CKI - Clarke Inc.

[FFHWatcher]

Who is Potter?

I would assume buybacks for a good chunk of it.

I assume someone came to them to buy Supremax vs. CKI wanting to sell. If they wanted to sell that many shares, I would think SP would decline even with Supremax good recent results.

[EliG]

Who is Potter?

 

10% holder. See replies ##312, 314, 315 up the page.

 

In fairness, we don't know if he wants out or not. He recently sold a tiny chunk of his positions. I wouldn't read anything into it.

[EliG]

So this sale gives them another ~$37 million in cash for a total now of almost $80m. I assume they wouldn't have given up Supremex's nice dividend payment without a plan for that cash.  I'm nervously excited to see where it's going...I sure hope I'm not disappointed...though I haven't been so far.

 

Any guesses?

 

Take control of Holloway?

 

(one can dream)

[Andy Dufresne]

I'm pleased with the sale of Clarke's holdings in Supremex. but I am not sure the reason for the sale was exogenous. Supremex has dwindling sales, EBITDA and FCF over the past several years - its a slowly dying cash cow whose share price is higher now than at any point in the past (it was trading under CAD 1 in Feb. 2013!) and I think that given the large size of the position and what might very well be limited upside, Clarke decided to exit. Of course, the fact that Supremex's shares continued to appreciate while the TSX went through a correction makes the cash all the more valuable.

 

Pauly - while I have no idea what Clarke will do with the funds, I do believe they will put them to good (=value creating) use, and that is the main point!

[writser]

 

Any guesses?

 

My guesses are :

 

1- buyback some big blocks of Clarke shares, maybe from M.Potter who just sold a chunk of his 10% position at around 10.50$.

 

2- if they really like Spyglass assets, it's on sale at a fraction of recent prices.

 

At current prices I'm not sure they should buy back a significant amount of shares and I bet they are not going to. A significant tender offer at $12.50 or a large buyback wouldn't be very accretive to BVPS, would significantly shrink the company and it would rob Clarke of dry powder to put to use if a great opportunity comes up. My guess is that they're going to sit on their cash until they find a great opportunity (or invest more in their current holdings).

 

At < $10 buying back shares becomes way more attractive.

[FFHWatcher]

Who is Potter?

 

10% holder. See replies ##312, 314, 315 up the page.

 

In fairness, we don't know if he wants out or not. He recently sold a tiny chunk of his positions. I wouldn't read anything into it.

 

Duh. Thanks. He is the guy I researched last week...forgot his name already.  Looks like a friend of Armoyan family from Nova Scotia.  Has largest construction company out in Nova Scotia and does work with the Armoyan Family Business (Armco Capital) out there re: Home Building, Scotia Learning Centres (another shareholder that Armoyan's control), Geosam, etc.   

[LesPaul]

Thanks for the updates guys.

 

So just a quick and dirty calc:

 

HLC - 6.87 M Shares x $6.5 = $44.6M

HLC DB - $17M (as per Nov 12 Corp Pres)

SLG - 6.72 M Shares x 0.75 = $5 M

TVK - 5 M Shares x 6.3 = $31.5 M

========================

~ $98.1 M

 

~75M Cash net of debt

 

$114M in other assets (per corp pres)

 

$287.1 M/19.7 Shares outstanding = ~$14.57 BVPS

 

Also excited to see what is done with the cash.

[EliG]

Rapps resigned from Spyglass board. He joined the board on Sept 22 to replace Armoyan.

 

http://mobile.tmxmoney.com/quote/readnews/?id=71895956&symbol=SGL

 

 

[FFHWatcher]

Rapps resigned from Spyglass board. He joined the board on Sept 22 to replace Armoyan.

 

http://mobile.tmxmoney.com/quote/readnews/?id=71895956&symbol=SGL

 

Hmm. That seems unusual.  I doubt he would do that if it was status quo, although it isn't a huge position for Clarke Inc.  If i were to guess they are either selling out of their position or making a bid to buy all of it.  I would say ... the former.

[EliG]

I strongly prefer the former. Cut the losses and run.

[FFHWatcher]

I strongly prefer the former. Cut the losses and run.

 

F(*&^ I just looked a their chart.  I never researched Spyglass, just a little on Holloway, Terravest, etc.  Run for the hills!!

I suspect (pray?) they own nothing, currently.

[alertmeipp]

I wish they do a buyout at nice premium... i have a tiny position there.

[bskptkl]

Thanks for the updates guys.

 

So just a quick and dirty calc:

 

HLC - 6.87 M Shares x $6.5 = $44.6M

HLC DB - $17M (as per Nov 12 Corp Pres)

SLG - 6.72 M Shares x 0.75 = $5 M

TVK - 5 M Shares x 6.3 = $31.5 M

========================

~ $98.1 M

 

~75M Cash net of debt

 

$114M in other assets (per corp pres)

 

$287.1 M/19.7 Shares outstanding = ~$14.57 BVPS

 

Also excited to see what is done with the cash.

 

BV has not changed much since they filed 9/30/14 FS on SEDAR, just $37 million more in cash pile and less in securities pile.

 

BV per share then = $12.99

On today's marks I have them making about $1 million on securities portfolio.

 

 

[bskptkl]

Thanks for the updates guys.

 

So just a quick and dirty calc:

 

HLC - 6.87 M Shares x $6.5 = $44.6M

HLC DB - $17M (as per Nov 12 Corp Pres)

SLG - 6.72 M Shares x 0.75 = $5 M

TVK - 5 M Shares x 6.3 = $31.5 M

========================

~ $98.1 M

 

~75M Cash net of debt

 

$114M in other assets (per corp pres)

 

$287.1 M/19.7 Shares outstanding = ~$14.57 BVPS

 

Also excited to see what is done with the cash.

 

BV has not changed much since they filed 9/30/14 FS on SEDAR, just $37 million more in cash pile and less in securities pile.

 

BV per share then = $12.99

On today's marks I have them making about $1 million on securities portfolio.

 

Sorry - up more like $3.2 million - I get $13.15 per share BV

[writser]

They do have more excess assets in their pension plan that do not appear on the balance sheet (but are discussed in the foot notes). ~$20m eventually taxed at 31% is ~$14m, an additional $0.70 per share that should eventually go to shareholders. I have BVPS around $13.80.

[ItsAValueTrap]

Rapps resigned from Spyglass board. He joined the board on Sept 22 to replace Armoyan.

 

http://mobile.tmxmoney.com/quote/readnews/?id=71895956&symbol=SGL

 

Hmm. That seems unusual.  I doubt he would do that if it was status quo, although it isn't a huge position for Clarke Inc.  If i were to guess they are either selling out of their position or making a bid to buy all of it.  I would say ... the former.

 

If they fought hard to get on the board and suddenly they leave the board... they are probably selling.

[Myth465]

I think they should sell.

Plenty of other value in the oil patch, and Holloway is a gem.

They could make easy money buying Holloway debt at 90%, 6.5% yield and selling assets / refinancing.

 

The MD&A was not very nice towards Spyglass so there is a board disagreement. I wouldnt fight for Spy given where oil is trading and given their leverage.

[kab60]

Is there a limit on how many shares of Holloway, Clarke can buy before it needs to do a special offer to the remaining shareholders? I wen't ahead and bought Clarke instead of Holloway (just before the current dip, unfortunately) but apart from taking it private I think they should just accumulate Holloway shares (which have gone down a little bit recently as well). But I'm not sure what the rules are, if there is any, seeing as Clarke Inc already holds such a major position.

[kab60]

Updated sharecount today, december 1st, 19.497.691. Last update was november 18th (19,652,991).

 

Seems like they bought back 155.300 shares which is about double of their daily limit of 5.400?

 

 

[writser]

AlphaVulture revisits Clarke: http://alphavulture.com/2014/12/02/clark-inc-revisited-a-bargain-after-all/

[krazeenyc]

I just started to look at CKI.  What do you guys think of George Armoyan?

 

I see that he is committed to shareholder value, evidenced by his buybacks. But is he a guy you want to run with over time -- will CKI be a compounder?  Is he good at creating value as an activist? It seems they got really lucky that they didn't get board seats at Sherritt -- a $17.6MM realized profit would have been a $10MM paper loss. What was his cost basis on his Royal Host basis?

 

 

[kab60]

I just started to look at CKI.  What do you guys think of George Armoyan?

 

I see that he is committed to shareholder value, evidenced by his buybacks. But is he a guy you want to run with over time -- will CKI be a compounder?  Is he good at creating value as an activist? It seems they got really lucky that they didn't get board seats at Sherritt -- a $17.6MM realized profit would have been a $10MM paper loss. What was his cost basis on his Royal Host basis?

 

I like his activist approach, his big personal holding and the low market cap of Clarke Inc., which means they should be able to do deals bigger companies aren't able to do. Their BV growth this year has been insane, so I don't expect them to continue like that, but I believe/hope that they've learned their lessons from 2007, when BV was reduced to 1/3. There was probably some luck involved this year - hopefully also some skill. I mainly invested because of discount to BV and because their holdings were mostly Holloway and Supremex, and with Supremex gone, it'll be interesting to see what deals their gonna do. I'd prefer they took Holloway private, but if they can find better deals - fine with me. I added at 11.05 - awful timing - and it's my 2nd biggest position now, but if I had more cash laying around obviously I like this entrance point.

[kab60]

Anyone know if there's a way to find out whether or not Clarke Inc. sold it holdings of Spyglass?

 

Even if they didn't, I don't really get recent price drop from 11.28 (november 23th) to 9.40 today (december 8th) - almost 17 pct.

 

Holloway is at exactly the same level as before the Q3 results while Terravest has dropped 5,5 pct. If they sold their whole Supremex position for 2,7 cnd/share that's is less than 2 percent below the marketprice on september 30th (Q3 end).

 

They also bought back a whole bunch of shares - including an insider buy, Luborsky, Brian Alan Did, who bought 10.000 shares - did I miss anything?

 

 

[doc75]

Anyone know if there's a way to find out whether or not Clarke Inc. sold it holdings of Spyglass?

 

Even if they didn't, I don't really get recent price drop from 11.28 (november 23th) to 9.40 today (december 8th) - almost 17 pct.

 

Holloway is at exactly the same level as before the Q3 results while Terravest has dropped 5,5 pct. If they sold their whole Supremex position for 2,7 cnd/share that's is less than 2 percent below the marketprice on september 30th (Q3 end).

 

They also bought back a whole bunch of shares - including an insider buy, Luborsky, Brian Alan Did, who bought 10.000 shares - did I miss anything?

 

I've been watching their repurchases.  They were buying their 5400 share allotment every day for a while but haven't been doing so for the past few trading sessions as the stock has dipped lower.

 

 

[kab60]

Anyone know if there's a way to find out whether or not Clarke Inc. sold it holdings of Spyglass?

 

Even if they didn't, I don't really get recent price drop from 11.28 (november 23th) to 9.40 today (december 8th) - almost 17 pct.

 

Holloway is at exactly the same level as before the Q3 results while Terravest has dropped 5,5 pct. If they sold their whole Supremex position for 2,7 cnd/share that's is less than 2 percent below the marketprice on september 30th (Q3 end).

 

They also bought back a whole bunch of shares - including an insider buy, Luborsky, Brian Alan Did, who bought 10.000 shares - did I miss anything?

 

I've been watching their repurchases.  They were buying their 5400 share allotment every day for a while but haven't been doing so for the past few trading sessions as the stock has dipped lower.

 

Where do you follow the repurchases day-to-day? TMXMoney? I can only lookup the activities from the last day which seems to confirm what you're saying as there's nothing. :)

 

According to this link they bought back at around 10 cnd on 3rd of december:

https://canadianinsider.com/node/7?menu_tickersearch=CKI+%7C+Clarke

But for all the repurchases listed, even the big ones in november, it says it was filed on december the 4th.