ragnarisapirate Posted January 26, 2011 Share Posted January 26, 2011 Syms is a retailer that sits on a mound of real estate. A rather interesting piece, is a few blocks from the NYSE and is quite literally 10 feet from a subway stop. I remember visiting several of the locations when I was in NY for a WEST meeting a few years back. Basically, I am curious if anyone else here is intrigued by the company. Note, this is not me saying that I am long the stock, or even saying that there is upside to it. Right now, I am in the process of digging, and, as that is the case, was curious if you guys had any thoughts on it. Their acquisition of another retailer out of bankruptcy doesn't seem to be working as some would have thought, though, there may be additional synergies that we have yet to see. Additionally, the controlling shareholder seems to be against everyone who's name isn't that of the company. With this said, is trading at a little more than 1/2 of tangible book value... Link to comment Share on other sites More sharing options...
keerthiprasad Posted January 26, 2011 Share Posted January 26, 2011 I checked them out a couple years ago, but got scared by the governance issues. They definitely are really cheap. I think the NYC property alone could account for the entire market cap. Unfortunately, it seems that this will only be realized once the CEO and her family have accumulated all of the shares at a depressed price. I'm not sure if the story has changed much in the last couple of years though...Any thoughts? On a side note, I have shopped at both Syms and Filene's basement, as I am a typical cheap value investor. There are some good finds, it just takes time. Also the Syms stores resemble an outlet mall in the early 1980's...pretty horrible looking lol. Seemed like some of the merchandise was a few years out of style too (ie Bill Cosby's sweater collection). KP Link to comment Share on other sites More sharing options...
ragnarisapirate Posted March 9, 2011 Author Share Posted March 9, 2011 Here is some good news... http://biz.yahoo.com/e/110308/syms8-k.html $15 million from the sale of a property. I am also working up a pretty extensive blog post on them that should come out in the coming weeks. Link to comment Share on other sites More sharing options...
Carvel46 Posted March 9, 2011 Share Posted March 9, 2011 ragnarisapirate: Don't be a ("off-price") tease! [bad joke :-[ ] I'm interested in your thoughts. Pro: asset valuation Con: corporate governance and the operating business Filene's Basement was a great brand. In Boston, the brand is cultish, although the Downtown Crossing store is now closed. Nostalgia... Unfortunately, Syms doesn't run a tight ship--a la TJX (and ROST). Syms merchandising and buying discipline must be a mess. And their IT is also likely a disaster. What do you make of the recent asset sale? Can the operations be turned around? Maybe it doesn't matter, although I have a hard time seeing the CEO kill the business with her last name on the awnings. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted March 9, 2011 Author Share Posted March 9, 2011 Thanks for the video, I really enjoyed it, and will include it in my write up. :) I honestly don't care about how badly the company is run. Not that it is terribly run, I actually don't think it is (don't get me wrong there is room for operational improvement)... This company is purely a play on real estate. The brand is just a bonus. I think that the recent sale is great news. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted March 16, 2011 Author Share Posted March 16, 2011 Here is the write up: http://ragnarisapirate.blogspot.com/2011/03/syms-corp-off-priced-stock-of-off-price.html To sum up, I found what records I could about their real estate, got the estimated market values from county tax assessment data, and saw that the company is sitting on a mound of valuable retail space, which seems to be significantly understated on the books. Additionally, the company is trading for just over 1/2 it's book value. Link to comment Share on other sites More sharing options...
RRJ Posted March 16, 2011 Share Posted March 16, 2011 Thanks for the idea, which is very interesting. My concern is the one Buffett has mentioned about REITs and other real estate holding companies, which is how long it can take to unlock the value. Same problem I had with JOE. While book is probably undervalued, as you say, might it not be less undervalued than it looks, because of the time it takes to liquidate or realize cash flows from the real estate, not to mention selling and brokerage costs if they do sell? Link to comment Share on other sites More sharing options...
sam1071 Posted March 20, 2011 Share Posted March 20, 2011 how do you unlock the value with Syms?? the family has total control...so unless there is a way only a long term play. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted March 21, 2011 Author Share Posted March 21, 2011 how do you unlock the value with Syms?? the family has total control...so unless there is a way only a long term play. A lot of the potential value (rather, opportunity cost of not developing or selling off some real estate) will probably take a ton of time. Though, historically, the company has done things with their real estate which makes the future look promising. I don't know when it will be, but I am fairly sure that something good will happen. Additionally, when trading at 1/2 book (the BV is REEAAALLLLYYY conservative), Syms sits on such a large discount to it's assets that the full potential of the company doesn't need to be unlocked to do well. Link to comment Share on other sites More sharing options...
RRJ Posted March 21, 2011 Share Posted March 21, 2011 Good answer. Thanks. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted March 21, 2011 Author Share Posted March 21, 2011 I also forgot to mention that they just layed off 210 distribution center workers on Jan 30th, which, has yet to be reported in their financial results... At $40K a job (just grabbing at a number), that will save the company well over $8 million annually. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted May 2, 2011 Author Share Posted May 2, 2011 Hey guys, does anyone have access to this research report from SADIF? I'd be super interested to read it. http://www.pr-inside.com/sadif-analytics-releases-new-summary-due-r2566678.htm Thanks in advance. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted May 20, 2011 Author Share Posted May 20, 2011 Interesting story from http://www.nypost.com/p/news/business/apart_at_the_syms_sWy4RyBYnuJJLeChvQ9PSN "Over a long period of time such a strategy will leave shareholders with a highly leveraged company and no assets," the letter continued, demanding that Syms "refine the business model to prevent further erosion of shareholder value." A better strategy, according to Capstone, would be to spin off certain Syms real estate to fund a share buyback, or even take the retailer private. A sale of the company's downtown flagship at 42 Trinity Place could fund a buyback of as much as 30 percent of Syms' stock, according to Capstone. The real-estate firm added that it "would be interested in making a minority investment to help privatize Syms in a management-led (leveraged buyout) as well as assisting Syms in the financing of such a transaction." On Bloomberg: http://www.bloomberg.com/news/2011-05-20/syms-urged-by-shareholder-to-stem-losses-sell-real-estate.html?cmpid=yhoo Link to comment Share on other sites More sharing options...
ragnarisapirate Posted May 24, 2011 Author Share Posted May 24, 2011 May 19, 2011 Mr. Bernard H. Tenenbaum Ms. Beth L. Bronner Mr. Henry M Chidgey Mr. Thomas E. Zannechia Dear Sirs & Madam, My name is Joshua Zamir and I am the managing member of Capstone Equities Capital Management LP (“CECM”) which is a holder of common stock of SYMS Corporation (“SYMS”). I am also a principal of Capstone Equities LLC, an affiliate of CECM, which is a real estate investment firm based in the New York Metro region (“Capstone”). Capstone has acquired over Five million square feet of properties - more than half of which located in the financial district of Manhattan. Principals of Capstone currently own interests in 14 Wall Street, 156 William Street, 4 New York Plaza, 30 Flatbush Avenue and other properties throughout the region. I believe our background is extremely relevant in understanding the value of SYMS’ real estate holdings. The purpose of this letter is to provide certain constructive ideas for consideration which I believe would be worthwhile for management to explore and enhance shareholder value. I have reviewed letters from other shareholders trying to persuade SYMS to monetize its real estate holdings as well as Marcy Syms response indicating that SYMS is “not a real estate development company.” However, I have done extensive research contacting local brokers in each market which SYMS has a location it owns and have determined that the market value of the real estate exceeds $200,000,000. The company is worth at least 50% more as a collection of retail real estate than as a retailer with substantial operating losses. Therefore, I urge you as fiduciaries, to give the below list of alternatives that would enhance shareholder value serious consideration: • The Sale of Certain Assets Using Proceeds to Buy-Back Shares- 42 Trinity in the Financial District of Manhattan is a prime development site worth over $40,000,000. Selling this site and using proceeds to buy back shares would allow you to reduce share count by 30%. Capstone is the Landlord at 14 Wall Street (a property of close proximity to 42 Trinity) and we have recently signed a long term lease with TJ Maxx for retail space. TJ Maxx also competes in the “off-price” space and has significantly more resources and now a better location than SYMS. In the 2010 10-K it is mentioned that “competition vs. retailers with larger resources” will impact margins. The TJ Maxx lease at 14 Wall Street, the “My Suit” store opening at 30 Broad Street and continued dominance of Century 21 at 22 Cortland Street indicate that a sale of the Trinity Store is timely. • Spin-Off Real Estate Assets to a Triple Net Lease Buyer- Under this plan SYMS would enter into long term leases (15+ years) with a buyer at a rent level which is sustainable. We have been in touch with an extremely well capitalized fund that would be very interested in this type of transaction even if the Secaucus location and 42 Trinity were to be excluded. An “asset lite” business model can be achieved without significant operation disruption. Your peers with simpler business models trade as much as 6X book value, SYMS does not even trade for book value which is a significant understatement of market value. Unlocking the value of your real estate this way would benefit all shareholders. • Taking the Company Private. Clearly the public markets are significantly undervaluing SYMS both as a retail business as well as the significant real estate holdings which it possesses. CECM would be interested in making a minority investment to help privatize SYMS in a management led LBO as well as assisting SYMS in the financing of such a transaction. • Adding Additional Board Seats of Highly Qualified Real Estate Professionals- Despite the fact that SYMS primary assets are commercial real estate, there are no independent directors with substantial real estate experience on the company’s board. The Board also lacks significant shareholder representation, with current directors (other than Marcy Syms) owning less than 300 shares of the Company’s outstanding common stock. • Consider Significant Cost Reductions to Mitigate Losses- SYMS’ selling, general and administrative plus occupancy costs have averaged 42% of net sales in each of the last two years. This compares very unfavorably with other comparable discounters we analyzed whose costs for these line items were between 25%-30% of net sales. • Continue to Close Non-Performing Stores. Final Observations: In reading the most recent annual report for fiscal year end February 26, 2011 it appears that the company has incurred significant additional debt and sold assets to fund losses. Over a long period of time such a strategy will leave shareholders with a highly leveraged company and no assets. It is imperative that the Company refine the business model to prevent further erosion of shareholder value. To be clear, we do not doubt your efforts or intentions; however, the Company's poor operating performance and more importantly, the extremely poor share price performance speak volumes and indicate that a different approach for creating shareholder value is needed. We intend to release this letter to the public for other shareholders’ review on the morning of May 31, 2011 and hope to speak with you in advance of doing so. Sincerely, Joshua Zamir CC: Marcy Syms, The SYMS Corporation Tom Kahn, Kahn Brothers Group Inc. Bruce Baughman, Franklin Resources Incorporated Alex Matina, Michael F. Price Elizabeth Bosco, Tocqeville Asset Management LP Christopher Crossan, Dimensional Fund Advisors LP Esopus Creek Value Series Fund LP, Andrew Sole Link to comment Share on other sites More sharing options...
cashisking Posted May 24, 2011 Share Posted May 24, 2011 Thanks for posting this. This is very good news for current investors and should help to get the story out in the near term. I'm a little dismayed by the proposal to do a management LBO, although thats clearly in their best interest... Link to comment Share on other sites More sharing options...
ragnarisapirate Posted May 26, 2011 Author Share Posted May 26, 2011 And now for the real catalyst... The exploration of strategic alternatives! http://finance.yahoo.com/news/Syms-Corp-Initiates-Process-prnews-2519488255.html?x=0&.v=1 Link to comment Share on other sites More sharing options...
Kraven Posted May 26, 2011 Share Posted May 26, 2011 Congratulations on this one. It's about time they try to monetize some of their assets. I have had this on a list to look at for a while, but always thought there was more time. Link to comment Share on other sites More sharing options...
keerthiprasad Posted May 26, 2011 Share Posted May 26, 2011 Congrats. I definitely missed the boat on this one... I didn't expect management to be so receptive and assumed there would be more time. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted May 26, 2011 Share Posted May 26, 2011 And now for the real catalyst... The exploration of strategic alternatives! http://finance.yahoo.com/news/Syms-Corp-Initiates-Process-prnews-2519488255.html?x=0&.v=1 Congratulations, Ragnar. From what I can see, you were the first to do the digging on this one. Hedge funds then appeared to piggy-back on your idea and were able to take a stake sizeable enough to persuade management to look at this issue closer. Link to comment Share on other sites More sharing options...
gfp Posted May 26, 2011 Share Posted May 26, 2011 Thanks Ragnar, I also piggybacked a small position and it has played out much quicker than expected. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted June 2, 2011 Author Share Posted June 2, 2011 http://ragnarisapirate.blogspot.com/2011/06/letters-from-esopus-creek-and-kahn.html Here are 2 of the letters that have recently gone to management... This is shaping up to be a very interesting situation! Link to comment Share on other sites More sharing options...
ragnarisapirate Posted July 1, 2011 Author Share Posted July 1, 2011 And now, Esopus Creek is suing Syms, I assume, in effort to aid along the exploration of strategic alternatives... The story just got a lot more interesting. Here is a link, that has the whole of the court document. http://ragnarisapirate.blogspot.com/2011/07/esopus-creek-sues-syms.html Link to comment Share on other sites More sharing options...
keerthiprasad Posted November 2, 2011 Share Posted November 2, 2011 Bankruptcy...I can't believe that they couldn't sell assets to avoid this. Hopefully there will be something interesting to pick up. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted November 2, 2011 Author Share Posted November 2, 2011 Bankruptcy...I can't believe that they couldn't sell assets to avoid this. Hopefully there will be something interesting to pick up. Yeah, it's pathetic. I kind of doubt that they tried very hard to avoid this. This should have been a no brainer. This will be an interesting case to watch and, since I still own some shares, be a part of. Here are some thoughts: http://ragnarisapirate.blogspot.com/2011/11/syms-is-bankrupt.html There will definitely be some money left for shareholders, but, the real question, is how much. Link to comment Share on other sites More sharing options...
17thstcapital Posted November 2, 2011 Share Posted November 2, 2011 This will be an interesting case to watch and, since I still own some shares, be a part of. Thanks for updating your thoughts here. Curious, did you take off some of your position today on this news and the subsequent nice bounce? Link to comment Share on other sites More sharing options...
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