EliG Posted February 25, 2015 Share Posted February 25, 2015 I think SGL is now included in their "Energy Securities" as well as the purchase of FFF. The financials say realized and unrealized losses, so SGL would count as an unrealized loss. Then how you explain this: "The Company had a loss from continuing operations of $6.4 million in the fourth quarter of 2014 compared to income of $15.4 in the same period in 2013. This again was largely driven by the increase in realized losses on investments during the period which is discussed above under the “Investment segment”." If not Spyglass, where did these realized losses come from? Link to comment Share on other sites More sharing options...
bbarberayr Posted February 25, 2015 Share Posted February 25, 2015 The accounting is tricky with CKI because of the IFRS rules with regards to valuation. I honestly don't pay much attention to earnings and focus on the change in book value as I think that is the more key metric. If you look at their financials it says: "As seen in the table above, our results can fluctuate significantly from quarter to quarter, mainly as a result of certain accounting standards the Company follows. Under IFRS, realized and unrealized gains and losses on our publicly-traded securities are recorded in “revenue” on our consolidated statements of earnings" So even stocks which are held have to have their change in value flow through the revenue line in the income statement. Re SGL, it is possible it was sold, but it was on the books in Q3 for $6.7 million, so if was sold near the lows for say $2.3 million, it could account for $4.4 million of the loss and they had realized losses of $14 million. I'm really not sure where the other $10 million came from, but you could probably figure it out by going through the Q3 and Q4 reports in detail. I will contact them and see if they will tell me if they did sell SGL though and post it here if they will say. Link to comment Share on other sites More sharing options...
bbarberayr Posted February 25, 2015 Share Posted February 25, 2015 I contacted Clarke and SGL is included in the Energy Basket. But based on how I read their accounting, the loss in value in Q4 in SGL will flow through to their revenue and earnings, but maybe a real accountant could clarify for us. Link to comment Share on other sites More sharing options...
kab60 Posted February 25, 2015 Share Posted February 25, 2015 They bought another 1m shares of Holloway (at 5.25$) on feb. 4th. I'm long Clarke, but wondering what you guys think is a reasonable discount to BV? Are you holding because you expect the gap to close, or because you expect the company to keep doing savvy deals? Or a combination? :) Link to comment Share on other sites More sharing options...
bbarberayr Posted February 25, 2015 Share Posted February 25, 2015 Another share buyback announced - this time 2 million shares at $10.00 Going back to the previous question, I think you want to own CKI because: 1. Smart management making good acquisitions 2. Good discount to book value 3. Shareholder friendly management doing things like this to surface value Often you have undervalued stocks, but management doesn't seem concerned about it. CKI is doing something about it, so good to ride along. Link to comment Share on other sites More sharing options...
Myth465 Posted February 25, 2015 Share Posted February 25, 2015 I like Clarke because it's safe and cheap. I think they are making all the right moves, and are cashed up in a distressed market environment. Clarke has cleaned up their holdings, and will continue to do buybacks at a 20% BV discount. They have a fairly overfunded pension which is being reduced by an Asset Ceiling. The full value isn't being recognized. Pension accounting is not my cup of tea, but I would guess there is some value to shareholders there. Funded status of plans – surplus 51,175 48,134 Cumulative impact of asset ceiling (21,352) (18,475) Accrued pension benefit asset, net of impact of asset ceiling 29,823 29,659 At the very least they have the cash on the books, plus the cash in the pension to really take advantage of this O&G / Canadian market downturn. They also have quite a lot of debt securities / related party loans which will be converted to cash in the next few years. Holloway / Terravest are perfect platforms to buy O&G holdings as well as hotels. You have Clarke, Clarke pension, Holloway, Terravest, and GA's private cash to continue taking over companies. I think the new O&G holding they have will be a nice win, and think they have a gem with Holloway, which I believe is deeply undervalued. Buying back Clarke is a nice way to concentrate more on Holloway. Here is more detail on pension accounting. http://www.iasplus.com/en/meeting-notes/ifrs-ic/2007/may/ifric-d19 Link to comment Share on other sites More sharing options...
writser Posted February 25, 2015 Share Posted February 25, 2015 Clarke cannot recognize the full surplus but that is just an accounting peculiarity. They would have to pay 31% taxes whenever they siphon assets out of the pension plan so intrinsic value of the pension plan is ~$15m higher than book AFAIK. I'm not sure how much assets they can siphon off and how fast. According to IR "the pension plan is very heavily regulated but the Company looks at all its options on a regular basis". I'm excited about the second tender offer - these guys mean business! Link to comment Share on other sites More sharing options...
Myth465 Posted February 26, 2015 Share Posted February 26, 2015 I like the Pension from a bullying perspective. When they buy they seem to attack with 3-4 related entities. The pension is cashed up quite a bit. They use it to buy shares, and also use it to loan money to related parties at 6%-7%. Not bad at all. I like the buyback as well with only 19 million shares it will make a big dent if they get traction. Link to comment Share on other sites More sharing options...
EliG Posted February 26, 2015 Share Posted February 26, 2015 They bought another 1m shares of Holloway (at 5.25$) on feb. 4th. They bought them from their own pension plan. Link to comment Share on other sites More sharing options...
EliG Posted February 26, 2015 Share Posted February 26, 2015 I like Clarke because it's safe and cheap. +1 Link to comment Share on other sites More sharing options...
Myth465 Posted February 26, 2015 Share Posted February 26, 2015 They bought another 1m shares of Holloway (at 5.25$) on feb. 4th. They bought them from their own pension plan. Thats annoying news... Link to comment Share on other sites More sharing options...
EliG Posted February 26, 2015 Share Posted February 26, 2015 Thats annoying news... Why? Note that Quinpool Holdings Partnership (Clarke subsidiary) sold HLC debentures to the pension plan at the same time. If I'm reading SEDI correctly: Pension plan sold 1M HLC common shares to Clarke at $5.25. Quinpool Holdings Partnership sold $6,232,000 of HLC.DB.A to the pension plan. Link to comment Share on other sites More sharing options...
bbarberayr Posted February 26, 2015 Share Posted February 26, 2015 I guess the part which is confusing is the MD&A talks about the acquisition of the HLC common, but not the disposition of the HLC.DB.A. So, that implies to me that buys and sells between Clarke Inc. and the pension plan are not disclosed in the MD&A. Also, the date in SEDI is Jan 30 for the purchase of the common and the date in the MD&A is February 4th, so the purchase could be an additional purchase and still could be coming to SEDI. So this leads me to conclude it is an additional 1,000,000 shares bought on February 4th and the SEDI filing for this should appear in the next few days. I guess if it doesn't, my logic is wrong, but I would hope they are consistent in what they disclose for both buys and sells in the MD&A to the pension plan. > Any thoughts? Link to comment Share on other sites More sharing options...
EliG Posted February 26, 2015 Share Posted February 26, 2015 > Any thoughts? I review insider transactions on the TMX site every evening, for each one of my significant holdings. It's a perfect complement to my evening cup of tea and the oatmeal raisin cookies. :) I only remember one 1M transaction. I posted it here the same day. That transaction matches SEDI records. I don't think we will see another one disclosed. Jan 30 vs. Feb 4 is probably trade date vs. settlement date. Link to comment Share on other sites More sharing options...
Myth465 Posted February 27, 2015 Share Posted February 27, 2015 Thats annoying news... Why? Note that Quinpool Holdings Partnership (Clarke subsidiary) sold HLC debentures to the pension plan at the same time. If I'm reading SEDI correctly: Pension plan sold 1M HLC common shares to Clarke at $5.25. Quinpool Holdings Partnership sold $6,232,000 of HLC.DB.A to the pension plan. This transaction makes sense. There is relatively little upside to the debt securities (dbs and various related party loans). Just a solid 6-8% return as they approach par. The easy money has been made with them trading up. The upside lies with the common in HLC and most other current major holdings. Better to put the debt securities in the pension and move the shares owned by the pension to Clarke. I would have preferred an overall increase in HLC to Clarke. I thought it was a million new shares based on reading the MDA. Its a good move, but would have preferred a direct market purchase. Link to comment Share on other sites More sharing options...
cheerlee Posted March 5, 2015 Share Posted March 5, 2015 Planning to fly to Toronto for Clarke's annual meeting in June. How's the annual meeting, boring or informative? What's the schedule? Thanks in advance. Link to comment Share on other sites More sharing options...
eburnside Posted March 10, 2015 Share Posted March 10, 2015 This is a fantastic thread. Thanks all for your contribution. I was curious if anyone could comment on whether or not PFIC Taxation rules apply for US investors holding shares of Clarke? Link to comment Share on other sites More sharing options...
sbalsam Posted March 11, 2015 Share Posted March 11, 2015 The PFIC rules would almost certainly apply to an investment in Clarke because more than 50% of the Company's assets are "passive" assets (i.e., they produce passive income or are held for the production of passive income). I am not up-to-date on all of the consequences of owning a PFIC in a taxable account. Depending upon your plans for the investment (e.g., short-term holding), this may not cause a large problem but you need to look into that. However, owning a PFIC in an IRA would not give rise to any tax consequences or filing requirements (see Notice 2014-28 - http://www.irs.gov/pub/irs-drop/n-14-28.pdf) and would certainly be the way to go if you have an IRA and room to make the investment there. Steve Link to comment Share on other sites More sharing options...
LesPaul Posted March 25, 2015 Share Posted March 25, 2015 Thought this might be worth sharing in the thread - cheers! TerraVest Capital Inc. Announces its First Oil & Gas Processing Equipment Order for the U.S. Market 7 minutes ago - ACQUIREMEDIA VEGREVILLE, AB and TORONTO, ON, March 25, 2015 /CNW/ - TerraVest Capital Inc. (TSX: TVK) (the "Company" or "TerraVest") is pleased to announce that NWP Industries LP ("NWP"), a wholly owned subsidiary of TerraVest, has been awarded its first purchase order for oil & gas processing equipment to be delivered to the U.S. Market. The equipment will be shipped to a major oil & gas producer with operations based in the state of Utah. TerraVest acquired NWP in August of 2014 and has been working with management to enhance its reach into new geographic markets. "We set out to fabricate oil & gas equipment for the U.S. market approximately six months ago knowing we have an excellent product offering, speed to delivery and competitive pricing. This award is the first step in demonstrating TerraVest and NWP's long-term strategic goal of diversifying the Fabrication division's geographic reach while still providing our existing customers with excellent customer service" said Mitch DeBelser, President of NWP Industries LP. Management is optimistic that the weak Canadian dollar will provide the opportunity for further U.S. sales and continues to implement a number of strategic initiatives to enhance the value of TerraVest's Western Canadian Fabrication division. Link to comment Share on other sites More sharing options...
writser Posted March 31, 2015 Share Posted March 31, 2015 Latest corporate presentation: link. Not much news here. Strange that the presentation is based on year-end numbers because it is now slightly out of date (for example, it does not include the additional purchase of 1m Holloway shares at $5.25). Last week Deloitte resigned as auditor "for commercial reasons". Big vague but probably no big deal as PWC took their place and not a 3rd rate auditor. Link to comment Share on other sites More sharing options...
intothebreach Posted March 31, 2015 Share Posted March 31, 2015 For what it's worth and without any additional info, I read "commercial reasons" as meaning they could not agree on fees (or got beat by PwC) or they needed independence to do consulting work that they could not do while being auditors (much less likely as it would need to be sizeable work to warrant dumping recurrent audit revenues). Link to comment Share on other sites More sharing options...
FFHWatcher Posted March 31, 2015 Share Posted March 31, 2015 Latest corporate presentation: link. Not much news here. Strange that the presentation is based on year-end numbers because it is now slightly out of date (for example, it does not include the additional purchase of 1m Holloway shares at $5.25). Last week Deloitte resigned as auditor "for commercial reasons". Big vague but probably no big deal as PWC took their place and not a 3rd rate auditor. I believe Clarke Inc bought the 1M shares of Holloway from the Clarke Pension Plan, so the 1M shares simply moved from 'Other Assets' to the Clarke Inc investment portfolio in exchange for $5.25M in cash. No net change, as I recall Link to comment Share on other sites More sharing options...
writser Posted March 31, 2015 Share Posted March 31, 2015 For what it's worth and without any additional info, I read "commercial reasons" as meaning they could not agree on fees (or got beat by PwC) or they needed independence to do consulting work that they could not do while being auditors (much less likely as it would need to be sizeable work to warrant dumping recurrent audit revenues). That's what I assumed too. Auditor fees for 2014 were already 50%+ lower than for 2013, I assume because Clarke sold most operating businesses in 2014. Given that, the resignation makes sense. I believe Clarke Inc bought the 1M shares of Holloway from the Clarke Pension Plan, so the 1M shares simply moved from 'Other Assets' to the Clarke Inc investment portfolio in exchange for $5.25M in cash. No net change, as I recall Yes, that was discussed in this topic. I was just wondering why they based their presentation on 2014 data. Can't they disclose newer information in a presentation? Not that it really matters .. Link to comment Share on other sites More sharing options...
rohitc99 Posted April 1, 2015 Share Posted April 1, 2015 This is a fantastic thread. Thanks all for your contribution. I was curious if anyone could comment on whether or not PFIC Taxation rules apply for US investors holding shares of Clarke? I wrote to Clarke recently and was told that to the best of their knowledge, clarke is not a PFIC Link to comment Share on other sites More sharing options...
sbalsam Posted April 1, 2015 Share Posted April 1, 2015 Holloway announced the sale of its Travelodge franchise rights for $21M. In the PR, Michael Rapps stated that the price was significantly more than the value that the Company assessed it at in its acquisition. (Since the gain is expected to be $6.4M and the valuation was likely prepared following the acquisition of Royal Host in 2014, that amount may quantify his statement.) Two analyst reports I saw (both by M Partners) attributed either $0 or $10 million to the value of the rights (in my view, mainly because it was not a traditional property that allows for an easy valuation based on cap rate) so the sale represents a material value realization. HLC's market cap is only about $125M. Additionally, the PR states that HLC will use the proceeds to repay its $16M credit facility ... which is held by Clarke. So, there is another $16M of cash coming in the door to be invested. Steve Link to comment Share on other sites More sharing options...
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