Gopinath Posted June 14, 2012 Share Posted June 14, 2012 I post this idea to get the ball rolling! Some of you may have already come across this company! This holding company trading for less than 70 cents on the dollar based on current book value. They hold stakes in interesting companies starting from shell companies like Steel Excel(used to be ADPT), statistically cheap companies like SLI Industries, great companies like Nathan Famous & even some private holdings. The portfolio companies they hold are cheaply priced based on their assets & earning power. If they become reasonably priced at some point, the discount at the holding company is even more wider. Steel Partners Holdings is run by activist investor Warren Lichtenstein. According to the Financial Times, the partnership produced gross annual returns of 22% from its 1990 inception to 2007. He sits on many of the boards the company hold stakes. It is likely that portfolio companies will trade appropriately at some point due to the owner manager being a board member buying more when the stocks go lower or selling when the get higher. My quick NAV estimation comes around $18/unit. Here is some of the companies they hold stakes in, Diversified Industrial Handy & Harman Ltd. CoSine Communications, Inc. SL Industries, Inc. Steel Excel Inc. SPH Services, Inc. BNS Holding, Inc. DGT Holdings Corp. Financial Services WebBank Corporate Barbican Group Holdings Limited API Group PLC Fox & Hound Restaurant Group JPS Industries, Inc. GenCorp Inc. Link to comment Share on other sites More sharing options...
Josh4580 Posted June 14, 2012 Share Posted June 14, 2012 http://www.steelpartners.com/userfiles/SPH%20Investor%20lettter%20May%204%202012.pdf Here is a link to the 2011 Annual Letter to unitholders. Very interesting holding company trading at a large discount. Link to comment Share on other sites More sharing options...
link01 Posted June 14, 2012 Share Posted June 14, 2012 looks cheap but may have some warts...but then again maybe thats why its cheap... http://www.reuters.com/article/2009/01/15/hedgefunds-steelpartners-idUSLNE50E01Y20090115 Link to comment Share on other sites More sharing options...
LongTerm Posted June 14, 2012 Share Posted June 14, 2012 A couple of recent posts about Steel Partners LP OTC Adventures: http://otcadventures.com/?p=90 Mine: http://longtermvalue.wordpress.com/2012/05/08/new-position-steel-partners-holdings-lp-splp/ There has been some recent activity to simplify the partnership structure (buying and selling between portfolio companies) so as not to qualify for investment company tax status Link to comment Share on other sites More sharing options...
Hielko Posted June 15, 2012 Share Posted June 15, 2012 What kind of management fees are there? Usually those are often a good reason for a discount if you don't think the manager is adding alpha. Link to comment Share on other sites More sharing options...
LongTerm Posted June 18, 2012 Share Posted June 18, 2012 The annual management fee (paid and adjusted quarterly) is 1.5% of 'total partners capital', which is defined as "the sum of the market capitalization of SPH and any amounts in the deferred fee accounts as of the last day of the prior calendar month." Managment also receives incentive units which seem to be equal to 15% of the annual change in EV of the LP units. At first blush this looks to me better than the normal 2 and 20 compensation of hedge funds... but the devil is in the details. Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2013 Share Posted July 16, 2013 2013 letter to unitholders + a recent article. It is selling for 0.8 x BVPS, Mr. Lichtenstein is still very young (47), and his company is still relatively small. Imo, it is very interesting: a lot of room to grow and a very good price! giofranchi Steel-Partners-Holdings-L_P_Investor-Letter_2013.pdfsteel-partners-holdings-july152013.pdf Link to comment Share on other sites More sharing options...
Cunninghamew Posted July 16, 2013 Share Posted July 16, 2013 I imagine this is already covered in all of the links that have been posted, but my understanding is a lot of limited partners felt screwed when he created this thing. Steel justified its creation as a way to get liquidity from all of his investments that went super illiquid in 08. The angry LP's argued its was a way for him to trap more permenant capital (to collect fees on). The LP's felt they were given liquidity, but it came at a price (i.e. a steeply discounted / illiquid security). I am not familiar enough with the situation to speak intelligently on it, but I imagine to get comfortable with this investment you would need to get comfortable with the CEO's ethos Lichtenstein is definietly a good investor. Hell some of his limited partners that sued him included Michael Price and Carl Icahn, so he was probably pretty good. I also recall reading something that claimed he annualized north of 20% leading up to 2008. Link to comment Share on other sites More sharing options...
giofranchi Posted July 16, 2013 Share Posted July 16, 2013 I imagine to get comfortable with this investment you would need to get comfortable with the CEO's ethos Damn!! It is clear by now I have the very annoying tendency to fall for big liars…!! ;D ;D ;D giofranchi Link to comment Share on other sites More sharing options...
Cunninghamew Posted July 16, 2013 Share Posted July 16, 2013 I imagine to get comfortable with this investment you would need to get comfortable with the CEO's ethos Damn!! It is clear by now I have the very annoying tendency to fall for big liars…!! ;D ;D ;D giofranchi Still it could be very interesting... just thought it was worth pointing out. Last year and early into this year I held a position in SPB. During my due diligence on SPB I came across a similar situation with a stock called HRB. HRB owned a large chunk of SPB, but was trading at a material discount. I walked away from putting money in HRB (fully knowledgeable about the discount), bc of concerns with Phil's ethos. Turned out to be a mistake (at least in hindsight) Link to comment Share on other sites More sharing options...
eclecticvalue Posted July 16, 2013 Share Posted July 16, 2013 Cunninghamew, I think you mean HRG. And looking at the one year and YTD performance HRG hasn't performed well at all. It was due to SEC scrutiny about Phil Falcone. So you made the right move to walk away. Link to comment Share on other sites More sharing options...
Cunninghamew Posted July 16, 2013 Share Posted July 16, 2013 Cunninghamew, I think you mean HRG. And looking at the one year and YTD performance HRG hasn't performed well at all. It was due to SEC scrutiny about Phil Falcone. So you made the right move to walk away. Yes was referring to HRG (sorry for the typo). I walked away bc of the scrutiny / fear that Harbinger redemptions could lead to an uneconomic liquidation in the stock. Looking back at my holding period it appears HRG slighly outperformed SPB. However, I feel like there was a time it was a significantly better performer. I started unwind my posistion in late Jan/early Feb. Sorry not relevant to the SPLP discussion. Link to comment Share on other sites More sharing options...
krazeenyc Posted July 16, 2013 Share Posted July 16, 2013 I've never strongly considered owning SPLP -- but I've been fortunate enough to buy shares in 2 companies now 1 week b4 SPLP decided to buy them out or take a large position (DGTC and now IGOI). THX SPLP :D Link to comment Share on other sites More sharing options...
Gopinath Posted April 14, 2015 Author Share Posted April 14, 2015 Here is an update and a write up an SPLP. http://valuealert.blogspot.com/2015/04/holding-company-at-discount-steel.html Link to comment Share on other sites More sharing options...
cheerlee Posted April 17, 2015 Share Posted April 17, 2015 Didn't do detail research on the companies owned, but looks like the owned public companies overvalued in market. Even the sum of parts is more than valuation of SPLP, but not sure how much margin we have at current price. Link to comment Share on other sites More sharing options...
peterareed Posted April 20, 2015 Share Posted April 20, 2015 Why do you think those companies look overvalued? Link to comment Share on other sites More sharing options...
LowIQinvestor Posted April 20, 2015 Share Posted April 20, 2015 If you aren't bearish on oil services, I suggest you buy SXCL over SPLP. Steel Excel Inc. (OTC: SXCL.PK): Steel Excel Inc. (“SXCL”) has two operating subsidiaries; Steel Energy Ltd. (“Steel Energy”) and Steel Sports Inc. (“Steel Sports”). SPLP owns approximately 57.9% of SXCL, with a market value of $211.6 million and had NOLs of approximately $146 million. The company has been repurchasing shares every year as the shares continued to be undervalued." Link to comment Share on other sites More sharing options...
Orchard Posted August 18, 2015 Share Posted August 18, 2015 I was curious whether someone attended their annual meeting and also in general whether this is an annual meeting worth going to? Do they have a Q&A session? Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 14, 2015 Share Posted December 14, 2015 Behind the Boom in Online Lending: A Tiny Utah Bank Now thriving, Warren Lichtenstein’s WebBank could get a closer look from regulators http://www.wsj.com/articles/behind-the-boom-in-online-lending-a-tiny-utah-bank-1450046828 Link to comment Share on other sites More sharing options...
timidbid Posted June 23, 2016 Share Posted June 23, 2016 Everytime I look at SPLP's WebBank holding valued at $59.1mm on their balance sheet while generating $31.4mm of net income in 2015 I just shake my head. From their most recent investment letter http://www.steelpartners.com/wp-content/uploads/2016/04/SP-Investor-Letter-2016.pdf: The bank reported net income of $31.4 million for 2015 and a return on average equity of 63.9%. The bank made $9.5 million in dividend payments to its parent in 2015. The bank’s December 31, 2015 total assets and equity capital were $327.5 million and $64.5 million, respectively. The stock is trading at a substantial discount to sum of parts and the company continues to buy back shares per their 8-K filed on June 9th https://www.sec.gov/Archives/edgar/data/1452857/000143774916033807/splp20160614_8k.htm On May 13, 2016, the Board of Directors (the “Board”) of the general partner of Steel Partners Holdings L.P. (the “Company”), approved the repurchase of up to an aggregate of $5,000,000 of the Company's common units (the “May 2016 Repurchase Program”). The May 2016 Repurchase Program having been fully utilized, on June 9, 2016, the Board approved the additional repurchase of up to an aggregate of $15,000,000 of the Company's common units (the “June 2016 Repurchase Program”). I suppose there are concerns around the management compensation agreement as well as market values of their other holdings? Link to comment Share on other sites More sharing options...
EricSchleien Posted December 19, 2017 Share Posted December 19, 2017 Has anyone looked at this recently? Link to comment Share on other sites More sharing options...
thepupil Posted December 19, 2017 Share Posted December 19, 2017 I've always viewed it as a slightly more discounted, more operating company (versus asset management/alternative investment) focused Tetragon, meaning I think the person/people involved are smart/cunning and trying to make themselves money, but there are serious governance/external fee issue which explain the discount. I prefer TFG because I prefer to underwrite the alternative investments and asset managers which comprise NAV (rather than operating companies..I have more personal experience in alternative assets than analyzing businesses), prefer the return of capital via divvy/buyback (TFG pays out 30-50% of sustainable earnings and has bought back 30%+ of shares), prefer the net cash balance sheet, and am generally more comfortable with the scumbags at TFG than the scumbag at SPLP. I once went through 20+ google search pages on warren lichtenstein. The guy is a piece of work. He's universally reviled in the institutional LP community, lives a extravagant lifestyle (owns places on the top of the bloomberg building, home in aspen), has gotten at least 1 DUI, got into public disputes with lovers, etc. I don't have all my notes, but some links are below. I'm sure you can find more. None of that means the guy won't make dough or isn't a good investor. Your just paying full fees to that guy who's also regularly messed with minority investors in his cross-shareholdings, buying them out cheap, doing reverse split buybacks to take out small shareholders for no premium, tendering for controlled companies in preferred stock (the prefs trade at ~$83 so they are/were an inferior currency), etc. https://www.lexology.com/library/detail.aspx?g=48f73573-f2f1-4fc9-bd64-110950508de6 https://dealbook.nytimes.com/2013/04/25/millionaires-clash-over-socialites-child-support-claims/?_php=true&_type=blogs&_r=0 https://www.aspentimes.com/news/aspen-cop-blotter-2/ https://www.thestreet.com/story/10306557/1/steel-partners-porn-plan.html I also don't know how the underwrite the bank with the super high ROE and the sustainability thereof. In short, I think SPLP is very cheap and interesting, and have been following its simplification efforts from afar. I just have the same governance hesitations as everyone else and have always preferred TFG for my hairy scary management warts allocation. My view is no more informed than that. I assume your thesis gets to NAV of $30 or higher and that you have noticed the consistent effort to simplify the beast and turn it into something that is actually growing in value at a nice clip after fees, but I'm eager to hear the specifics. Link to comment Share on other sites More sharing options...
EricSchleien Posted December 21, 2017 Share Posted December 21, 2017 Yeah that's basically my thesis in a nutshell. Link to comment Share on other sites More sharing options...
dweiss60 Posted June 6, 2019 Share Posted June 6, 2019 Have you come back to this since? Stock is cheaper and earnings are higher (I think) Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted September 23, 2019 Share Posted September 23, 2019 New 52 week lows. The business has grown, management are guiding $210m-$230m in EBITDA, even when you factor in the debt and the pension deficit, this still looks pretty cheap. The only thing that bothers me is I am not convinced how durable the underlining businesses would perform in a recession. Link to comment Share on other sites More sharing options...
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