Dark Companies

[oddballstocks]

Don't know if you guys follow but I should be(or so I've been told) receiving the Buck Hills annual report shortly. One of the most interesting and obscure companies I follow.

 

Agreed.  Easily the best annual report I receive.  The company is uninvestable (unless you live there), but awesome to follow.

 

I know someone who collects companies like this.  If a company is quasi public he makes it his goal to hunt down and acquire a few shares.

 

 

Its definitely a daunting situation but with the right mentality, I think there is a case to be made that at worst it's a nice risk adjusted lottery ticket. Hardest thing, by a mile is finding shares.

 

My loose assumptions for investing.

 

-I have no problem never selling the shares. At the least, holding for 20+ years

-Things are so skewed to the uninvestable end, that literally anything that goes right benefits the investment

-The area is still fairly popular as a vacation destination and the assets(primarily land and timber) aren't going anywhere

-There is a super slow, but constant effort being made to renovate/build new the famous "Inn". Not their property anymore but no doubt a positive for the area

 

So you factor this in, and then unlike a lottery ticket, there is a market for this. You've currently got a moderate sized bid at $11.50. You take a haircut solely on liquidity, but it's not an outright loss.

 

Now, here's the thing. Should someone want change, this doesn't seem entirely ridiculous to pull off. The HOA fees are killing the market of the homes in that area. The HOA fees are almost entirely derived from the cost of owning and operating that golf course. What happens if someone at the company bumps their head and the next morning wakes up and decides to sell the golf course? You cut a deal where the golf course is sold and in return for a cash amount that likely exceeds the market cap, you could probably also garner a tiny royalty payment in the low single digit range based off revenue. Turn a major negative into a positive. Then you're left with running what is essentially an amusement park with 4500 acres of timber land.

 

This is probably wishful thinking, but under a best case(however unlikely) scenario 10x your money is not really out of the equation. Downside you figure from here is what, 30-40%? For a small allocation, I like this kind of setup. The Annual Meeting is in July which I hope to attend to at least garner a better feel and maybe locate where the bulk of the shares are.

 

 

Gregmal,

 

Fascinating analysis.  I hadn't considered it like this.

 

A few more points on it.  I believe the majority of the shares are owned by homeowners.  There is a mention in the annual report that said HOA members can convert their membership shares into market shares at $20/share.  What's crazy is there are thousands converted like this each year.  My gut says home owners convert into market shares, but figure there isn't a market and don't sell.  All they'd need is a phone call in many cases.

 

It's a nice property from what I've heard.  I haven't been there.  But I know that part of the state is scenic.  It's also known as an enclave for wealthier people to vacation and summer.  It's like owning a piece of the Hamptons in a way, but a LOT cheaper.  Look at this: https://www.trulia.com/property/3112559402-353-Knoll-Dr-Buck-Hill-Falls-PA-18323#photo-1  Only $124k, that's not much for a second house.  From pictures I'd estimate you're looking at $30k in renovations if you DIY, or maybe $75k if you pay someone, but $200k for a place like that is pretty cheap.  Fixed up it could be worth $400k based on some comps I'm seeing.

[Gregmal]

Don't know if you guys follow but I should be(or so I've been told) receiving the Buck Hills annual report shortly. One of the most interesting and obscure companies I follow.

 

Agreed.  Easily the best annual report I receive.  The company is uninvestable (unless you live there), but awesome to follow.

 

I know someone who collects companies like this.  If a company is quasi public he makes it his goal to hunt down and acquire a few shares.

 

 

Its definitely a daunting situation but with the right mentality, I think there is a case to be made that at worst it's a nice risk adjusted lottery ticket. Hardest thing, by a mile is finding shares.

 

My loose assumptions for investing.

 

-I have no problem never selling the shares. At the least, holding for 20+ years

-Things are so skewed to the uninvestable end, that literally anything that goes right benefits the investment

-The area is still fairly popular as a vacation destination and the assets(primarily land and timber) aren't going anywhere

-There is a super slow, but constant effort being made to renovate/build new the famous "Inn". Not their property anymore but no doubt a positive for the area

 

So you factor this in, and then unlike a lottery ticket, there is a market for this. You've currently got a moderate sized bid at $11.50. You take a haircut solely on liquidity, but it's not an outright loss.

 

Now, here's the thing. Should someone want change, this doesn't seem entirely ridiculous to pull off. The HOA fees are killing the market of the homes in that area. The HOA fees are almost entirely derived from the cost of owning and operating that golf course. What happens if someone at the company bumps their head and the next morning wakes up and decides to sell the golf course? You cut a deal where the golf course is sold and in return for a cash amount that likely exceeds the market cap, you could probably also garner a tiny royalty payment in the low single digit range based off revenue. Turn a major negative into a positive. Then you're left with running what is essentially an amusement park with 4500 acres of timber land.

 

This is probably wishful thinking, but under a best case(however unlikely) scenario 10x your money is not really out of the equation. Downside you figure from here is what, 30-40%? For a small allocation, I like this kind of setup. The Annual Meeting is in July which I hope to attend to at least garner a better feel and maybe locate where the bulk of the shares are.

 

 

Gregmal,

 

Fascinating analysis.  I hadn't considered it like this.

 

A few more points on it.  I believe the majority of the shares are owned by homeowners.  There is a mention in the annual report that said HOA members can convert their membership shares into market shares at $20/share.  What's crazy is there are thousands converted like this each year.  My gut says home owners convert into market shares, but figure there isn't a market and don't sell.  All they'd need is a phone call in many cases.

 

It's a nice property from what I've heard.  I haven't been there.  But I know that part of the state is scenic.  It's also known as an enclave for wealthier people to vacation and summer.  It's like owning a piece of the Hamptons in a way, but a LOT cheaper.  Look at this: https://www.trulia.com/property/3112559402-353-Knoll-Dr-Buck-Hill-Falls-PA-18323#photo-1  Only $124k, that's not much for a second house.  From pictures I'd estimate you're looking at $30k in renovations if you DIY, or maybe $75k if you pay someone, but $200k for a place like that is pretty cheap.  Fixed up it could be worth $400k based on some comps I'm seeing.

 

Haha yes, I actually awhile back looked into buying one of the houses. Problem is, at the time, the HOA was $1,100. Per month... On a $165,000 house. And compounding at like a 15% clip the last few years. But this is kind of a catalyst too. That is not sustainable and you're seeing people flee the area because of it. So in time, something I have plenty of, they will be forced to re-evaluate how they operate because the HOA issue snowballs. The more people leave, the higher the fees are for the rest, giving the remaining residents incentive to pack up as well. At some point, either the residents put their foot down, or the company is forced to get rid of the golf ops. Eventually the assets will have to be drawn on which should unlock value. One view, and it is correct, is that this is kind of a public HOA, run for the residents. On the other hand, I could say this is a public company who gets partially subsidized by residents of the town. Its a very intriguing story nonetheless

[NeverLoseMoney]

Nate & Gregmal: have you ever looked into Skytop Lodge Corp. (SKTP)? Found this one once while searching for dark stocks. Apparently Skytop Lodge was established in 1928, because people were unhappy about the restrictions at Buck Hill Falls:

 

“The story goes that Skytop came about because some patrons of the Quaker resort Buck Hill Falls wanted a resort that was less restrictive,” one passage reads. “Philadelphia Quakers had founded Buck Hill in 1901 and practiced behavior and decorum that followed Quaker philosophies. Card playing and dancing, for example, were prohibited… Two decades later, the Jazz Age was in full swing. When Skytop opened in 1928, three miles north of Buck Hill, music and dancing were featured activities and two card rooms were built to accommodate bridge players.”

See: http://www.skytop.com/skytop-lodge-marks-87th-birthday-history-book-release/

 

There's a book about Skytop Lodge too: https://www.amazon.com/Skytop-Images-America-Claire-Gierwatowski/dp/1467123463/

 

Anyway, it could be interesting to check out. The share price is high though at $750, so that might be a bit too much to pay for a single share, if that's required to get information.

[wachtwoord]

Nate & Gregmal: have you ever looked into Skytop Lodge Corp. (SKTP)? Found this one once while searching for dark stocks. Apparently Skytop Lodge was established in 1928, because people were unhappy about the restrictions at Buck Hill Falls:

 

“The story goes that Skytop came about because some patrons of the Quaker resort Buck Hill Falls wanted a resort that was less restrictive,” one passage reads. “Philadelphia Quakers had founded Buck Hill in 1901 and practiced behavior and decorum that followed Quaker philosophies. Card playing and dancing, for example, were prohibited… Two decades later, the Jazz Age was in full swing. When Skytop opened in 1928, three miles north of Buck Hill, music and dancing were featured activities and two card rooms were built to accommodate bridge players.”

See: http://www.skytop.com/skytop-lodge-marks-87th-birthday-history-book-release/

 

There's a book about Skytop Lodge too: https://www.amazon.com/Skytop-Images-America-Claire-Gierwatowski/dp/1467123463/

 

Anyway, it could be interesting to check out. The share price is high though at $750, so that might be a bit too much to pay for a single share, if that's required to get information.

 

As a heads up their prefereds are cheaper at $250 (http://www.otcmarkets.com/stock/SKTPP/quote) will get you a report too I'd think?

[NeverLoseMoney]

I don't know and I also don't know if buying a normal share will get you any information. I don't own any shares.

[Gregmal]

Nate & Gregmal: have you ever looked into Skytop Lodge Corp. (SKTP)? Found this one once while searching for dark stocks. Apparently Skytop Lodge was established in 1928, because people were unhappy about the restrictions at Buck Hill Falls:

 

“The story goes that Skytop came about because some patrons of the Quaker resort Buck Hill Falls wanted a resort that was less restrictive,” one passage reads. “Philadelphia Quakers had founded Buck Hill in 1901 and practiced behavior and decorum that followed Quaker philosophies. Card playing and dancing, for example, were prohibited… Two decades later, the Jazz Age was in full swing. When Skytop opened in 1928, three miles north of Buck Hill, music and dancing were featured activities and two card rooms were built to accommodate bridge players.”

See: http://www.skytop.com/skytop-lodge-marks-87th-birthday-history-book-release/

 

There's a book about Skytop Lodge too: https://www.amazon.com/Skytop-Images-America-Claire-Gierwatowski/dp/1467123463/

 

Anyway, it could be interesting to check out. The share price is high though at $750, so that might be a bit too much to pay for a single share, if that's required to get information.

 

Never heard of it but will check it out. Thanks

[DooDiligence]

Totally agree it is wrong to reshare VIC ideas before the 3 month exclusive period is up. I think a service like that deserves to get reported to VIC and will pretty quickly have his membership revoked.

 

Also agree it is not ethical to rewrite an idea from someone's blog without giving credit.

 

However, if someone likes one of my publicly posted ideas and writes about the company (even without crediting me for someone they used) it makes me happy the idea is shared. I do understand it if someone doesn't like it and agree credit should have been given.

 

Back on topic:

 

One thing I want to make clear is I'm not looking to do write-ups on dark companies. Sure, I'll write up one if I happen to like it for my existing newsletter but what I wanted to put together is something of a database. If possible with up to date sortable data on dark companies.

 

Can you automate the search process on SEC site with a query for form 25 & 15 filers?

 

I'm barely conversant in this but maybe one of the deeper techies here can elaborate on

 

https://www.sec.gov/structureddata

 

http://developer.edgar-online.com/docs

 

I just realized that I was suggesting searching the SEC site for non filers (smacks forehead multiple times...)

 

The absence of biting responses is further evidence of the grace & kindness of COBF members!

[oddballstocks]

Nate & Gregmal: have you ever looked into Skytop Lodge Corp. (SKTP)? Found this one once while searching for dark stocks. Apparently Skytop Lodge was established in 1928, because people were unhappy about the restrictions at Buck Hill Falls:

 

“The story goes that Skytop came about because some patrons of the Quaker resort Buck Hill Falls wanted a resort that was less restrictive,” one passage reads. “Philadelphia Quakers had founded Buck Hill in 1901 and practiced behavior and decorum that followed Quaker philosophies. Card playing and dancing, for example, were prohibited… Two decades later, the Jazz Age was in full swing. When Skytop opened in 1928, three miles north of Buck Hill, music and dancing were featured activities and two card rooms were built to accommodate bridge players.”

See: http://www.skytop.com/skytop-lodge-marks-87th-birthday-history-book-release/

 

There's a book about Skytop Lodge too: https://www.amazon.com/Skytop-Images-America-Claire-Gierwatowski/dp/1467123463/

 

Anyway, it could be interesting to check out. The share price is high though at $750, so that might be a bit too much to pay for a single share, if that's required to get information.

 

Never heard of it but will check it out. Thanks

 

I have their financials laying around here somewhere.  They're in the Poconos.  ScottHall has some experiences with getting the financials from them, it wasn't easy.

 

Their issue is it's a hotel and there's operating leverage.  If I remember they aren't full enough to earn much money over break-even.

[ScottHall]

Nate & Gregmal: have you ever looked into Skytop Lodge Corp. (SKTP)? Found this one once while searching for dark stocks. Apparently Skytop Lodge was established in 1928, because people were unhappy about the restrictions at Buck Hill Falls:

 

“The story goes that Skytop came about because some patrons of the Quaker resort Buck Hill Falls wanted a resort that was less restrictive,” one passage reads. “Philadelphia Quakers had founded Buck Hill in 1901 and practiced behavior and decorum that followed Quaker philosophies. Card playing and dancing, for example, were prohibited… Two decades later, the Jazz Age was in full swing. When Skytop opened in 1928, three miles north of Buck Hill, music and dancing were featured activities and two card rooms were built to accommodate bridge players.”

See: http://www.skytop.com/skytop-lodge-marks-87th-birthday-history-book-release/

 

There's a book about Skytop Lodge too: https://www.amazon.com/Skytop-Images-America-Claire-Gierwatowski/dp/1467123463/

 

Anyway, it could be interesting to check out. The share price is high though at $750, so that might be a bit too much to pay for a single share, if that's required to get information.

 

Never heard of it but will check it out. Thanks

 

I have their financials laying around here somewhere.  They're in the Poconos.  ScottHall has some experiences with getting the financials from them, it wasn't easy.

 

Their issue is it's a hotel and there's operating leverage.  If I remember they aren't full enough to earn much money over break-even.

 

Yeah, that's right. Occupancy was always quite low for the time I held a share. They've also had some pretty nasty problems lately so it could be worse now, I don't know. This stuff can be killer for a business, especially a place like Skytop.

 

http://www.poconorecord.com/article/20150413/NEWS/150419776

 

 

[benbuffett]

Brokers closing or threatening to shut down accounts for investing in some of these otc pink sheet/dark companies.

 

Not sure if I read about this in this thread or not?

 

Also I tried to put orders in at Fido and TDA on a few of these dark companies  and was told I could not. Funny because I had shares in a few already.

 

Anyone else running into this issue?

[Jurgis]

Brokers closing or threatening to shut down accounts for investing in some of these otc pink sheet/dark companies.

 

Not sure if I read about this in this thread or not?

 

Also I tried to put orders in at Fido and TDA on a few of these dark companies  and was told I could not. Funny because I had shares in a few already.

 

Anyone else running into this issue?

 

Yeah, Fido does not allow to buy new positions in grey/no info companies. Even if you already have a position. You can always sell though.

 

Funny that if company goes reporting for a while, then you can buy again.

 

Yeah, I think this could be exploited by people who can buy when the company is dark.

OTOH, I did not see a jump in price when company went from dark to Fido-buyable. So maybe not so easy to exploit.

 

Fido did not tell me to liquidate position or threaten to close account though. They would not budge on allowing to buy though.

 

Not a big issue for me, but FYI.