DTEJD1997 Posted May 26, 2017 Author Share Posted May 26, 2017 A retailer with real estate that provides a margin of safety, now where have I heard that story before ;D I thought this seekingalpha writeup on it was well done, only wish I'd seen it when it first came out. https://seekingalpha.com/article/4040237-calloways-nursery-radar-trading-liquidation-value This is where the market is not efficient and an edge can be gained in these micro-cap stocks. If anybody doubts the Voss Rd. location is not truly "mega super class A+ property", they have not seen it with their own eyes. Further...the value of this ONE location could be 1/3 of the market cap. of the company EVEN at this heightened share price. Thus, it makes the evaluation extremely simplistic...kind of like a 1 foot hurdle. Compare this to another retailer...oh I don't know...one that is run by a "hedgie"...one that has hundreds or thousands of properties...is anyone of those properties with 35% of the market cap of the company? 20% 10% 5%? More than 1%? Finally, CLWY sold their crummier Houston location...they booked a gain on it...a "mega super A+ gain". If they choose to do it again, they can... Link to comment Share on other sites More sharing options...
hooplaer23 Posted August 16, 2017 Share Posted August 16, 2017 Calloway's posted its quarterly results today (see http://www.otcmarkets.com/stock/CLWY/filings). EPS for the first half of the year is $0.71, compared to the share price of around $6. Historically the company has incurred modest losses in the second half of the year due to the seasonality of the business, but if it can break even the company would be trading at 8.5x earnings. Link to comment Share on other sites More sharing options...
DooDiligence Posted August 16, 2017 Share Posted August 16, 2017 The recapitalization turned out well for these guys. Anyone know what happened with the big management shakeup in 2016? --- Calloway's Nursery And 3K Limited Partnership Announce Final Results Of Joint Tender Offer And Closing Of Recapitalization (excerpt) In addition, pursuant to the terms of the Recapitalization Agreement, Mr. Estill resigned as the Chief Executive Officer and Chairman of the Board of Directors of Calloway's at the closing of the Recapitalization, and Marce Ward, the President and Chief Operating Officer of Calloway's prior to the Recapitalization, was appointed as President and Chief Executive Officer. Furthermore, pursuant to the Recapitalization Agreement, five members of the Calloway's Board of Directors, consisting of Mr. Estill, Dan Feehan, Alan Howe, Daniel Reynolds and David Straus, resigned from the board. The post-Recapitalization Board of Directors consists of continuing directors Peter Kamin, David Alexander and Mr. Ward, as well as two designees appointed by 3K, David Schneider and Terry Shaver. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted August 26, 2017 Author Share Posted August 26, 2017 Hey all: WOW, CLWY really had tremendous earnings...I am shocked this stock is not higher. The balance sheet has shown marked improvement also. There is a very good chance that CLWY is still very "cheap" at $6/share. Link to comment Share on other sites More sharing options...
DooDiligence Posted August 26, 2017 Share Posted August 26, 2017 The recapitalization turned out well for these guys. Anyone know what happened with the big management shakeup in 2016? Thanks to Travis Wiedower for having the clairvoyance to answer my question before I even asked it. (I gotta learn to read the whole thread...) Link to comment Share on other sites More sharing options...
Travis Wiedower Posted August 28, 2017 Share Posted August 28, 2017 Hey all: WOW, CLWY really had tremendous earnings...I am shocked this stock is not higher. The balance sheet has shown marked improvement also. There is a very good chance that CLWY is still very "cheap" at $6/share. Agreed. I added to my position after earnings. I'm surprised the stock isn't higher. Link to comment Share on other sites More sharing options...
oddballstocks Posted August 28, 2017 Share Posted August 28, 2017 What's the hit from this storm for them? Are locations underwater? Link to comment Share on other sites More sharing options...
_JJ_ Posted August 28, 2017 Share Posted August 28, 2017 I think DFW area is safe for now. Wondering what their Houston location is like at the moment. They don't mention anything on their FB-page. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted August 28, 2017 Author Share Posted August 28, 2017 I think DFW area is safe for now. Wondering what their Houston location is like at the moment. They don't mention anything on their FB-page. I believe Dallas has had minimal damage (if any) from the Hurricane. Houston is a much different case. One of my ex-employees has had to evacuate their house...too much water in it. My ex-girlfriend had over a foot of water on the 1st floor of her house. Other people I know had NO damage or very minimal. A lot of landscaping may need to be reworked/redone in a week or two? Could actually lead to increased sales for the Houston location? Link to comment Share on other sites More sharing options...
Travis Wiedower Posted September 1, 2017 Share Posted September 1, 2017 Been calling their Houston location everyday this week and they reopened today. The guy I spoke to assured me the store is fine and their inventory is fully stocked. According to Drive Texas there are zero road closures in Piney Point Village (where the store is located), which is also a good sign. I've always thought that Houston location is Calloway's biggest store so I still expect it to affect Q3 results, maybe a 1-2% hit to revenue or something like that. As DTE said, it could also turn out to be a positive over the next few quarters. I haven't bothered to call any Dallas stores. It seems like they got nothing more than wind and rain (similar to what we got in Austin). Link to comment Share on other sites More sharing options...
EricSchleien Posted September 2, 2017 Share Posted September 2, 2017 Been calling their Houston location everyday this week and they reopened today. The guy I spoke to assured me the store is fine and their inventory is fully stocked. According to Drive Texas there are zero road closures in Piney Point Village (where the store is located), which is also a good sign. I've always thought that Houston location is Calloway's biggest store so I still expect it to affect Q3 results, maybe a 1-2% hit to revenue or something like that. As DTE said, it could also turn out to be a positive over the next few quarters. I haven't bothered to call any Dallas stores. It seems like they got nothing more than wind and rain (similar to what we got in Austin). I did bother calling Dallas. It took me 20 seconds. As Travis said, they're fine. Link to comment Share on other sites More sharing options...
bergman104 Posted September 3, 2017 Share Posted September 3, 2017 It looks like they usually do very well at the 6 month mark but then actually lose money the rest of the year in terms of net income. June 2014, 2015 and 2016 were $0.39, $0.29 and $0.41 EPS respectively, while full-year was ~$0.28, $0.19 and $0.26. Full year 2014 was an estimate because of their property sale. Anyway, I agree with most of this post that this is a great underfollowed company with a business model I can understand. But what are full year expectations? Is ~$7 actually cheap if they lose money the next 6 months? Link to comment Share on other sites More sharing options...
Travis Wiedower Posted September 3, 2017 Share Posted September 3, 2017 It looks like they usually do very well at the 6 month mark but then actually lose money the rest of the year in terms of net income. June 2014, 2015 and 2016 were $0.39, $0.29 and $0.41 EPS respectively, while full-year was ~$0.28, $0.19 and $0.26. Full year 2014 was an estimate because of their property sale. Anyway, I agree with most of this post that this is a great underfollowed company with a business model I can understand. But what are full year expectations? Is ~$7 actually cheap if they lose money the next 6 months? I posted the following on SumZero yesterday: "If the second half of this year is identical to 2016 (conservative assumption in my opinion), my estimate of full year NOPAT is $4.4 million. A 12.5x multiple on that results in a yearend enterprise value of $60 million (equivalent to a stock price of $7.80). In terms of updating my discounted cash flow, the biggest factor is operating margins going forward. One could easily argue that 2017 is nearing the end of a bull cycle and these operating margins are not sustainable. On the other hand, one could argue margins have increased since the new management team came in so they are likely to be permanent operational improvements. Likely a bit of both. Depending on operating margin movement going forward (stays at current levels vs some mean reversion), I can get a realistic fair value between $7.10 and $9.00. Don't forget this only values the operating business. They also own a couple dollars worth of real estate." Link to comment Share on other sites More sharing options...
mbrock77 Posted November 16, 2017 Share Posted November 16, 2017 Q3 out https://www.otcmarkets.com/financialReportViewer?symbol=CLWY&id=182777 Link to comment Share on other sites More sharing options...
Radio Free Cash Flow Posted November 17, 2017 Share Posted November 17, 2017 This company just keeps executing. Operating income and profits hitting new highs. Operating margin is up 800 basis points since 2012. Excellent returns on capital as well, which leads me to think they'll consider opening another garden center or two in 2018. The return on capital does benefit somewhat from legacy low-cost real estate, but the two centers they opened in 2016 seem to be contributing strongly already. Still a bargain at ~11x 2017 earnings and under 7x EBIT. My biggest fear is that Peter Kamin & Co. take my shares away from me in a buyout. Link to comment Share on other sites More sharing options...
mbrock77 Posted November 21, 2017 Share Posted November 21, 2017 Although I don't see any official announcement, it looks like they will be paying a special div of $0.50 (ex div Dec 14). https://www.otcmarkets.com/stock/CLWY/profile Link to comment Share on other sites More sharing options...
sbalsam Posted December 14, 2017 Share Posted December 14, 2017 I tried reaching out to the Company a couple of weeks ago to confirm the dividend (by email and phone-voicemail) but did not receive a reply. Nonetheless, based on the adjustment to the closing price from $7.90 to $7.40, it does appear that the company went ex-dividend today as the OTC markets profile page had listed. Separately, for purposes of valuation, keep in mind that the republican tax plan will have an extremely beneficial impact on Calloway. Calloway pays a very low state tax under Texas's franchise tax (my estimate is an effective rate of about 2.5% of earnings before tax) so almost its entire tax burden is federal which would be significantly reduced. Changing Calloway's tax rate from the 38% it showed on its 2016 income statement to 23% (20% federal + another 3% to cover state tax) would have increased its net income by 25%. Steve Link to comment Share on other sites More sharing options...
sbalsam Posted January 18, 2018 Share Posted January 18, 2018 While I don't want to interrupt the crickets, thought I'd mention that the $.50 special dividend was paid and received in my account as per the announcement on OTC Markets. Thanks mbrock77 for pointing this out as I would never have noticed the announcement and I gained comfort with the valuation and bought shares because of it. Steve Link to comment Share on other sites More sharing options...
mbrock77 Posted March 6, 2018 Share Posted March 6, 2018 New store opening soon: https://www.prnewswire.com/news-releases/calloways-nursery-to-open-19th-location-in-hebron-texas-300608728.html Link to comment Share on other sites More sharing options...
mbrock77 Posted May 17, 2018 Share Posted May 17, 2018 Q1 2018 is out, for those interested: https://backend.otcmarkets.com/otcapi/company/financial-report/193634/content Link to comment Share on other sites More sharing options...
DTEJD1997 Posted May 17, 2018 Author Share Posted May 17, 2018 Q1 2018 is out, for those interested: https://backend.otcmarkets.com/otcapi/company/financial-report/193634/content Thank you for posting that. CLWY has been up the past couple of days and I was wondering if there was something behind it. Looks like CLWY might hit a new high. Very impressive considering they paid out a $.50/share dividend in December. Link to comment Share on other sites More sharing options...
mbrock77 Posted August 15, 2018 Share Posted August 15, 2018 Q2 below. Really solid quarter: https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content Link to comment Share on other sites More sharing options...
DTEJD1997 Posted August 15, 2018 Author Share Posted August 15, 2018 Q2 below. Really solid quarter: https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content Wow, that is truly impressive....however it looks like the reduction in the corporate tax rate is responsible for a good percentage of the YoY gain in income. Will be interesting to see if the stock spikes on opening tomorrow. Link to comment Share on other sites More sharing options...
porcupine Posted August 15, 2018 Share Posted August 15, 2018 Q2 below. Really solid quarter: https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content Wow, that is truly impressive....however it looks like the reduction in the corporate tax rate is responsible for a good percentage of the YoY gain in income. Will be interesting to see if the stock spikes on opening tomorrow. True. Net margin is about the same if you apply the same tax rate to operating profit. Did a write-up on this company recently. Let me know what you guys thinks. It's quite long, though. https://lowtideinvestments.com/2018/08/10/calloways-nursery-inc/ FYI... I don't receive any compensation from this at all... more of just a site to put my ideas on writing... obviously gave a shoutout to COBF for this one! Link to comment Share on other sites More sharing options...
bci23 Posted August 16, 2018 Share Posted August 16, 2018 Q2 below. Really solid quarter: https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content Wow, that is truly impressive....however it looks like the reduction in the corporate tax rate is responsible for a good percentage of the YoY gain in income. Will be interesting to see if the stock spikes on opening tomorrow. True. Net margin is about the same if you apply the same tax rate to operating profit. Did a write-up on this company recently. Let me know what you guys thinks. It's quite long, though. https://lowtideinvestments.com/2018/08/10/calloways-nursery-inc/ FYI... I don't receive any compensation from this at all... more of just a site to put my ideas on writing... obviously gave a shoutout to COBF for this one! Couple comments on your post. 1. My understanding is that Peter Kamin and 3k partnership are psuedo-permanent capital so to assume he will be on some sort of timeline like 3-5 years to sell is probably not the best way to look at this situation. He might sell but i think it will be more because he thinks hes getting a great price rather than needing the liquidity. 2. I think special dividends like the one last year that you call out or a large tender offer are both likely to occur in the future as he has used that playbook in the past. Link to comment Share on other sites More sharing options...
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