Rimage Corporation (Public, NASDAQ:RIMG)

Web Site
Google Finance
SEC Filing

Nov 25, 2011
Check list:
1.Major Business.
Optical disk distribution equipment.

2.Balance sheet.
Recent Price $11, Tangible book value: should be no more than $10 after Qumu acquisition. Share outstanding: 10.45m after Qumu acquisition. Market Cap: $105m.
Current asset, Current liability, No Debt, Inventory low, Cash: should be around $70m after Qumu acquisition.

3.Credit facility.
Not important

4.Financial data by years.
Revenue, Earning, FCF, FCF-WC, Dividend.
Optional: FCF-WC, SG&A, R&D.
Revenue/Price ratio.
Dividend policy

	2011	2010	2009	2008	2007	2006	2005	2004	2003	2002
Revenue		89	83	91	109
OP Income		11.5	11.3	11.8	20.9
Income		7.7	8.5	9.4	15.8
FCF		7.5	13.8	7.9	25
Cash		117	110	95	94
Dividend	0.47*	0	0	0	0

*Dividend will be $0.17 a quarter in the near future.

5.Cost structure
No much leasing obligation. Seems pretty flexible.

6.Insider holding, options, Insider trading info, share buy back.
CEO own very few shares.
Royce own quite a lot shares

7.Management compensation.
A reasonable management compensation. Compare dividend with compensation.

8.Employee numbers. Revenue/Employee. Compensation/Employee.
189 at end of 2010.

9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?

10.Auditor
Better be among the big four.

11.Major events.
Oct. 2011, acquired Qumu Inc for $52m($39m cash + 1m share). All the cash probably will go to the goodwill.

12.Comments.
(1)Revenue on optical equipment side is constantly down. The gross margin is still good. With low inventory, No Debt. The business itself is very well managed.

(2)The Qumu acquisition is kind of uncertain. Need to wait a year to see how it will turn out.

PetMed Express, Inc. (Public, NASDAQ:PETS)

Web Site
Google Finance
SEC Filing

Year end at Mar.31
Oct. 31, 2011
2012 Q2 Data
Check list:
1.Major Business.
US Pet medications.Total pet medication is estimated at $3.8B which veterinarians take the majority of the market. PETS has revenue around $200m.

OTC: 60% with lower margin. Prescription: 40% with higher margin.
Online:
Q1, Q2 Summer season is around 30% in sales each quarter. Q3, Q4 windows season 20% in sales each quarter.

2.Balance sheet.
Recent Price: $10. Tangible book value: $3.80, Share outstanding: 20m, Market Cap:$200m.
Current asset:: $81.5m, Current liability:$8.7m, Debt: 0, Inventory:$19m, Cash:$72m.
Current ratio >= 8.

3.Credit facility.
not important

4.Financial data by years.

	2013	2012	2011	2010	2009	2008	2007	2006	2005	2004	2003	2002
Revenue	228	238	232	238	219	188	162	137	108	94	55	32
Income	17.1	16.7	20.9	26	22	20	14.4	12	8	5.8	3.3	0.8
CF-WC	20.0	20.3	24.8	28.6	25.8
CAPx	0.6	0.7	0.7	1.0	3.7
Cash	33.6	57.1	72	65.5	44.5	50	39.5	23	12.5	3.3	1.0	0.7
Dividend	1.6	0.525	0.475	0.30

5.Cost structure
68% of the sales are from website.

6.Insider holding, options, Insider trading info, share buy back.
Menderes Akdag: CEO 520k 2%

7.Management compensation.
Menderes Akdag(CEO): $776k, except 2010 at $3.5m. The rest are $0.5 to $1m a year.

Bruce S. Rosenbloom(CFO): $482k

8.Employee numbers. Revenue/Employee. Compensation/Employee.
204 employees at 2011.  Most are for customer care and order fulfilment.

9.Industry comparison.
Prescription pets drugs. registered list here: link
PetCareRx.com: similar price
Centerpetpharmacy.com: similar price
kvsupply.com: Even cheaper than petmeds.
NationalPetMeds.com: redirect to Petmeds.com

OTC drugs, including:

Petsmart: pretty expensive. Doesn't seems to offer online prescription.
Wag.com(Amazon): the same cheap price.
EntirelyPets.com: Similar price
PetShed.com: similar price

10.Auditor
Better be among the big four.

11.Major events.
Business acquisition, law suit etc.

12.Comments.
1. The company has been able to grow from $10m to over $200m in revenue within several years. However, the growing era had passed. Now if it can maintain current sales level, it is still a good business.

2. The business margin is keep going down as both online and offline competition is tougher, for example Amazon launches wag.com while Walmart and other store start selling pets medication as well.

3. The prescription drug is its core business. It seems to be competitive and still growing.

4. Since the management owns quite a few shares. They should be more interested in buy back shares than distribute dividend.

5. Overall, this is a very good managed business and current price seems cheap. (P/E: 10). However, The current income or FCF doesn't means much for this company. It is reasonable to expect that the profit margin will continue to be down. Currently 10% is too high, thus the current price is still not cheap enough. 

Updated June. 10, 2013

1.Quality Score: 7.

2.FCF-WC for past 5 years average is $22.5m/year. Share based compensation is about $1.9m/year.  Base price = 20.6/20*15=$15.4.

Kirkland's, Inc. (Public, NASDAQ:KIRK)

Google Finance
SEC Filing
Web Site

Aug 16, 2011
Check list:
1.Major Business.
Sale home decors, gifts. 294 stores across U.S at end of Q2 2011. Found by Carl Kirkland(and others maybe) at 1966 and IPO at 2002.
Q1 to Q3 sales almost flat. Q4 50% higher.

2.Balance sheet.
Recent Price:$8.61, Tangible book value:$6.15, Share outstanding:19.9m, Market Cap:$172m.
Current asset:$145m, Current liability:$41m, Debt:0, Inventory:$45m, Cash:$90m.
Current ratio >3.

3.Credit facility.
$50m with BAC to 2016.  around LIBOR+2%. No covenants. Current no amount outstanding.

4.Financial data by years.

	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001
Revenue	415	406	391	396	443	415	394	369	342	307
Stores	300	279	299	335	349	347	320	280	249	233
Income/s	1.28	1.71	0.47	(1.33)	(0.01)	0.01	0.34	0.92	0.70	(0.60)
FCF	14.1	40	30.6	(19.6)	10	(4.0)	0.3	13.1	10.3	32.8
Cash	91.2	76.4	36.4	5.8	25.4	15.0	17.9	17.4	4.2	29.7
Debt									0*	58

*Used IPO to paid off all debt and preferred stock.
Revenue/Price > 2:1
Never paid any dividend.

5.Cost structure
Leasing obligations: Around $40m per year.

6.Insider holding, options, Insider trading info, share buy back.
Robert Alderson(CEO): 810k(4%)(include 350k options)
Carl Kirkland(founder):1.5m(7.5%).  there is also 1m (5%) share for his family.
Royce and other 3 funds: 4.6m(20%).

1.8m options outstanding. Average exercise price $9.78

Issued share buy back of $50m at Aug 2011 for the next 18 month. Around 30% of current market cap.

7.Management compensation.
2010 top 3  $3.5m

8.Employee numbers. Revenue/Employee. Compensation/Employee.
around 3948 employees at Mar. 2011. Around $100k sales per employee.

9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?

10.Auditor
Ernst & Young LLP.

11.Major events.
Business acquisition, law suit etc.

12.Comments.
Concerns and thoughts.

Bank of America Warrants( BAC.WS.A BAC.WS.B)

Aug. 08, 2011

http://ca.finance.yahoo.com/q?s=BAC-WTA

http://ca.finance.yahoo.com/q?s=BAC-WTB


BAC: shares: 10B. Tangible book value: $12.9 at June. 2011


1. BAC WS A: Current price below $3.

150m shares(1.5%), Strike price $13.30. Expire: Jan 16, 2019. Strike price will be adjusted when dividend > 0.01. When auctioned at Mar 3, 2010, it has a minimum bid of $7 and final auctioned price is $8.35. Chou bought at least 4.2m share for over $7.5/share.



2. BAC.WS.B: Current price $0.7.

Strike price will be adjusted when dividend > 0.32.

121.8m shares(1.2%), Strike price $30.79. Expire: Oct. 28, 2018. When auctioned at Mar 3, 2010, it has a minimum bid of $1.5. And final auctioned price is $2.35.

Urbana Corporation (Public, TSE:URB.A)

Google Finance
SEDAR Filing

Web site

Aug. 05, 2011
Recent Data
Check list:
1.Major Business.
Investing, mainly on stock exchange company and some private exchange. Generally it can be viewed as a close end fund.

2.Balance sheet.
Recent Price: $1.01 - $1.05.
NAV at Aug, 5 2011 is $1.72.
Share outstanding: 10m common share + 67m A share. 5.3m warrants at $2.5 will expire at Nov. 2011.
Market Cap: $81m
Debt: $14m

Current major positions:
(1)1.8m NYSE Euronext (NYSE:NYX) around 40% of total book value. Current price $28.55. Current dividend $1.2/share.
At Apr. 2011 Nasdaq OMX Group offer to buy NYX at $42.50 per share. However, it is abandoned for antitrust concerns.

(2)1.68m CBOE holdings (NASDAQ:CBOE) around 26% of total book value. Current price $22.56.
Current dividend $0.48/share.

Note: This two holding together has a market value of $89.3m value which is already over URB's market cap $81m. Dividend of this two stock is around $3m a year.

(3)Setup CIHI at 2007 and Bought 308,888 Bombay stock exchange share(private company). Cost $43.5m. At 2010, it go for 13 for 1 split and come to 4m shares. URB owns 58.54% of CIHI. At 2010 setup UMI and bough 791k of BSE. In total URB owns 3.142m of BSE. BSE has total around 103.4m shares.  George Soros also bought 4m share of BSE at 2010 for Rs380/share.

	Shares	Price(1)	%NAV	EPS(2)	dividend/s	book
NYX	1.8m	27.5	37.65%	1.98	1.2	<0
CBOE	1.68m	22.37	28.39%	1.14	0.48	1.10
BSE	3.14m	6.60	15.67%	0.41(3)	0.09(3)	4.55(3)

(1)Price used to calculate NAV at Aug. 5 by the fund.

(2)Based on average on past 3 years. 

(3)based on 1 Indian rupee = 0.022051 U.S. dollars



3.Credit facility.
BMO $15m, primary +2.75. $14M outstanding at July 29, 2011

4.Financial data by years.

	Aug 2011	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001
NAV	1.81	1.83	2.00	2.05	3.37	2.69	1.26	0.71
Price(A)	1.1	1.23	1.48	1.35	5.15	3.00*
shares	77	81.1	87.5	77.1	78.1	10.0	9.0	9.0

*Common share price, since no A share before 2006 yet.
Never paid any dividend.

5.Cost structure
N/A

6.Insider holding, options, Insider trading info, share buy back.
Thomas Caldwell(CCO): 48% of common share.
Brenden Caldwell(CEO): 10% of common share
2009: bought back 1.3m share at 1.28
2010: bought back 3.0m share at 1.32
2011 May 31: bought back 5m share: 1.23.
2011 July 29: It says 67m A share which is 2.5m less than in annual report number. Indicated that it has repurchased 2.5m share during this two month.
Mar. 2011, Thomas bought 1m common share from private holder for $1.44/share.

7.Management compensation.
It pays 1.5%(stock) and 0.5%(bond) management fee to Caldwell mutual fund. $10k for each director.

8.Employee numbers. Revenue/Employee. Compensation/Employee.
N/A

9.Industry comparison.
N/A

10.Auditor
Deloitte & Touche LLP

11.Major events.
(1)Jan 2007: First IPO, 18.5m share.at $3.10
(2)July 2007: Second IPO, 25.4m share at $3.10
(3)Nov. 2009: Third IPO: 10.5m share at $1.90.

12.Comments.
(1) The class A share has a take over protection which if an offer is made to common share. Class A share can be converted to common share.
(2) Theoretically we can short 180 share of NYX for $5139 and short 168 share of CBOE for $3790. At the same time use CAD$8085 buy 7700 share of URB.  Then we will have $844 profit and have the rest of URB's holdings for free. However, there are some limitations:

  1) Each time URB change the holding of NYX and CBOE. Or repurchased its own shares. We need to re-balance the hedge position.

  2) It might take a very long time for URB's price to back to normal, during this period, we might get a margin call if the short position raise in price a lot while URB stays low.

  3) The holdings is traded in US$ while URB is traded in CAD$.  Also commission cost could be quite a lot.

(3) The current price of 3 major holding are fairly priced. CBOE and BSE showed very solid grows during the past 3 to 4 years. If we use 10 times PE to calc the three stock prices($19.8, $11.4, $4.1), we can get $1.20 NAV value. Even we cut the 3 major holding price in half, we can get $1.02 NAV value.  The downturn risk of those 3 stocks are well protected.

links:
http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/64175


Apr. 15, 2017
Current Price: $3.30
The company's 2nd largest private holding which is the BSE had IPO'd Feb. 2017. The current price of BSE is around 1000 rupee which make it just close to the company's cost.

The biggest private holding is Real Matters already filed draft IPO document Apr. 10, 2017 without price given. Real Matters currently has 150m shares outstanding and 165m shares diluted. URB holds about 6.27m RM shares and is around 4.2% of total. Currently it is recorded at CAD$5.25/share in URB's book. The price should be the last round RM private placement price. Base on this price, the total RM is valued at 150*5.25=$787m or 165*5.25=$866m the most. It is quite less that the $1B reported by media previously.

Urbana's investment in RM:

Dec.20, 2013: 3.75m x $1.20 = $4.5m.

May 01, 2015: 1.25m x $2.30 = $2.875m. Total 5m shares. Cost: $7.375m. Value: $11.5m

Sept. 18, 2015: 280k x $2.50 = $700k. Total 5.28m shares. Cost: $8.075m. Value: $13.2m.

Apr. 01, 2016: 619911x$4.00= $2.479.744. Total 5,899,911 shares. Cost: $10,554,744. Value: $23,599,644.

Nov. 01, 2016: 309520*$5.25= $1.624.980.  Total: 6,209,431 shares Cost: $12,179,624. Value: $32,599,513.

Jan. 13, 2017: 61991*$0= $0.  Total: 6,271,422 shares Cost: $12,179,624. Value: $32,924,966.
(note: this is 1.5m shares (1%) given out by the corp of not being able to go public by 2016).

Paulson Capital Corp. (Public, NASDAQ:PLCC)

Google Finance
EDGAR Filing

Aug 03 2011
2011 Q1 Data
Check list:
1.Major Business.
Founded by Chester Paulson at 1971. Main business is securities brokerage and corporation finance for small business.
Brokerage commission: very stable around $15-$20m.
Corporation finance: around $3-$6m a year when stable.
Investing: very unstable.


2.Balance sheet.
Recent Price: $1.10, Tangible book value: $2.96, Share outstanding: 5.77m, Market Cap:$6.34m.
Total asset: $19.5m, Current liability: $2.4m, Debt: $0, Cash: $0.3m.
Most asset are current asset.

3.Credit facility.
not important

4.Financial data by years.

	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001	Ave
Commissions	15.2	13.5	14.4	17	15.7	16.5	18.3	16.6	7.6	7.6
Corp Finance	3.0	0.5	0.4	6	5	3.3	11.2	6.8	0.1	6	4
Invest+Trade	(1.3)	0.9	(23)	4.6	(7.7)	18.8	3.4	4.6	(6.8)	11.7	0.5
OP Income*	0.4	(3.8)	(3)	3.1	0.4	(5.4)	2.5	1.5	(0.2)	(4.7)	(0.9)
Income/s	(0.21)	(0.41)	(2.86)	0.78	(0.79)	1.35	0.55	0.65	(1.12)	1.08	(0.08)
Book	3.00	3.20	3.54	6.33	5.63	6.35	5.27	4.75	4.11	5.12
Top 3**	680k	560k	720k	1.2m	1.2m	4.1m	1.6m	1m	290k	740k
Cash

*No include Investment and trading.
**Compensation for top 3 executive.

5.Cost structure
The commission income and commission expense seems very related. Some of its employees are mainly commission based and  more contractors. It seems the cost structure are pretty flexible

6.Insider holding, options, Insider trading info, share buy back.
Paulson family: >40%.

7.Management compensation.
Ref above.

8.Employee numbers. Revenue/Employee. Compensation/Employee.
65 at end of 2010. 27 of it are mainly commission based.
plus 68 commission based contractor.

9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?

10.Auditor
McGladrey & Pullen, LLP. Big form, seems OK.

11.Major events.
(1) March 2006: 2 for 1 split. .

12.Comments.
(1)The commission income and expense seems related. Most expense are commission related.
(2)For the past 10 years, the investment income close to zero. However, the first 5 years is noticeably better. The latest recession had a big effect on this. I view this is not permanent.
(3)The compensation for executives are very high at some years and low at some other years. Seems a lots of commission involved.
(4)Since the book value is much higher than current price. If we can expect the company will not lose too much and can make a profit in the long run, it is worth buying.

Arrhythmia Research Technology, Inc. (Public, AMEX:HRT)

Google Finance
EDGAR Filing

July, 20, 2011
2010 Data
Check list:
1.Major Business.
Founded at 1982. It is known for ART 1200EPX  device which is a signal-averaged electrocardiography device (SAECG), However, its main revenue is from other stuff.
(1) Sensor used in ECG device. around 50% of revenue
(2) Subassembly and medal component for defense industry. 30% of revenue.
Divisions:
(1)Micron Products: Sensors.
(2)Micron Integrated Technologies(MIT) : Medal and plastic product.

U.S. 50%, Canada 30%. Europe: 10%. U.S sales declined while Asia sales grow very well.
Top 3 customers account for over 50% of sales.

2.Balance sheet.
Recent Price: $4.34, Tangible book value: $5.54, Share outstanding: 2.79m, Market Cap:$12m.
Current asset: $10.4m, Current liability: $1.7m, Debt: $0, Inventory: $3.1m, Cash: $2.4m.
Current ratio > 5.

3.Credit facility.
Not important

4.Financial data by years.
Revenue, Earning, FCF, FCF-WC, Dividend.
Optional: FCF-WC, SG&A, R&D.
Revenue/Price ratio.
Dividend policy

	2011	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001
Revenue	24.3	23.4	21.1	22.5	19.5	19.3	12.9	11.1	7.7	7.2	7.2
OP Income	(1.4)	0.6	0.6	0.6	1.8	3.2	2.4	2.4	1.6	0.9	0.3
Income/s	(0.48)	0.19	0.14	0.13	0.47	0.80	0.59	0.60	0.48	0.26	0.07
FCF	(2.8)	0.6	2	0.9	(0.4)	0	0.5	(0.1)	0.9	0.6	1.4
Cash	1.4	4	3.7	2.3	1.7	2.1	1.9	1.8	2.1	1.8	1.9
Debt	0	0	0	0.6	0.7	0.2	0	0	0	0	0
Dividend	0.12	0.12	0	0	0	0.06	0.12	0.11	0.05	0	0

5.Cost structure
Leasing obligations. Flexible cost structure or fixed cost structure? Cost controls.

6.Insider holding, options, Insider trading info, share buy back.
Russell Chambers seems the founder. At 1990, he is no more chairman of the board
At 1994, He owns around 340k shares, around 9%.
At 2000, He owns around 488k shares, around 16%.
At 2005, He convert shares to Chamber Medical Foundation: 351k, around 13%.
At 2010. Chambers Medical Foundation owns 276k, around 10%.
Julius Tabin: Director since 1982. 124k, 4.4%
Jason Chambers(son of Russel): 67k. 2.4%.

7.Management compensation.
James E. Rouse, CEO since 2002. $270k at 2010. $230k at 2009.

8.Employee numbers. Revenue/Employee. Compensation/Employee.
at end of 2011: 116 full time + 16 part time.
at end of 2010: 107  full time + 9 part time. 200k revenue per employee.

9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?

10.Auditor
CCR LLP. (Carlin, Charron & Rosen LLP) $30m revenue. Seems OK.

11.Major events.
(1) 2006 create MIT

12.Comments.
(1) Over the past 10 years, the sales has been tripled. Even compared with pre 2000 $10m annual revenue, it  is more than doubled.
(2) Income comparable to 2000 recession. Kind of low for current price.
(3) FCF wasn't changed that much in 10 years. Major reason is CAPX spending for grows.
(4) Book value is over current price.

Updated Apr 30, 2012:
(1) Book value: $5.02, recent price $3.06.
(2) The major reason for 2011 lose is the wirelessDx expansion. Expense increased over $1.7m.

Canlan Ice Sports Corp. (Public, TSE:ICE)

Google Finance
SEDAR Filing

July 05,  2011
2010 Data
Check list:
1.Major Business.
A BC based company which operates 22 ice sport center with 64 ice surfaces mainly for hockey and skating program. 18 in Canad, 4 in US. Company entered ice sports at 1986. IPO at 1990.
around 70% revenue is from ice sports.  include ASHL league: 35% of revenue. Third party contract around 20%. Food and Beverage around 20%.
Ontario 50%. BC: 25%.
Q1 and Q4 20% higher than Q2 and Q3.

2.Balance sheet.
Recent Price: $1.90, Tangible book value: $3.49:, Share outstanding:13,3m, Market Cap: $25m.
Current asset:$14.5m Current liability:$19.8m, Debt: $44.4m, Inventory: $1m, Cash: $8.9m.
Current ratio <1.

3.Credit facility.
(1) $30m 6.79% loan mature at 2018. 20 years term. $27 outstanding. $1.5m payment of principle per year from Sept to Dec.
(2) $20m prime + 1.5% mature at 2014. $17m outstanding. Seems $1.2m payment of principle per year.
Interest expense around $3.5m at 2010.

4.Financial data by years.

	2010	2009	2008	2007	2006	2005	2004	2003	2002	2001
Revenue	69.8	67.2	64.7	62.5	55.2	48.8	46.1	45.0	42.3	39.8
OP Income	5.4	8.0	8.5	6.0	8.7	4.7	4.1	4.1	3.2	0
Income/s	0.05	0.20	0.29	0.05	0.10	0.07	0.15	(0.11)	(0.11)	(0.33)
FCF	3.2	6.2	6.2	4.0	(2.8)*	3.2	3.4	2.5	2.2	(1.2)
Cash	8.9	9.2	7.6	4.6	4.8	1.2	1.2	4.1	4.0	2.5
Debt	44.4	46.6	49.1	50.3	53.2	49.1	47.2	50.8	53.9	55.5

Started at Q4 2010, the company will pay $0.015 dividend per quarter. $0.06 per year.
Revenue is 3 times of market cap.
* 2006 has $12.7m in capital expenditure.

5.Cost structure
Leasing obligations. Flexible cost structure or fixed cost structure? Cost controls.

6.Insider holding, options, Insider trading info, share buy back.
Bartrac Investment: 75% of share. 10m shares.
Frank D. Barker and Geoffrey J. Barker seems the owner of it.

7.Management compensation.
St. Aubin: CEO less than $300k a year.

8.Employee numbers. Revenue/Employee. Compensation/Employee.
963 at 2010. 4 facilities use unionized worker.

9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?

10.Auditor
KPMG LLP

11.Major events.
(1) Grant Ballantyne retire at end of 2008 as CEO.

12.Comments.
(1) Current ratio is quite low. However, there is $11m among current liability which is differed income and customer deposit. So it is not likely to be a problem.
(2) FCF seems good since 2004. Average income still a little bit low.
(3) It seems quite leveraged with quite a lot of debt. However, with its real estate value and positive cash flow. It doesn't seems be a problem.
(4)Trading volume seems really low. Maybe hard to buy and sell.

Supremex Inc (Public, TSE:SXP)

Google Finance
SEDAR Filing

May 03, 2011
June,19, 2012, updated
Check list:
1.Major Business.
Founded at 1977. Mail envelop manufacture. 10 factories across Canada. Over 50% share of Canada envelop market. IPO at 2006 as income fund. Converted to Corp at Jan 2011.
Transactional mail: 50%. Direct mail: 20%. (this might not be accurate since it never changed in its report over years.).
Over 90% from Canada, 7% from U.S.
March to July sales lower.

2.Balance sheet.
Recent Price: $2.36, Tangible book value: -28.6m, Share outstanding: 29.3m, Market Cap:$69m.
Current assets: $38m, Current liability:$36.5m, Debt:$69m, Inventory:$12m, Cash:$0.
June, 19, 2012: 
Recent Price: $1.62. Book value: -35m*. Shares: 29.3m. Market Cap: $47.5m, 
Current assets: $33m, Current liabilty: $25m. Debt: $53m.  Inventory: $13m. Cash: $1.6m
*:there is a increase of $12m in pension obligation due to accounting policy change. 

3.Credit facility.
(1) $35m revolving, $4.3m outstanding. Interest around 5%
(2) $65.6m term, all outstanding. Interest around 5%.
Both mature at 2012.

4.Financial data by years.
Revenue/Price ratio:2.2:1
Dividend policy: current dividend is $0.12/share.

	2011	2010	2009	2008	2007	2006	2005	2004	2003
Revenue	144	153	166	182	187	196	191	194	198
Volume(1)	4.6	4.8	4.83	5.05	5.12	5.16	5.12
Volume(2)	5.2	5.5	5.45	6.14	6.07	5.79	5.40
SXP Volume	5.3?	5.3	5.8	6.6	7.2	7.6	7.5
SXP%	55%?	55.8%	56.4%	59%	64%	69%	71%
FCF	15	29.8	32.4	40.7	37.2	37.8
Acquisition	-4	-1.9	0.3	-13.4	-25.4	n/a	n/a
Devidend	-2.9	-4.7	-18.9	-33.8	-36	-24
Debt	54	69	92	111	101	75	0
Employees	600	650	650	750	780	750	750

(1)Canada Post Transaction Mail Volume, in billions
(2)Canada Post Admail Volume, in billions
(3)Based on Transaction Mail decreased by -4.2% and Admail decreased by -10.9% as reported by Canada post.

5.Cost structure
Leasing obligations:$9.2m.

6.Insider holding, options, Insider trading info, share buy back.
Gilles Cyr(CEO): 415k.
George Armoyan: (Director): 7.7m,  Sime Armoyan: 3.3m. Total the family owns 38% of common shares.

7.Management compensation.
Top4: 2011: 1.9m. 2010: 1.3m. 2009: 1.0m.

8.Employee numbers. Revenue/Employee. Compensation/Employee.
650 employees. 230k revenue/employee.  27 unionized. plus LaSalle facility worker similar to unionized.

9.Industry comparison.
(1) National Envelope:  US Private company. $600m in sales. At June 10, 2010, it filed for bankruptcy. At Sept. 2011, Gores Group acquired it by $150m.

(2) Cenveo(CVO:NYSE): $2b annual sales. At 1995 Cenveo acquired SXP. Sold it at 2006 by IPO. SXP has non-solicitation agreement with Cenveo which expired at Apr. 2008. This seems had significant affect of SXP's revenue.

10.Auditor
Ernst & Young

11.Major events.
Aug. 2007:  acquire NPG Envelope for $25.6m. It has annual sales of $26m with 150 employees.
Sept. 2008: acquired Montreal Envelop for $13.2m. It has annual sales of $13.0m with 85 employees.
Jan. 2011: Converted to corporation from income fund.
Jan. 2011, To adopt IFRS from Canada GAAP, there might be decrease of $8m to $11m in equity.

12.Comments.
(1) From 2006 to 2010, despite two acquisitions, its envelop volume decreased by 30%. Its market share dropped around 15% from peak time. If considering the acquisition, the market share might dropped over 30%. Cenveo might have a big effect on its sales since 2008.
(2)Balance sheet looked not good. No tangible book value. Debt too high. Current ratio too low.
(3) Its free cash flow remained strong and very attractive.
(4) Over the past 6 years, it has paid $117m in dividend ($4/share).
(5) At Q4 2010, its sales in U.S. jumped by over 50%. Although is small in numbers,.
(6) Although it is the No. 1 player in Canada. It has no brand value, small price change could cause lost on market share.

Coast Wholesale Appliances (Public, TSE:CWA)

Google Finance

Apr. 11, 2011
2010 data
Check list:

1.Major Business.
Whole sale of home appliance, mainly electronics. Founded at 1978.  16 retail stores. 3 warehouses. Mainly at western Canada and for new house construction. IPO at June 2005 with 6.5m shares and $10 per share.
Seasonality: first quarter and fourth quarter a little slower. around 23%.
Revenue lag behind house permit around 6 - 18 months.
Sectors:
Retail: 50%(estimate)
Builder: 50%(estimate)

2.Balance sheet.
Recent Price: $4.50, Tangible book value: $0, Shares: 10.03m, Market Cap: $45m.
Current asset: $36.5m, Current liability:$24.3m, Debt: $18m, Inventory:$23.4m. $700k in showrooms

3.Credit facility.

1. $13m term loan should be repaid in 10 years from 2011-2020 with $1.3m per year. Interest rate is around 4.5% currently.
2. $20m revolving loan. $5m outstanding. Interest rate is the same as term loan.

4.Financial data by years. 

	2010	2009	2008	2007	2006	2005*	Ave
Revenue	135	144	147	143	126	67
OP Income	5.6	6.9	9.0	10.8	10.3	6.3	9.2
Income/s	0.56	0.69	0.90	1.08	1.03	0.63	0.92
FCF	9.1	16.4	12.1	9.8	9.6	2.4	10.3
FCF-WC	7.1	8.3	10.5	11.5	11.5	6.8	9.3
Dividend	5.8	5.8	12.7	12.1	12	4.5	9.6
Debt	18	22	23.5	23.5	20	20
Cash	1.8	2.4	0	0	0	0

*2005 data is only for June 23 to Dec.31.
Current year dividend is $0.035 per month. $0.42 per year.
Dividend pay out policy is around 50%.
Revenue/Price is around 4:1.

5.Cost structure

Leasing obligations: $3.5m to $4m a year.
Flexible cost structure or fixed cost structure? Cost controls.

6.Insider holding, options, Insider trading info, share buy back.
Harlow B. Burrows: Interim CEO. Founder. 100k + up to 35% by CWAL investment Ltd.
Gordon ChristoÅ and Randy Ryzak: founder of CWAL, seems retired after 2005. Don't know how much they own ???


7.Management compensation. 
2010 Top5: $1.6m. 2009 Top 4: $1.3m

8.Employee numbers. Revenue/Employee. Compensation/Employee.
266 people as of March 31, 2011. Most are sales person

9.Industry comparison.
Sears, Home depot etc.

10.Auditor
Deloitte & Touche LLP


11.Major events.
1. At Jan. 2009, bought Morley’s Appliance Centre for $5.25m, thus opened first store in GTA.
2. Blain Lawson served as CEO from 2007 and to end of 2010.

3. Aug. 2011, Maurice E. Paquette now is the new CEO. It says he is one of the founder and the original CEO.

12.Comments.
1. From 2005 to 2010, cash improved by $3.8m. after paid $52.6m in dividend and spent $5.3m in acquisition.
2. Current ratio is just about 1.5. No tangible book value.
3. Revenue tied to real estate development. However, decreased less than 10% in 2010 compare to house starts in west Canada decreased 40% in 2009. This might caused by new store opened in GTA.
http://www40.statcan.ca/l01/cst01/manuf05-eng.htm
4. It converted from an income fund which never paid any tax during the past six years. Since 2011, it will pay up to 25% in tax at 2011.
5. 5-years rental contract expired. Now rental have increased.
6. Currently still looking for a new CEO.
7. Higher Canadian dollar should benefit the business a lit bit.

Sept. 20, 2011
Sold all positions. Two main reasons
1. It is kind of a test for me at the beginning which I want to try something new: ignore book value. However, it turns out that I didn't feel comfortable when the price drop a lot. Just likes the SCHS. It seems this kind of test is unnecessary. I guess just need to stick with the old tricks.
2. Its revenue is declining on whole sale side while Canada real estate is still hot. Not that good.

The Goldfield Corporation (Public, AMEX:GV)

http://www.google.com/finance?q=AMEX:GV

http://www.goldfieldcorp.com/

Mar. 18, 2011
Q3 2011 data
Check list:

1.Major Business.
Southeast Power: Electronic line construction, Optic cable installation. Customer concentrated, top3 count over 50%.usually first 2 quarter higher, last 2 lower.
Baywater development: Real Estate, built 5 condo's so far. The latest pineapple one has 33 units. Sold 4 in first 3Q 2010.  4 units left as Sept. 2010. Bought 2 new inventory during first 2Q 2010, sold one at Q3.

2.Price, Tangible book value, Share outstanding, Market Cap. 
Current price $0.36. Book value: $0.56. Shares: 25.45m. Market Cap:$9.2m

3.Current asset, Current liability, Debt, Debt maturity and interest, Inventory, Cash.
Current asset: $11.1m . Current liability: $4.1m. Total debt: $4.5m.  Inventory: $1.3m(5 units of RE). Cash $1.9m.

4. Credit facilities:
Working Capital loan: $3.0m. Outstanding $0.5m. LIBOR+1.8%. Set at 2005 at $1.0m. Mar. 2006, changed to $3.0m.
Mortgage: $0.5m. $0.5m outstanding:$0.5m.Set at 2002 at $6m. including 1.5m for working capital use. At 2005, changed to 6m not include working capital use. 2007 changed to $14m. 2009 changed to $3m.
Equipment loan: $3.8m. Outstanding: $3.5m. LIBOR+2.5%. It was set at 2004 and initial principle is $2.6m. 2005 changed to $2.0m. 2008 changed to $3.5m. 2009 changed to $3.8m. Feb. 2011, the principle increased to $6.9m.

4.Revenue, Earning, FCF, Dividend, Dividend policy, R&D, Revenue/Price ratio.
                       3Q2010    2009      2008      2007      2006        2005      2004       2003     2002    Ave
Elect Rev.        23.2m      27.8m    29.1m    26.8m     36.4m      28.8m     28.8m     26.5m    16m
RE Rev           1.4m        1.5m      2.4m       0.5m       11.1m      10.6m     3.9m       6.5m      6m

Elect Income   1.3m       (0.1m)     1.2m      0.5m       4.7m         3.2m      0.9m       1.7m      1.7m

RE   Income    0.2m       0            (4.0m)    (1.4m)      2.8m        3.3m      0.7m       1.2m      1.2m
Corp Exp       (1.9m)     (2.3m)    (2.6m)    (2.6m)     (2.9m)      (2.6m)    (2.4m)    (2.5m)    (2.7m)    
Income/S       (0.02)      (0.08)     (0.21)     (0.09)      0.12         0.09      (0.01)      0.01       0.02
FCF               (1.6m)     0             3.5m       0             1.1m        (8.0)      1.0m        (4.0m)    3.0m
Elect FCF*    1.8m**   (0.7m)    3.1m       0.1m        4.4m        3.8m      (1.8m)      0.2m      1.9m              

*only added depreciation and deduct capital expenditure from income. 

** based on a $2.0m in depreciation and estimate $1.5m in capital expenditure.

Not paying dividend since 1933. 

Revenue is around 3 times of market cap. 

5.SG&A, R&D expense.
Ref above Corp Exp.

6.Insider holding, options, Insider trading info, share buy back.
                                Q1 2010       Q1 2006   Q1 2005   Q1 2001  Q1 2000
John Scottile(CEO): 1.6m(6.4%)   1.3m(5%) 1.0m(4%)  913k        661k
Al Marino                0.9m              0.9m      
All directors:            3.2m(12.4%)
He bought 230k at end of 1999 at around $0.30 level. Exercised 250k options at Q1 2001
Bought back 2.3m share since 2002 to Dec. 2009. at $0.55 per share.

7.Management compensation. 
2009: CEO: 0.5m   Top 3: 1m

8.Employee numbers. Revenue/Employee. Compensation/Employee.
125(107 hour-rate) around 250k revenue per employee.

9.Industry comparison.
Major competitors in the same industry. Whether the business is competitive?

10.Auditor
KPMG

11.Major events.
2008: Write down $3.1m of its pineapple condo inventory

12.Comments.
(1) The average cash generated by electronic segment is not enough to cover corporation cost. It seems very sensitive to revenue level.
(2) The equipment loan increase from $3.8m to $6.9m is very unusual. It is likely a big project is going on. However, there is no release which is strange.
(3)The Real estate segment can be assumed to be not lose in future.
(4)After 10 years of operation, except the $3.1m wrote down, the company's equity down from $18.3m to $14.3m. Shares from 26.9m to 25.5m. So generally the past 10 years didn't made any money at all even excluding the wrote down.
(5)From no debt at Dec. 2000 to Debt $4.5m at Sept .2010.

Nokia Corporation (ADR) (Public, NYSE:NOK)

all in EUR:

Check list:

1.Major Business.

(1)Mobile device: 70%. 1) Mobile phone: 50% 2) Smart Phone and tablets: 50%

(2)Telecom Network Equipment:  30% through Nokia-Siemens
(3)NAVTEQ: 2%. Map system

2.Price, Book value, Share outstanding, Market Cap. 

Recent Price 5.87($8.34).  Book: 2.30. Shares: 3.74B. Market Cap: 22.4B

3.Current ratio. Debt/Current Asset ratio. Debt maturity and interest. Inventory level. Cash level.

Current Asset: 27.1B. Current liability: 15.4B. Current ratio: 1.54. Debt: 5.3B   Inventory 2.5B.  Cash: 12.3B. Net cash: 7.0B.

4.Revenue, Earning, Deficit check. FCF, Dividend history, Dividend policy, Revenue/Price ratio. 

                             2010       2009       2008        2007        2006       average
Revenue               42.5        41           50.7         51            41.1
Income                 1.85       1.8           4.0           7.2           4.3
Minority Interest   0.50       0.63         0.10         0.46         0.06
Income/share        0.50       0.48        1.07         1.83         1.05           0.99
FCF                       4.1         2.69         2.18         7.0           3.31           3.86
Dividend/share     0.40       0.40         0.40         0.53         0.43
Net cash:             7.0         3.7           2.4          10.7          8.3
Debt:                   5.3         5.2           4.5          1.1            0.3
Employees           132k      123k        126k        112k        65k
R&D                    5.8         5.9           6.0           5.6            3.9

5.SG&A, R&D expense.

6.Insider holding. Management compensation. Options.
2010 Total compensation for 9 Executive is 5.6m cash + 3.5m stocks, options.
2009 Total compensation for 11 Executive is 6.1m cash + 4.6m  stocks, options.
Insider holds very few shares of the company. Morgan Stanley is the biggest share holder holds around 2.6% at Dec. 2009. 
Options are almost all above current price. 

7. Insider trading info, stock buy back.

From 2005 to 2008 bought back 865m share by 14.7B . Average 17/share.

10.Employee numbers. Revenue/Employee. Compensation/Employee.

Whether employees are unionized, etc. 

11.Industry comparison.

iPhone, Android, cheap china mobile phones.

12.Major events.

1) 2007 Created Nokia Siemens Networks joint venture. 

2) 2008 Acquired NAVTEQ for 5.3B

3) 2010 Stephen Elop Joined Nokia as new CEO. 2011 he decided to use windows phone 7 in Nokia smartphone.

13.Comments.

1)The business is complicated and I don't have a clear picture of the business. There are ton's of data to be read. Also we can't rely much on its past data for the nature of its business. The usefulness of the data are very limited.

2)Pure from past data point, the income, FCF, balance sheet looks good in current price. In fact, the stock does look cheap in those data( P/E < 6 and P/FCF < 10 ).  However, the recent 2 years income are down. If it can keep current revenue and profit, then it is still in an acceptable price range. The dividend is very good as well.


3) It has been able go generate quite a lot cash in recent years. Only at 2008, it spent quite a bit to acquire NAVTEQ.

14. Conclusions

Pure from financial data point of view, it does look cheap to me. However, I probably will not get in with some reasons:

1) I wasn't able to understand the business very well. Although it seems only have pretty simple 3 segments. Financially it is complicated. I only get in those companies that I am capable to understand well.

2) There is much uncertainty ahead. I do not know whether the current price have provided enough margin of safety for those uncertainty. While on smaller companies, some times I can figure it out. 

In a word, if it is a small cap company which I can handle and is more stable, I probably will get in. 

School Specialty, Inc. (Public, NASDAQ:SCHS)

SEC Filing

Year end Apr. 30th.
Feb. 09, 2011
Q2 2011 data.

Check list:
1.Major Business.

Supplier for school preK-12.  Founded at 1959. 1996 acquired by U.S. Office Product. 1998 spin off from U.S. Office Product.

Accelerated Learning Group: Publish preK-12 curriculum, agenda etc. 30% of revenue. Gross margin 55%.
Educational Resources: Classroom and office supplies, learning materials: 45%,  furnitures: 25%. Gross margin 35%.

2.Price, Book value, Share outstanding, Market Cap. 

Current price: 13.37.  Book value: -$4.50. Shares: 18.9m.  Market Cap: $250m.

3.Current ratio. Debt/Current Asset ratio. Debt maturity and interest. Inventory level. Cash level.

Current ratio: 1.7.  Debt: $267m. Current asset: $264m. Inventory: $75m. Cash: $8m


Convertible Notes: 
$200m 3.75% convertible notes due 2026. However, redeemable at Nov 30, 2011, 2016, 2021. It is likely that all or some of them will be redeemed this year. 

Line of credit:

$350m credit + $200 term loan. Interest: Eurodollar +3.75%,  Currently $67 on balance.

Financial covenants:

1. Total Leverage Ratio < 4.5:1

2. Senior Secured Leverage Ratio < 3.5:1

3. Interest coverage ratio > 3.5:1

4. Capital expenditure < $25m + $5m( unused in prior one year)

4.Revenue, Earning, Deficit check. FCF, Dividend history, Dividend policy, Revenue/Price ratio.

                2Q2011  2010   2009   2008   2007   2006   2005   2004   2003   2002   2001   Ave
Revenue 545         897    1047   1088   1043    977     1003    908     870     767     692
Income    32.4       25.8    27.1    34.3     9.9      (2.3)     43       40.8    39.6    21.8    12.1
EPS        1.74       1.37    1.44    1.66     0.44    (0.10)   1.88    1.94    1.94    1.17     0.68   1.24

FCF*       57.5       88.7    53.7    76.8     63.8    51.5     23.1     65.1    51.4    77        80.1   >60
AC**       0             13.5     0         5.8       0         276      20.9     89.2     55.8   162      113    >70
Equity      -85        -188                                        -199                                                      -15
Debt        267        332                                         417                                                      190

shares    18.9       18.9                                         22.9                                                     17.5
*exclude acquisitions  

** Acquisitions.

From year 2001 to year 2006, total FCF $348m for 6 years. total acquisition cost $717m.  Debt from $162m(2000) to $417m, increased by $255m. Share increased by 5m( maybe include 2-3m options)

From year 2006 to year 2010, debt decreased by $85m, share repurchase from 2007 to 2010 are $186m.

No dividends. 

5.SG&A, R&D expense. Cost structure.

According to Q2 2011 conference. 2/3 of SG&A are fixed and 1/3 are variable. .

6.Insider holding. Management compensation. Options. 

David Vander Zanden(CEO): 371k(include 271k options exercisable)
Jonathan Ledeky(None Exec. Director): 542k.  

Compensation:
2010 - 2008: $5.6m, $4.3m, $6.4m
David: $2.0m, $1.8m, $2.6m. However, only $670k cash in salary, rest are stocks and options.
David: 400k options , lowest price $20.
Total options outstanding: $1.6m, ave price $31.
It has a special term that CEO's stock holding should be at least 4 times of his annual salary. Which means his current cash salary should be no more than 371k*$13.37/4=$1.2m.

7. Insider trading info, stock buy back.
No shares bought back in 2010. From 2007 to 2009 bought back 5.4m shares at $186m. Ave Price: $34.4. 2011 still have $34.7m room available for buy back.

10.Employee numbers. Revenue/Employee. Compensation/Employee.
at June 2010: 2007.  Ave $450k revenue per employee.

11.Industry comparison.

Major competitors in the same industry. Whether the business is competitive? 

12.Major events.

Many big acquisitions from 2001 to 2006.  Sales are higher while FCF stay the same.  $276m one in 2006 seems a very bad one.

13.Concerns.

1. From Q2 2011 report, it might not comply with the financial covenant.  "The Company may need to work with its lenders to secure a waiver or amend such ratios in the near future." Overall, I feel they could get a new one if they can't meet the covenant. 

2. The insider holding is low. However, there is special term of stocks must be 4 times of CEO salary term and the options CEO got, it likely will be share buy back than dividend in the future.
3. No tangible book value and no dividend.  
4. Many acquisitions during the past,  However, after 2006, they seems switched to share buy back. The current credit facility limits capital expenditure, But DOES NOT limits acquisitions. 

14.Other research.

http://seekingalpha.com/article/230705-school-specialty-a-high-quality-business-for-the-contrarian-investor?source=qp_article

Feb. 24, 2011

Q3 2011 data

1. Total Debt: $253m.

2. Line of credit changed

(1) $175m credit +$125m term loan. Interest: Eurodollar + 4.5%.  $47.5m outstanding.

(2) Covenant: 

  <1> Total Leverage Ratio < 4.5:1, summer time of 2011 < 6:1. 

  <2> Senior Secured Leverage Ratio < 3.5:1, first half of 2012 < 3.75:1

  <3> Interest coverage ratio > 3.0:1, 2011 to 2012 > 2.5:1, 2.75:1

  <4> Capital expenditure < $25m + $5m( unused in prior one year)

3. Convertible Notes: $100m refinanced, the rest $100m will be redeemed I guess.
  <1> Annual interest around 4% will be accumulated in principal until 2026.
  <2> Convertible at $22.62 per share. No more than 20% of current shares which should be 3.8m
  <3> Holder can redeem at Nov. 2014, 2018, 2022. Company can redeem after May. 2014

Mar. 15, 2011
Bought at $14.29

July 7. 2011
1. CEO will retire 2012.
2. Another $57.5m of the convertible notes were refinanced to the 4% convertible notes mature at 2026. the rest $42.5m still there.

Jan. 18, 2013
Current price $0.63. Close to bankruptcy.
1. Asset based credit (ABL) :
Secured by current asset and second priority on long term assets. Mature at Sept. 2014, may be extend by one year if convertible note is refinanced. At Oct. 31, 2012, $55m outstanding.  Interest 4.65%

2. Term loan credit:
Secured by long term assets and second priority of current assets. Mature at Sept. 2014, may be extend by one year if convertible note is refinanced. At Oct. 31, 2012, $67m outstanding.  Interest 14.5%

3. Convertible Notes
Unsecured 3.75% mature at 2026, however, it can be recalled at Sept. 2014. Conversion price: $22.62 per share. Current balance $161m. Based on a Jan. 10, 2013 filing, Zazove Associates, LLC might hold  $62m of them which could be converted to 2,743,591 shares.

At Dec. 31, 2012, it actually triggered default of ABL and Term loan. However, Jan. 04, 2013, it entered forbearance agreement with ABL and Term loan lender to extent the covenant break until Feb. 01, 2013.
Cash: $8.2m. Inventory: $85m. Receivable: $119m. Long term assets: $60m.

The company is profitable and from my view, it can survive the current forbearance. Then it will be likely have a refinance of its convertible notes some time this year or next year. The notes will transfer to major stack in equity and the current share holder will get minor stack. Currently it is hard to calc the share value until the deal is made.

Nov. 04, 2013
Actually the company goes to bankruptcy at end of Jan. and exit bankruptcy at June. Quite a story there. Mainly the battle between the ABL lender(Bayside) and the Convertible Notes holder.

1. At the end (by Oct. 30th), Bayside got all money back and plus $21m in early payment fee( originally it is $26m). While Convertible Notes holder got almost all of the equity in the new company. Although some of them didn't participate the post bankruptcy financing which got much less.

2. The only loser is the equity holder which got nothing in the new company. I think this is very unfair given the company not necessarily need to go bankrupt.

3. Both CEO and CFO step down and will be replaced by the new owner which is pretty much a normal thing to happen.

4. Currently the company is remain as private with one million shares.

Nov. 21, 2013
Ownership of 1m shares:
BulwarkBay Investment Group LLC : 65,226

J. GOLDMAN MASTER FUND, L.P. : 88,698 

ZAZOVE ASSOCIATES, LLC :313,598 

Scoggin Capital Management II LLC: 18,693 

STEEL EXCEL INC.:75,593 

Wolverine Flagship Fund Trading Limited : 74,489 

Davis Selected Advisers, L.P. :71,383

Davis Appreciation & Income Fund: 69,205

BulwarkBay  and J. GOLDMAN filed S-1 to sale their 402k share for $85 per share.