially okay. You really need a Carl Icahn to step in. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted June 2, 2015 Share Posted June 2, 2015 SELF recently reported $2.175m in income from the storage facilities alone (FY14). Thus the $0.26 dividend is fully protected and still has room to grow as occupancy is 87% (from 79% at FY13) vs. ~90% national average for storage facilities. You forgot to subtract the 1.3mm in corporate overhead. Shareholders are only making 900k in rental property income. You got of course the price appreciation from the properties, but that only becomes tangible if shareholders are able to get their hands on it. There's also the securities that I hope they will distribute back to shareholders. What really makes this idea stand out is if you look at the liability side of the balance sheet... you notice there's nothing there. An unlevered REIT... man that's a rare animal in this market. Theoretically shareholders can extract 15mm via a mortgage of the properties and the remaining co will be financially okay. You really need a Carl Icahn to step in. Yikes, your right. I was pumped about capacity. Either way, full protected is extremely misleading. More I think about it, compensation & benefits really isn't that crazy, they just need more facilities to spread out costs. $800k/yr for 2 execs (which clearly shouldn't be paid as they do given assumed weekly hours) and likely 1 full-time employee per facility. They really shouldn't need all those employees but figure maintenance and the like is also included and it really isn't outrageous, just noticeably inefficient. Completely agree on the lack of debt. I think I mention this in my SA article as another potential distribution for shareholders. Unrealized property increases are probably unsustainable considering they were purchased as ridiculously low rates. Mortgages tend to be less IR sensitive but commercial properties are no different then bonds. Has anyone gotten ahold of management? They have dodged my calls for a few weeks. This is my only market reversion investment and it's probably time to walk away. If we could get a group of activists together then there might be an opportunity here. Link to comment Share on other sites More sharing options...
Moht Posted June 30, 2015 Share Posted June 30, 2015 Form 10 just released on Self Storage. See: http://www.sec.gov/Archives/edgar/data/1031235/000103123515000013/0001031235-15-000013-index.htm Looks like they plan to convert from a '40 act fund to an operating company. They'll then uplist to the Nasdaq. I'm just getting up to speed on the name. Has this been in the works for a while? Not sure what to think about it. On the one hand, an uplisting to the Nasdaq is positive. On the other hand, they won't be forced to distribute most of the profits. This could lead to increased extraction by management/insiders through higher salaries. You're also beholden to their capital allocation skills, which I haven't looked into. Anyone have a view here? Could SELF be the vehicle to roll-up the Winmill's other entities (Tuxis, Bexil)? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted August 5, 2015 Share Posted August 5, 2015 I believe the conversion started in late 2013 or 2014 and they state that the conversion should be fully-completed in 3Q15 (they are already a REIT for tax purposes). Why do you believe they won't be forced to distribute their earnings as a REIT (legally, they must distribute at least 90% and they are already distributing more than that). Management is the reason I ultimately sold a few weeks ago, Fat Pitch's warnings made me nervous given SELF's lack of fulfillment of their stated plans (selling and distributing the proceeds of their equity/preferred holdings). I haven't heard any updates on uplisting lately, I would hope some language regarding this is included in the AR. NAV increases are being driven by revaluations of their self storage facilities and increases in their equity/preferred holdings. This is increasing faster than CF growth, thus it is probably unsustainable. If not for management, I would still have a [large] stake. On paper this is a screaming buy, in my opinion. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted February 1, 2016 Share Posted February 1, 2016 Form 10 just released on Self Storage. See: http://www.sec.gov/Archives/edgar/data/1031235/000103123515000013/0001031235-15-000013-index.htm Looks like they plan to convert from a '40 act fund to an operating company. They'll then uplist to the Nasdaq. I'm just getting up to speed on the name. Has this been in the works for a while? Not sure what to think about it. On the one hand, an uplisting to the Nasdaq is positive. On the other hand, they won't be forced to distribute most of the profits. This could lead to increased extraction by management/insiders through higher salaries. You're also beholden to their capital allocation skills, which I haven't looked into. Anyone have a view here? Could SELF be the vehicle to roll-up the Winmill's other entities (Tuxis, Bexil)? SELF just completed their uplisting. I have no position and management seems like a liability. See Fat Pitch's posts above. http://finance.yahoo.com/news/self-storage-group-changes-name-143000559.html http://finance.yahoo.com/news/global-self-storage-adopts-stockholder-221258950.html Link to comment Share on other sites More sharing options...
Saidal Posted June 16, 2016 Share Posted June 16, 2016 If anyone owns the Winmill related entity Bexil, please DM me. Thanks! Link to comment Share on other sites More sharing options...
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