Google Finance
Filing
Oct 17, 2016
2016 Q2 Data
1.Basic Information
(1) History
Warren Lichtenstein created hedge fund Steel Partners at 1990 at age of 24 and was performing really good until 2008 when the fund has big loses and many withdraw happens. Lichtenstein try to convert the fund to partnership and had a fight with major stack holder(notably Carl Icahn 34%). Finally they settled by withdraw in kind and the rest was converted to SPLP. From 2011 to 2015, the company wasn't performing good but that was only the share price( ave 8%/year). Gradually Lichtenstein take some of the holding private and reduced the complexity of the Corp.
(2) Business
Major Holdings
1) Handy & Harman Ltd 70%
This is its major holdings ant the company it self is a holding company. It consolidated JPS Industries, Inc.(OTC:JPST, tendered at 2015 at $10/share) and SL Industries, Inc. (NYSE:SLI, tendered at 2016 at $40/share) which both are SPLP's major holding before. In the near term, the company might get around 800m annual sales and around $100m EBITDA, compare around $240m market cap and $500m EV. Currently it has around $260m debt and $260m pension obligation. Tangible book value is below zero.
NHN seems a little undervalued based on EV/EBITDA of just 5 times. The company has grew its revenue and combined business quite well. It also utilize some NOLs each year. FCF is above $50m before 2015 but down to $40m at 2015. Still very cheap if based on $40m FCF.
2) WebFinancial Holding Corp(WFH Holdings) 91%
a) WebBank: The company was acquired at 2005 and currently has around $31m net income at 2015 and is recorded on book value of $60m by SPLP.
WebBank seems significantly undervalued at $60m. I use 10 P/E to give it a valuation of $300m, SPLP's 91% share should worth 270m.
b) WFH Holding LLC: Previously called CoSine Communications, converted to WFH shares at $4.40 at Dec. 2015, perviously it consolidated API group. 2015 revenue is $113m. It has be combined with webbank which is to use the NOL tax benefits.
Currently is valued $188m. This includes around $116m future tax benefit. If deducted the tax benefits, it should only worths around $70m.
3) Steel Excel: 64% valued at $80m.
4) Aerojet Rocketdyne: 6.6% valued at $80m.
(3) Management.
Lichtenstein is a deep value active investor who is good at identify troubled business and aggressively turn them around.
MER is 1.5% currently.
(4) Debt and Credit facility.
Currently the company has $75m debt.
(5) Insider holding, options, Insider trading info, share buy back.
Warren G. Lichtenstein: 35%, Jack L. Howard: 15%.
2. Financial data.
(1) As the company's financial consolidated its major positions. So the data is quite hard to read and is not very useful. It is more accurate to treat the company as the sum of all its parts minus debt.
4. Risk
(1)NHN's pension assets $320m, liability $260m. It is quite underfunded and is quite a bit concern. However, any future interest rate increase will give it some release which is pretty likely.
(2)Webbank business is mainly on P2P online lending although it doesn't offer directly and didn't carry the credit risk. However, if the industry changes, or regulation getting tuff, it could lose its main revenue stream.
(3) Lichtenstein is great investor, but his strong personality might get the company in trouble sometime.
5. Conclusion
6.Links
https://www.valueinvestorsclub.com/idea/STEEL_PARTNERS_HOLDINGS_LP/66484#top
http://www.barelkarsan.com/2016/09/stealing-from-steel-partners.html
June 13, 2017.
Current Price: $18.5, Preferred : $22.0
The company finished the acquisition of all shares in steel excel and will acquire rest shares of Handy and Harman. Currently the fair value is expected to be around $32/share.
The company created 6% preferred share for the acquisition of Steel excel and Handy and Harman. The share is 20% redeemable at par at 2020 and will be fully redeemed at 2026. Currently it is yield around 8.45% at price of $22.
https://www.valueinvestorsclub.com/idea/STEEL_PARTNERS_HOLDINGS_LP/66484#top
http://www.barelkarsan.com/2016/09/stealing-from-steel-partners.html
June 13, 2017.
Current Price: $18.5, Preferred : $22.0
The company finished the acquisition of all shares in steel excel and will acquire rest shares of Handy and Harman. Currently the fair value is expected to be around $32/share.
The company created 6% preferred share for the acquisition of Steel excel and Handy and Harman. The share is 20% redeemable at par at 2020 and will be fully redeemed at 2026. Currently it is yield around 8.45% at price of $22.
