bci23 Posted December 5, 2014 Share Posted December 5, 2014 http://www.businesswire.com/news/home/20141205005822/en/AB-Management-LLC-Announces-Intent-Nominate-Directors#.VIIZgjHF98E Link to comment Share on other sites More sharing options...
bci23 Posted December 5, 2014 Author Share Posted December 5, 2014 Quick look at the valuation, this one could be interesting. Link to comment Share on other sites More sharing options...
BG2008 Posted December 9, 2014 Share Posted December 9, 2014 Kreisler is indeed interesting. It is a $26.6mm market cap company with $18.5mm in current assets including $7.4mm in cash and total liability of under $5mm. Net Net of $13.5 in equity value. In essence, shareholders today are paying $13.1mm for a business that generates $30.6mm of sales and about $4.3mm of EBITDA. Typical business value in the space is >1.0x sales. There are many smaller aircraft parts providers in the space. From my conversation with people in the defense/aero space, customers typically do not try to squeeze suppliers as much as other industries. At the end the day, Boeing, United Technology, etc don't want headlines of "aircraft explodes because of cheap parts". Business tend to be cashcows. The company also recently signed a $102mm contract. However, AB value doesn't necessarily believe that this is the good thing as these are fixed cost and the company can actually suffer losses if they don't manage cost correctly. The activist dynamic is also very interesting here. AB Value owns 11.1% and Josephy Daly owns 19.3% representing a total of 29.4% interest in the company. They are now wagering a fight against management due to the contract and recent changes to the bylaw. AB Value and Daly's presence is the reason why I own a position in the company. It's not everyday that you get to buy a company with tons of net assets with an activist thrown in. Let's keep the thread alive and updated on this. It could get interesting. Most recent annual report http://www.kreislermfg.com/files/kreisler%20financials%20updated%2020140929.pdf Most recent proxy statement http://www.kreislermfg.com/files/kreisler%20manufacturing%20corporation%20-%202014%20proxy%20statement.pdf Amendment to bylaw http://www.kreislermfg.com/files/kreisler%20manufacturing%20corporation%20bylaws%20-%202014%20revisions.pdf Recent $102 mm contract http://www.kreislermfg.com/files/krsl%20press%20release%20--%20final%2003dec2014.pdf Link to comment Share on other sites More sharing options...
moustachio Posted December 10, 2014 Share Posted December 10, 2014 I had this one on a list of stocks to check out, meaning it looked cheap and attractive at a glance, but I never had time to look into it. These tiny companies seem to go nowhere until out of the blue something happens like they initiate a dividend, stock buyback, or.... an activist investor takes an interest. For this type of stock I think FCF is the best measurement, and by that measure this one looks dirty cheap. A sort of similar company that I had right below this one in the "list of stocks to checkout" is QPDC. It looks like it might be similarly cheap... Link to comment Share on other sites More sharing options...
oddballstocks Posted December 10, 2014 Share Posted December 10, 2014 Funny how things change with time. I looked at them years back and it was endless losses and a terrible operation in Poland. The valuation was very cheap, but it was unclear how anything might happen. This looked like the proverbial melting ice cube. Fast forward a few years and the situation is completely different. In hindsight I could have tripled my money or more, but given what I knew at the time passing was the right decision. Link to comment Share on other sites More sharing options...
BG2008 Posted December 10, 2014 Share Posted December 10, 2014 Oddball, I think it was completely correct to pass when you did. This company only became "investable" when they decided to get rid of their Poland operation and reign in all the operating losses. Often times, higher prices equals less upside, but more certainty that you will make money. I got involved when I realized the positioning of AB Value and the director. AB Value and the director need to create a liquidity event in order for them to exit their position. I like the combination of undervaluation and stakeholders who are "trap" in these situations and have to create their own liquidity event. This one is worth following. Link to comment Share on other sites More sharing options...
no_thanks Posted December 10, 2014 Share Posted December 10, 2014 Kreisler is indeed interesting. It is a $26.6mm market cap company with $18.5mm in current assets including $7.4mm in cash and total liability of under $5mm. Net Net of $13.5 in equity value. In essence, shareholders today are paying $13.1mm for a business that generates $30.6mm of sales and about $4.3mm of EBITDA. Typical business value in the space is >1.0x sales. There are many smaller aircraft parts providers in the space. From my conversation with people in the defense/aero space, customers typically do not try to squeeze suppliers as much as other industries. At the end the day, Boeing, United Technology, etc don't want headlines of "aircraft explodes because of cheap parts". Business tend to be cashcows. The company also recently signed a $102mm contract. However, AB value doesn't necessarily believe that this is the good thing as these are fixed cost and the company can actually suffer losses if they don't manage cost correctly. The activist dynamic is also very interesting here. AB Value owns 11.1% and Josephy Daly owns 19.3% representing a total of 29.4% interest in the company. They are now wagering a fight against management due to the contract and recent changes to the bylaw. AB Value and Daly's presence is the reason why I own a position in the company. It's not everyday that you get to buy a company with tons of net assets with an activist thrown in. Let's keep the thread alive and updated on this. It could get interesting. Most recent annual report http://www.kreislermfg.com/files/kreisler%20financials%20updated%2020140929.pdf Most recent proxy statement http://www.kreislermfg.com/files/kreisler%20manufacturing%20corporation%20-%202014%20proxy%20statement.pdf Amendment to bylaw http://www.kreislermfg.com/files/kreisler%20manufacturing%20corporation%20bylaws%20-%202014%20revisions.pdf Recent $102 mm contract http://www.kreislermfg.com/files/krsl%20press%20release%20--%20final%2003dec2014.pdf Are you going to the annual meeting? Link to comment Share on other sites More sharing options...
BG2008 Posted December 10, 2014 Share Posted December 10, 2014 I am planning on going. Link to comment Share on other sites More sharing options...
no_thanks Posted December 11, 2014 Share Posted December 11, 2014 Looks like it should be pretty contentious. Doesn't management own 40%? Seems like it is going to be very difficult for the activists. Nice that it is pretty cheap though. Should be very interesting. Link to comment Share on other sites More sharing options...
Tim Eriksen Posted December 11, 2014 Share Posted December 11, 2014 Looks like it should be pretty contentious. Doesn't management own 40%? Seems like it is going to be very difficult for the activists. Nice that it is pretty cheap though. Should be very interesting. I got my first phone call today. It was from management. I also received the AB proxy. By my calcs management has 40% of shares and if the director and AB are on the same page they would have 30.4%. That would mean AB has to get 2/3 of other voters if everyone voted. Since not everyone will vote they need an even higher percentage. With the meeting scheduled for the 18th there is not much time. It trades at about 5 times earnings net of cash. Link to comment Share on other sites More sharing options...
BG2008 Posted December 16, 2014 Share Posted December 16, 2014 Just a reminder to anyone involved to vote their proxy Link to comment Share on other sites More sharing options...
Tim Eriksen Posted December 18, 2014 Share Posted December 18, 2014 Kreisler announces that Delaware Court rejects AB Value request to submit proxy after deadline. http://www.otcmarkets.com/stock/KRSL/news/Delaware-Court-Rejects-AB-Value-s-Claim--Kreisler-Board-Discusses-Strategic-Alternatives-And-Declares--3-00-Per-Share-Cash-Dividend?id=93950 But surprisingly, the board announces a $3 special dividend. Makes me wonder if votes were going AB Value's way. Board believes high cash balance entices short term oriented hedge funds. Will consider additional dividends in future years. Link to comment Share on other sites More sharing options...
Tim Eriksen Posted December 18, 2014 Share Posted December 18, 2014 The decision can be found here: http://courts.delaware.gov/opinions/download.aspx?ID=216490 Interesting items: 1. Plaintiff (AB Value) claims that Jeffrey Stern turned in a proxy indicating intent to vote for AB Value and not for management (his brothers). Thus 170,000 shares (9.1%) I would have thought were in support of management, were actually against (p. 12-13). Thus if AB Value had the support of Director Daly they were starting out well ahead of management (739k to 576k, with 553k of float). It also makes me wonder how the other sibling would have voted her 170k shares. 2. Senior Management had received substantial raises after the proxy was issued - from 175k to 275k each. Management is 2 of the 4 board members. There had been discussions to give back pay to management but the discussions were tabled (clearly this is what Daly was referring to in his press release). After it was tabled all four directors voted for the raise. Thus it seems AB Value was correct in its assertions regarding management. 3. Kreisler amended their bylaws after the proxy was sent to give the government and significant customers the ability to block a director nominee in future elections. Sounds like the story is far from over... Link to comment Share on other sites More sharing options...
BG2008 Posted December 18, 2014 Share Posted December 18, 2014 It was highly probable that the court was going to reject AB's request. The board's decision to return $3 cash is a surprise and they mentioned that they may seek strategic alternatives. A sale of the company will likely result in 1.0-1.2x P/S and an adjustment for the excess cash and current assets implies a $33-36mm plus $10mm of excess cash equatng to $43 to $46 mm versus the $27mm market that it is currently trading at or roughly 60 to 70% upside from today's price. This one is getting interesting. Heads, I get $3 of value, tails the company gets sold. If AB wins, I think the company is put into play to a strategic buyer. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted December 18, 2014 Share Posted December 18, 2014 Thanks for sharing this idea. Does anyone know how much Daly owns? Isn't he relatively new to the Board? Link to comment Share on other sites More sharing options...
bci23 Posted December 18, 2014 Author Share Posted December 18, 2014 Thanks for sharing this idea. Does anyone know how much Daly owns? Isn't he relatively new to the Board? 19.3% Link to comment Share on other sites More sharing options...
Tim Eriksen Posted December 18, 2014 Share Posted December 18, 2014 Thanks for sharing this idea. Does anyone know how much Daly owns? Isn't he relatively new to the Board? Kreisler held the meeting today. They did not have a quorum because AB Value did not turn in their proxies. KRSL adjourned the meeting. Management seems to be trying to round up a quorum to approve the auditors and I presume the directors. It seems obvious that AB Value has more shares of support than management (which is impressive since they did not have a shareholder list and did not contact all shareholders); however, since the votes for AB Value's directors are not currently going to be counted, management cannot even approve the auditor. The curious part relates to the directors. Are they going to declare directors who received less votes than AB's nominees as winners? How does this impasse get resolved? Management's perception is likely that it has control and thus why give anything up. The other side is likely confident it has majority support and can get control so why compromise now. The more management fights (or takes credit for special dividends that only happened because AB Value pushed) it seems the more likely they are to infuriate the opposition and ultimately puts not only control but their own jobs at risk should the opposition ultimately prevail. For those unfamiliar with micro cap unlisted stock investing this is very instructive and not unusual. Link to comment Share on other sites More sharing options...
Jurgis Posted December 18, 2014 Share Posted December 18, 2014 Thanks for the updates. I bought some recently - after voting cut off date. Keep us posted on how things unfold. Link to comment Share on other sites More sharing options...
BG2008 Posted December 18, 2014 Share Posted December 18, 2014 I was not able to attend the meeting today due to scheduling conflicts, Kreisler failed to achieve a quorum and AB is trying to further the fight. This is indeed getting more interesting. WESTFIELD, N.J.--(BUSINESS WIRE)--December 18, 2014-- AB Value Management LLC, an investment management company that owns greater than 11% of Kreisler Manufacturing Corporation's (OTC Pink: KRSL) common stock announces the following: Kreisler Manufacturing Corporation (the "Company") failed to achieve a quorum at its December 18, 2014 scheduled annual meeting. AB Value Management LLC ("AB Value") has not presented its ballots in an effort to force a new annual meeting in which its nominees are permitted to be elected. By blocking a quorum, AB Value will force the Company to allow it the opportunity to nominate its director candidates. Andrew Berger, principal of AB Value has stated, "We chose to undertake the arduous effort to add new directors to the Company because of the lack of focus on sound governance and recent efforts by management to pay themselves millions of dollars for 'back pay' from the 2003-2014 period. We will do whatever it takes to ensure the Company is positioned for success for all stakeholders rather than unjust self-enrichment of the Company's executive management." We petitioned the court via an emergency hearing to force the Company to waive its advance notice bylaw requirement given the extreme nature of recently discovered events, including: (i) a 57% increase in base salary that was passed on December 5, 2014 for the two co-presidents, which the Company has yet to disclose to its stockholders; (ii) the concerns expressed publicly on December 5, 2014 by Mr. Daly, an independent director and Kreisler's largest individual shareholder and existing independent director of the activities of Kreisler's existing board, regarding the need of a compensation committee comprised solely of independent directors and action that may have "a material impact on the company's current cash position"; (iii) inaccuracies in the proxy statement regarding the biography of John W. Poling within management's proxy; (iv) the ownership change of a 37% voting bloc in the Company previously within management's proxy; (v) the Company's December 3rd press release respecting a new fixed price contract -- a strategy hauntingly reminiscent of the Company's failed and expensive efforts in Poland; and (vi) the incumbent directors' recent effort to further entrench themselves with the their unilateral adoption of draconian and preclusive defensive bylaws in the Company's December 8(th) Amended and Restated Bylaws. AB Value will continue to challenge in court the methods by which the incumbent directors have entrenched themselves and disenfranchised the stockholders of the Company. AB Value fully expects discovery and trial on a full record will vindicate its efforts, and intends to test the veracity of the statements to the court made by defendants, and in particular, those of Ned Stern, in their efforts to avoid the emergency relief requested from the court by AB Value and temporarily retain control of the Company. David Polonitza, a prospective nominee for the board has remarked, "The Company is using every trick in the book to stop the will of the stockholders from being heard. I look forward to a full and fair election. Stockholder democracy is not a punishment, it's an obligation. The support of a 9.1% Stern family stockholder is a strong indication of the quality of AB Value's efforts." AB Value wants to thank the many stockholders who continue to support its efforts. "It may take time for our nominees to be voted onto the Company's board," stated Andrew Berger, "but stockholder votes are trending our way over management and the facts are on our side. We will do whatever it takes to ensure that the Company's army of lawyers cannot defeat the will of the majority of stockholders." AB Value encourages stockholders to continue to vote the GOLD Proxy. Voting the GOLD Proxy will allow us to force a new meeting and elect our directors. If you have any questions or need assistance in voting your shares, please call: InvestorCom, Inc. 65 Locust Avenue Suite 302 New Canaan, CT 06840 Shareholders, Banks, and Brokers call (203) 972-9300 (877) 972-0090 CONTACT: InvestorCom, Inc. John Glenn Grau, 203-972-9300 ext. 11 SOURCE: AB Value Management LLC Copyright Business Wire 2014 (END) Dow Jones Newswires December 18, 2014 15:14 ET (20:14 GMT) Link to comment Share on other sites More sharing options...
BG2008 Posted December 23, 2014 Share Posted December 23, 2014 Message from interactive brokers - Dividend of $3, Ex Date is tomorrow KRSL@PINK (Name: KREISLER MANUFACTURING CORP) announced a cash dividend with ex-dividend date of 20141224 and payable date of 20141231. The declared cash rate is USD 3. Link to comment Share on other sites More sharing options...
60North Investments Posted February 23, 2016 Share Posted February 23, 2016 Q2 results weren't too bad. I was wondering where's that big order they announced in Dec 2014 though? This Q2 ended in Dec 2015, so I would imagine the sales would start showing more rapidly? I probably am missing something. Balance sheet sure looks much better after the large dividend paid last year. Link to comment Share on other sites More sharing options...
Deepdive Posted June 3, 2016 Share Posted June 3, 2016 Kreisler just got bought out by United Flexible for 18 dollars per share. Key point, the threads that have low page counts tend to do well. Link to comment Share on other sites More sharing options...
writser Posted June 3, 2016 Share Posted June 3, 2016 Kreisler just got bought out by United Flexible for 18 dollars per share. Key point, the threads that have low page counts tend to do well. Yes :) This was on my watchlist but unfortunately I never ended up buying. Managed to buy a small amount of shares around $17.60 after the deal was announced. Looks like a decent IRR for a low-risk transaction. Link to comment Share on other sites More sharing options...
Jurgis Posted June 3, 2016 Share Posted June 3, 2016 Sold my very small position this week. I'll probably never get comfortable buying such nanocaps to reach even 1% of my portfolio per position. Got merger information statement today. Good read if you can get it somewhere (mine is paper, so can't post). Interesting that the auction has been going on since August 2015 and company did not hold 2015 meeting so as not to go through another proxy fight in the middle of the auction. Interesting that apparently nobody knew that auction was going on - even the guys who presented KRSL at Fairfax dinner (otherwise they would not have presented it probably I guess ;) ). And tons of time to buy shares if anyone wanted to. I almost added after looking at their 2015 results. But wasn't sure whether their capex was justified, not sure about management, not sure about "disappearing" activists. And as I said above, I'm not comfortable with nanocaps. :-\ Any post mortem from folks who were involved in the activist side? Or held (larger) positions? Link to comment Share on other sites More sharing options...
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