jm25 Posted January 17, 2014 Share Posted January 17, 2014 TSX:CKI Clarke, Inc. is an investment holding firm. It primarily involves in investment in undervalue businesses. The firm through its subsidiaries, engages in investment and transportation business in Canada and internationally. Through transportation services business subsidiaries, it engages in integrated transportation operations that include various modes, such as boxcar, intermodal, and trucking services, as well as offers truckload and less than truckload services comprising longhaul, flatbed, and intermodal services. Firm’s freight product mix includes building products, food, beverages, metals, consumer packaged products, pharmaceuticals, computer hardware, electronics, and a range of retail goods. It also provides various information technology services, such as server hosting, migration services, application services, network services, disaster recovery services, security and access, and Web services to the business community. In addition, the firm owns a container ship that serves as a time charter vessel transporting goods between Fort Lauderdale, Florida and George Town, Grand Cayman, as well as operates ferries. Further, through a joint venture with Sure-Gro, Inc., it involves in consumer home and garden business. Additionally, through its investment division the firm invests in marketable securities portfolio, including fixed income securities, unit trusts, and long-term investments. • Cash flow positive • Pays a 5% dividend • Cheap on a p/e and ev/ebitda • Trades below 1.5x price / tangible book value, 1.1x book value • Reasonable leverage • Bought back shares when shares were trading below book value – seem like smart capital allocators. Tried to buy back converts with cash rather than have dilution for shareholders • Large insider ownership • No research analyst following What I need to look into: • Strong earnings in 08, 09, 10, and LTM… what happened in 2011 and 2012? • How active CEO is in the business and if he will be around. I think he stepped back a while back due to health reasons. Potentially some key man risk here. Has anyone looked into this name or ever spoken to Management? Link to comment Share on other sites More sharing options...
Parsad Posted January 17, 2014 Share Posted January 17, 2014 TSX:CKI Clarke, Inc. is an investment holding firm. It primarily involves in investment in undervalue businesses. The firm through its subsidiaries, engages in investment and transportation business in Canada and internationally. Through transportation services business subsidiaries, it engages in integrated transportation operations that include various modes, such as boxcar, intermodal, and trucking services, as well as offers truckload and less than truckload services comprising longhaul, flatbed, and intermodal services. Firm’s freight product mix includes building products, food, beverages, metals, consumer packaged products, pharmaceuticals, computer hardware, electronics, and a range of retail goods. It also provides various information technology services, such as server hosting, migration services, application services, network services, disaster recovery services, security and access, and Web services to the business community. In addition, the firm owns a container ship that serves as a time charter vessel transporting goods between Fort Lauderdale, Florida and George Town, Grand Cayman, as well as operates ferries. Further, through a joint venture with Sure-Gro, Inc., it involves in consumer home and garden business. Additionally, through its investment division the firm invests in marketable securities portfolio, including fixed income securities, unit trusts, and long-term investments. • Cash flow positive • Pays a 5% dividend • Cheap on a p/e and ev/ebitda • Trades below 1.5x price / tangible book value, 1.1x book value • Reasonable leverage • Bought back shares when shares were trading below book value – seem like smart capital allocators. Tried to buy back converts with cash rather than have dilution for shareholders • Large insider ownership • No research analyst following What I need to look into: • Strong earnings in 08, 09, 10, and LTM… what happened in 2011 and 2012? • How active CEO is in the business and if he will be around. I think he stepped back a while back due to health reasons. Potentially some key man risk here. Has anyone looked into this name or ever spoken to Management? Have not spoken to management, but followed the company for years! Read all you can on George Armoyan...interesting fellow! The stock has run up a bit after being flat for a couple of years. Cheers! Link to comment Share on other sites More sharing options...
jwfm1985 Posted January 17, 2014 Share Posted January 17, 2014 This is 100% a personal opinion (and I'm sure there are others with differing views!) but I wouldn't touch anything Armoyan is behind, especially Clarke. Some very shady dealings in the past... Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 17, 2014 Share Posted January 17, 2014 I scalped this stock in the past and missed the current run-up because I did not buy and hold. (Ooops?) One of their analysts or employees is subscribed to my blog. I don't have time to analyze everything out there, so I simply assume that you should buy Clarke when the company is buying back or tendering for its own shares. It looks like the company is currently buying back its convertible debentures: http://www.canadianinsider.com/node/7?menu_tickersearch=cki (Is it sad that I know very little about this company?) Link to comment Share on other sites More sharing options...
augustabound Posted January 17, 2014 Share Posted January 17, 2014 This is 100% a personal opinion (and I'm sure there are others with differing views!) but I wouldn't touch anything Armoyan is behind, especially Clarke. Some very shady dealings in the past... I can't remember anything to this but I think you're right. There's something in my gut telling me I forgot about this company for a reason a few years back..........................but I can't for the life of me remember why. That's why I write things down now. ;D Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 18, 2014 Share Posted January 18, 2014 I own a lot....I suggest you check out the book value...after the Clarke trucking sale...too tired to give you a scenario...I did not know that Clarke was pushing a proxy vote a Sherritt who just sold it's royalty division to Altius another of my holdings. If people post I will correct and add...other than that...it is another buck for 40 cents..Armoyan owns 48% so he is aligned with shareholders... 5% yield...book value is mostly cash... Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 18, 2014 Share Posted January 18, 2014 Jm25, The earnings this year are an absolute blow out...they are announced in the deals...but no one has done the work to find out...this is an old Bruce Berkowitz holding. You need to adjust your book value number it's changed dramatically. Dazel. Link to comment Share on other sites More sharing options...
Parsad Posted January 18, 2014 Share Posted January 18, 2014 Armoyan has played some pretty hard-ball tactics at times, and I think that is probably what is giving some people concern from past articles, etc. But for the most part, his compensation, etc has always been aligned with Clarke shareholders, which is something that many other value CEO's don't seem to follow. Cheers! Link to comment Share on other sites More sharing options...
Guest 50centdollars Posted January 18, 2014 Share Posted January 18, 2014 I own a lot....I suggest you check out the book value...after the Clarke trucking sale...too tired to give you a scenario...I did not know that Clarke was pushing a proxy vote a Sherritt who just sold it's royalty division to Altius another of my holdings. If people post I will correct and add...other than that...it is another buck for 40 cents..Armoyan owns 48% so he is aligned with shareholders... 5% yield...book value is mostly cash... Dazel. Agreed. I think they have about $12/share in cash and marketable securities so I think the downside is protected here. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 18, 2014 Share Posted January 18, 2014 Agreed Sanjeev. Armoyan is a businessman and he is a true value investor and operator...they are extremely rare. Unfortunately, in the real world businessmen get there hands dirty it is not the fun illusion that people get from how easy people think it is consistently produce profits and or shareholer returns. There is a very good reason that most businesses do not perform well. Because it is hard.! Sometimes you have to dig in the dirt and Armoyan has done this...his brothers reputation is not good and George's reputation has been dragged along with it....and no one enjoyed getting absolutely smoked in 2008. Clarke lost 80% of the value of it's shares..and Armoyan took a sabatical. It has been a great turn around story. Link to comment Share on other sites More sharing options...
EdWatchesBoxing Posted January 18, 2014 Share Posted January 18, 2014 I own a lot....I suggest you check out the book value...after the Clarke trucking sale...too tired to give you a scenario...I did not know that Clarke was pushing a proxy vote a Sherritt who just sold it's royalty division to Altius another of my holdings. If people post I will correct and add...other than that...it is another buck for 40 cents..Armoyan owns 48% so he is aligned with shareholders... 5% yield...book value is mostly cash... Dazel. LOL, I had a related "ah-ha" moment. I was reading the altius PR about the royalties and I wondered where I heard about Sherritt before. I found out a few days later that it was from reading about Clarke's holdings on Bloomberg. Link to comment Share on other sites More sharing options...
jm25 Posted January 20, 2014 Author Share Posted January 20, 2014 All people have discussed is their views on Armoyan. I understand he's the force behind the business, but does anyone have a view of current business and future earnings potential? Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 20, 2014 Share Posted January 20, 2014 The tanks business, freight that's left and the home heating division (should do very well this year with the new acquisition that was well timed-weather in the region has been very cold) are statistically undervalued. We do not know what his average cost is in Sherritt is now but it should do well... He has been successful at deploying capital in the past but there is a ton of cash on the balance sheet right now which is negative right now...however, I would expect a special dividend sometime in the near future. The market has not figured out the trucking sale yet. Dazel Link to comment Share on other sites More sharing options...
Myth465 Posted January 20, 2014 Share Posted January 20, 2014 Thanks for the idea. I bought some. I like that he holds spyglass and also looked at Royal Host a few years back. Dazel thanks for your comments. Link to comment Share on other sites More sharing options...
Myth465 Posted January 30, 2014 Share Posted January 30, 2014 http://finance.yahoo.com/news/clarke-inc-announces-sale-commercial-141100960.html Pretty big news. Interesting sale, thanks Dazel. I made clarke a 15% position after quite a bit of reading after your post. Looks like operating companies are moving to Terra. Also interesting that they bought 7 million of the convertible debs in the pension fund. Will be interesting to see the financials of the shipping / ferry business once the other ops are moved to discontinued operations, and will be interesting to see what other rabbits come out of the other segment which seems to contain quite a few hidden assets. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 30, 2014 Share Posted January 30, 2014 Armoyan is a value investors dream....he puts into action what we think. He has picked the the businesses that have hidden value. The difference for us as a value investor is we see it but unless it is unlocked we sit for long periods of time "waiting". He also picks hard assets and I can value them easily to see what he is doing. I have mentioned on the Altius thread that it looks like the market has called a bottom in the commodity sector after a decimating 3 year bear market. Armoyan is already in the space...as that is where the value is right now. Congrats Myth. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 30, 2014 Share Posted January 30, 2014 Myth, The shipping and ferry assets value on the books will close to 0...when you net out the sale of the freight division...so any sale is boost to book value. I expect some capital structure moves soon. Dazel. Link to comment Share on other sites More sharing options...
bizaro86 Posted January 30, 2014 Share Posted January 30, 2014 I'm a pretty big fan of this company, basically its undervalued assets with an excellent owner operator. I've owned some of their positions independently, but swapped it for a position in Clarke. I figure I'm getting the same exposure at a discount, with an excellent owner-operator who has the size and inclination to be an activist when necessary. I think the Canadian business community doesn't care much for hard nosed outsiders who stir things up, which is a big source of his "reputation." There might be a bit of a xenophobic undertone there (he's from Syria originally) as well. I'm holding my position via the convertible debentures. When I bought them, they were trading at no premium to their conversion value, and had a slightly higher yield than the common. Basically, it was a chance to move up the capital structure to reduce downside risk with no loss of upside. Link to comment Share on other sites More sharing options...
bskptkl Posted January 30, 2014 Share Posted January 30, 2014 I'm a pretty big fan of this company, basically its undervalued assets with an excellent owner operator. I've owned some of their positions independently, but swapped it for a position in Clarke. I figure I'm getting the same exposure at a discount, with an excellent owner-operator who has the size and inclination to be an activist when necessary. I think the Canadian business community doesn't care much for hard nosed outsiders who stir things up, which is a big source of his "reputation." There might be a bit of a xenophobic undertone there (he's from Syria originally) as well. I'm holding my position via the convertible debentures. When I bought them, they were trading at no premium to their conversion value, and had a slightly higher yield than the common. Basically, it was a chance to move up the capital structure to reduce downside risk with no loss of upside. Can the company redeem the debentures unilaterally? I see they tried and failed to get the conversion feature knocked out in return for a bump in rate. Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 30, 2014 Share Posted January 30, 2014 Convertibles are callable at 100 they trade at 105....I owned the convertibles and converted them...the move to offer 50 basis points to get rid of the conversion warrant was very close. The yield on the common is better after tax now than the bonds. Bizaro, Nice to see you again...very Ballsy holding the bonds through the tender period...they were very close. Dazel Link to comment Share on other sites More sharing options...
bizaro86 Posted January 30, 2014 Share Posted January 30, 2014 Hi Dazel, I didn't buy the converts until after the announcement, I've only held them for a few weeks. Previous to that I had positions in a few of their investments, but nothing in Clarke directly. The converts require 30 days notice to redeem at 100. If they decide to do so (which I would eventually expect) I'll convert to common then. Basically, I'm looking at it as an investment in the common, with a bit of downside protection. Link to comment Share on other sites More sharing options...
Guest Dazel Posted February 2, 2014 Share Posted February 2, 2014 Bizaro, You better have a look....decision time. Link to comment Share on other sites More sharing options...
bizaro86 Posted February 2, 2014 Share Posted February 2, 2014 Of course they redeem the day after I post about it here! I will convert, since I still like the underlying, and was mainly using this to mitigate the downside. I probably should have realized this was too good a deal to last for any amount of time. Thanks for mentioning it Dazel. Link to comment Share on other sites More sharing options...
bskptkl Posted February 3, 2014 Share Posted February 3, 2014 Of course they redeem the day after I post about it here! I will convert, since I still like the underlying, and was mainly using this to mitigate the downside. I probably should have realized this was too good a deal to last for any amount of time. Thanks for mentioning it Dazel. They are redeeming 23%. I wonder if the imbedded option value makes it not worth converting... Last price of $7.68 implies 102.4 on debentures. You lose .014 on redemption of 23% - makes the rest of converts worth 102.8 which implies $7.71 on stock. Of course if lots of people convert - remainder will be redeemed on more than 23%. I wonder what the pension fund will do - convert or not? I saw a print of $73,000 debentures, price 102.51 go up today bought by National Bank which is the house CKI (according to CFO) uses for NCIB buybacks. Wonder if they are still buying them in... Link to comment Share on other sites More sharing options...
Myth465 Posted March 4, 2014 Share Posted March 4, 2014 Interesting that more people didnt convert. I cant wait for the 10k. Book value and investment update will be nice. http://finance.yahoo.com/news/clarke-inc-completes-partial-redemption-140000659.html Seems weird for the pension to convert to holding Clarke shares. Also wonder why they didnt buy back more of the DB. Very quite few months and little movement in the stock for a company which has been extremely active over the last few months. I think they will also have a decent size win in Spyglass given how natural gas prices have behaved. Link to comment Share on other sites More sharing options...
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