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CKI - Clarke Inc.


jm25

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Clarke filed a SEDAR notice on Friday:

 

FORM 45-102F1

Notice of Intention to Distribute Securities under Section 2.8 of NI 45-102

Resale of Securities

 

Reporting issuer

 

1. Name of reporting issuer:

Holloway Lodging Corp.

 

Selling security holder

 

2. Your name:

Clarke Inc.

 

3. The offices or positions you hold in the reporting issuer:

None.

 

4. Are you selling securities as a lender, pledgee, mortgagee or other encumbrancer?

No.

 

5. Number and class of securities of the reporting issuer you beneficially own:

$11,544,000 principal value of 6.25% debentures (HLC.DB)

$6,232,000 principal value of 7.50% debentures (HLC.DB.A)

 

Distribution

 

6. Number and class of securities you propose to sell:

$11,544,000 principal value of 6.25% debentures (HLC.DB)

$6,232,000 principal value of 7.50% debentures (HLC.DB.A)

 

7. Will you sell the securities privately or on an exchange or market? If on an exchange or market, provide the name.

The securities may be sold privately or through the facilities of the Toronto Stock Exchange or similar alternatives.

 

So they are going to distribute the excess cash to the shareholders, but at the same time they are looking to raise $17.8M cash by selling HLC debentures.

 

Any thoughts on this?

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My take on the special dividend is that it is being done at the behest of George and family, simple as that.  Whether he wants to raise cash without selling shares into an illiquid market, or because he's not excited about the investment prowess of his proteges and wants to shrink their capital, or whatever other reason.

 

I also noticed the sale of the HCL debs.  Interestingly, Dustin Haw (investment officer) also recently unloaded a small personal stake.  They've made a pretty good return on these but still strange.

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What matts said.

 

Also what will they do if investment opportunities appear and 85% of the cash is gone? Issue shares under book? Take debt at possibly crappy rates? Isn't the whole point to have money when investment opportunities appear?

 

Would you guys tell Buffett to return BRK cash to you too because he can't bag an elephant today?

 

100% agree, sold out my position today as well.

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I wonder if they are not in the process of winding down CKI.  You look at all the business sales over the last few years and the simplification of the business - it could be setting up for this.

 

The selling of the Holloway Debentures at close to par is another step.

 

Plus Armoyan has GEOSAM for personal investments and it would be otherwise hard for him to get out of CKI.

 

Maybe once we see energy rebound, we see the energy assets sold and the HLC and TVK shares distributed.  The only tricky part then would be getting the value out of the pension assets - I asked them about that a couple years ago and they said there was nothing in the works then, but things change.

 

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  • 3 months later...

I bought back a small chunk today. Stock hardly moved the past few months, but Terravest is up nicely, Canadian energy stocks are doing ok, Clarke received a couple of dividends and bought back quite some shares lately. Nothing spectacular, but I like what management has done so far and I don't think this should be trading at a double-digit discount.

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  • 2 years later...

Rapps buying ~60k shares right? Or am I missing something else.

 

Slightly off-topic, but I absolutely hate the Canada SEDI website. Impossible to use. Can anybody recommend a (preferably free) website to track insider transactions in Canada that's a bit easier to use?

 

And yeah, I still follow Clarke a bit. It's just that book value is now ~$14.50 by my calculations so I don't see much upside. The pension assets should probably be discounted a bit because there are some limitations as to what they can do with them. On top of that I used to model a ~$20m liability for capitalized overhead. Add all that together and I end up pretty much exactly at today's share price. So I don't see much upside - unless you have a strong view on Holloway / Terravest. But in that case you might be better off buying those companies directly.

 

On the other hand, Clarke currently does generate quite a bit of revenue to cover overhead costs so maybe my model is a bit too conservative. Not exactly clear to me what 'provision of services' entails: is this mostly ferry revenue or advisory fees for their financial services? I cannot find a split-out.

 

I like this company, I like what they have been doing, have sensible capital allocation and insider ownership but at current prices I just don't see much upside. Maybe Clarke deserves to trade at a huge premium to book but that's not a thesis I'm comfortable enough with to buy shares. And I have no strong views on Holloway / Terravest either. So it's probably a pass for me now but I'd be happy to hear why I am wrong. Clarke traded at much bigger discounts in the past at times of distress and I'd be happy to load up then.

 

FWIW Holloway will be consolidated from now on as Clarke owns ~51% of shares since the beginning of the year due to Holloway buying back shares.

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Here you go for insider trading:

 

https://www.canadianinsider.com/ and it is free. you can sign up for emails on companies you are interested in to be notified every time there is an insider trade.

 

Clark share price has been appreciating at about 20% or so per year although they paid out the increase in special dividends for a couple of years (2016 & 2017). It has been pretty consistent for the past few years so I’m happy.

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  • 1 month later...

Rode them on the way up early in 2018 and hopped off last summer. Interesting to see what kind of year Holloway and TerraVest have in Western Canada. No doubt a nice special dividend coming if those cash cows produce.

 

Additionally, an investment that should generate a nice return for the group:

 

HALIFAX, April 10, 2019 /CNW/ - Clarke Inc. ("Clarke") (TSX: CKI) is pleased to announce that, together with certain parties with whom it is deemed to be a joint actor, it has acquired ownership of, and control over, 29,444,400 common shares ("Trican Shares") of Trican Well Service Ltd.("Trican"), representing 10% of the outstanding Trican Shares. Under applicable Canadian provincial securities legislation, Clarke is deemed to be a joint actor with its majority shareholder, G2S2 Capital Inc. ("G2S2"), and Clarke Inc. Master Trust ("Clarke MT"), a pension plan administered by Clarke. Each of Clarke, G2S2 and Clarke MT acquired their Trican Shares for investment purposes. Such parties may, from time to time, acquire additional Trican Shares or dispose of some or all of their current or additional Trican Shares. Trican has agreed to nominate Michael Rapps, the President and CEO of Clarke, for election as a director at Trican's2019 annual general meeting. Michael Rapps commented: "Trican is one of the largest oilfield service companies in Western Canada, has among the best balance sheets of any oilfield service company with minimal debt and has a collection of assets and businesses that, in our view, is worth significantly more than the company's current share price implies." Mr. Rapps added: "We commend Trican for taking advantage of the opportunity the market is presenting by repurchasing more than 16% of its shares over the last 18 months and we encourage the company to continue doing so as long as the market undervalues the company. We believe Trican can continue to strengthen its operations and capital structure throughout the current downturn. Together with relief from the perfect storm the Canadian energy is currently facing, these actions should result in significant value creation for all Trican stakeholders."

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  • 3 months later...

Armoyan bought 10%+ stakes in both TCW and BNP. Both are deep value plays in the WCSB oil patch.

 

TCW has almost no debt so will survive and they are buying back shares with excess cash. Pressure pumping business is terrible in Western Canada right now or their only market.

 

BNP is a natural gas weighted producer that has survived for a long time and managed to reduce its debt by a lot over last few years. It has one of the lowest decline rates among its peers. However, latest AECO weakness or give away has hurt them big time and now have going concern warning. New Alberta government is working on a solution with producers for natural gas but, so far nothing.

 

Anyway, thought I would share as these could become multi-baggers if things ever turnaround in Western Canada.

 

Cardboard

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"... if things ever turnaround in Western Canada."

Lordy but it's painful waiting - seems like death by a thousand cuts.

 

I like the way these guys at Clarke operate. They have done quite well over the past couple of years and should have enough experience with Holloway by now to know what they are getting into.

 

The share price performance history can be misleading until you factor in the fact that they had a special dividend of $2.00 in 2016 and another $2.00 again in 2017 - those dividends were about 20% each.

 

Nice bounce back in the share price today in a down market.

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I hate the SEDI site so much.. I can search for G2S2 as much as I want herebut nothing shows up even though it is the 'registered holder'. Am I an idiot? Why can't I open new tabs on that website? Why doesn't the 'back' button work? I just want to do a quick search for G2S2 and see its holdings / transactions over time clearly presented. Impossible. What a piece of crap. If I look at Trican, I see that Armoyan owns three stakes in Trican: one for Clarke, one for the Clarke master trust and one for G2S2. Why aren't these insiders in their own right? I assume the Master trust is the Clarke pension fund and G2S2 is his personal vehicle?

 

Anyway, apart from that rant I wanted to mention that Armoyan also owns a ~15% stake (as far as I can see personally) in Temple Hotels. Perhaps interesting given that Clarke just bought Holloway. Not sure what to think of Armoyan buying stuff in his personal vehicle rather than through Clarke. Seems like a a logical move to try to fold Temple into Holloway or something but that would imply a bit of a conflict of interest.

 

But perhaps I am misunderstanding the SEDI filings.

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Acquire Holloway first, then redevelop the Ottawa site?

 

 

"A hotel across from the Westgate Shopping Centre could be demolished to make way for five new residential buildings, containing 900 units, under a plan endorsed by a city committee this week.

 

Holloway Lodging has already demolished the eight-storey portion of the hotel and is looking to replace the remaining guest rooms and conference centre with a trio of towers facing Carling Avenue ranging in height from 20 to 22 storeys that contain some retail space at ground level. Additionally, the site owner is looking to construct two eight-storey buildings at the rear of the property."

 

https://obj.ca/article/carling-avenue-travelodge-redevelopment-gets-nod-ottawas-planning-committee

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