Monday, May 4
Rand Logistics (RLOG) is a bulk carrier shipping company on the Great Lakes. Construction materials , grain, iron ore, coal,salt, and other products are shipped. They operate a fleet of 16 including the new addition announced on 04/22. This addition is the first new Canadian flagged river class self unloader to be introduced into service on the Great Lakes in over 40 years. Rand’s current fleet count is 16, 10 Canadian flagged and 6 U.S. flagged vessels. “The new vessel is fully booked with long-term contractual business. It’s expected to be the most efficient river class vessel on the Great Lakes. The introduction of this vessel into service is one of the elements of their strategic plan to improve our return on invested capital.”
The CEO spoke in depth on improving ROIC during the recent earning call. A project was implemented to identify, modify or eliminate customer contracts that are yielding an unacceptable return on invested capital. “Formalizing return on invested capital parameters for setting contract terms and pricing; continuing to improve the reliability and operating efficiency metrics to increase the percentage of time our vessels are in revenue-loaded condition. Rationalizing costs; increasing our sales efficiency relating to ship repair, maintenance and capital expenditures; and finally, introducing their newest vessel into service in the second half of 2015.”
Rand Logistics wide moat /barriers to entry are supported by several. The 1920 U.S. Jones act dictates only ships built, crewed and owned by U.S. citizens can operate between U.S. ports. Further the Canada Marine Act requires Canadian commissioned ships to operate between Canadian ports. Jones act legislation creates additional barrier to entry. Additionally, Rand has long term contacts with clients like Cargill, ADM,Kraft food, Morton Salt and others. Customer relationships and focus to expand existing great lake region business creates advantages. Controlling the largest shipping fleet provides economies of scale.
Shipping is a capital intensive industry. It’s expensive to build a ship coupled with related costs adding another advantage over potential future competition. Executive management has deep logistics experience. Executive chairman, Laurence Levey served as chairman of of Detroit and Canada Tunnel Corporation, CEO of High Voltage Engineering Corporation, national logistics services company Ozburn-Hessey, director; Derby Industries LLC, and many other investment banking achievements. Lawrence Levey is a Baker Scholar from Harvard University.
Mean reversion attributes:
Stock's price is near its 5 year low coupled with P/B, P/S all near 5 year low. The high F score of 7 is driven by positive scores for NI, great than PY, hence current ROA positive and versus last year, Cash flow greater than NI, current ratio greater than PY, improvement in gross margins, improved efficiency as measured by the asset turnover versus PY. All these attributes contribute to a F score of 7. The F score was dragged down by a 2 tests, YOY increase in share count, increased leverage measuring Long Term Debt / Average Total Assets increased versus PY.RLOG has a history of poor execution with buybacks at attractive prices. Current F score of 7 is a positive sign. The median F score is 5 over the past 10 years. The only other time RLOG had an F score of 7 was 2012.RLOG had a 2012 high stock or price of 8.79 and low of 5.79. Further, EV/GP is at historically cheap valuations. Current RLOG price is $3.36. Further, 52 price change was -44.10%. Temporary but significant foreign exchange rates challenges over the prior fiscal year. Lastly, anormal Great Lake ice conditions had a negative impact in prior quarterly results.
Summary Financial Statistics:
Price = $3.36
Market Cap: 61.43M , Enterprise Value: 247.90
Price/Sales (ttm): 0.40 , Price/Book (mrq): 1.09
Revenue (ttm): 153.61M , Revenue Per Share (ttm): 8.55
Qtrly Revenue Growth (yoy): -1.70% , Gross Profit (ttm): 45.81M
EBITDA (ttm): 32.12M
Total Cash (mrq): 7.66M , Total Cash Per Share (mrq): 0.43
Total Debt (mrq): 177.40M , Total Debt/Equity (mrq): 249.35
Current Ratio (mrq): 1.53 , Book Value Per Share (mrq): 3.12
Operating Cash Flow (ttm): 21.27M , Levered Free Cash Flow (ttm): -23.34M
52-Week Change: -44.10%
52-Week High (Jun 12, 2014): 6.73 , 52-Week Low (Mar 10, 2015): 2.96
Shares Outstanding: 18.02M , Float: 15.16M
% Held by Insiders: 21.85% , % Held by Institutions: 69.40%
Short % of Float: 3.20%
No position in RLOG. But, I believe the stock will achieve market out performing returns over the next 12 months.
Sunday, April 26
There are many more helpful metrics to consider.
Another "anomaly" I noticed with my small 2 month data set. Combine insider buying and the review ownership, if held by value intuitions your odd may improve. So if it's held by Heartland, Royce, Kennedy Capital, Gabeli, Tenton and others as an example you may have a better chance of outperformance. But when adding to these criteria you should consider relative prior 12 month returns. Consider avoiding stocks that have had relatively large move in its stock price.
That's it for now, more insights and discoveries in future posts.
Daily insider micro cap buying will continue to be shared in the tab labeled.
In conclusion yes buying the day after reported insider purchases for micro cap value as a group appears to generate Alpha short term. But this strategy is not practical. You would have to buy all or at least a random representative sample of the population. So having said that, I would use reported insider purchases as an excellent starting point. Then review industry, size of the purchases to shares in float, title of buyer (Office, Director, 5% owner), number of individual buyers, historical price performance , value ratios, who owns the shares, company size and others.
Monday, April 13
My first approach focuses on company’s officers. CEO, CFO, COO (officers) activity carry more predictive power. Further, published studies show insider activity from smaller companies (micro cap) is more useful in determining the stock’s direction.
These are a few convincing purchases from C-level executives (Officers) from February 25, 2015 to April 10, 2015.
Luby's, Inc. (LUB)
An interesting value attribute of Luby’s, it’s the cheapest of the Restaurant stocks when comparing the acquisition cost (enterprise value) to owned real estate. Luby’s was founded in 1947.
Bargain Status: Real Estate Rich Highly Fixable Opportunity
PHI Inc. (PHII)
Taitron Components Inc. (TAIT)
Gordmans Stores, Inc. (GMAN)
Old post "Cheap and Risky founded 1915: 52 Change -58.40% "
AeroCentury Corp. (ACY)
Other notable insider buying click to view details on google Docs.
Click to view quotes for all notable ideas.
Monday, April 6
Reasons to consider a closer look for longer term investors.
Historical low valuations using EV to sales, EV to GP, EV to non cash assets, P/TB (see table below)
21% of shares outstanding held by insiders.
Institutional ownership from respected value institutions, Royce, Robeco, Perritt and others.
No Wall Street coverage
Mean reversion candidate down -74% prior 52 weeks,
Debt free market leader in land based geophysical services,
Contrarian industry idea with strength to lead industry niche once market improves
No 2015 insider selling
Strategic business combination with TGC Industries, October 2014. TGC has a strong balance sheet, complementary equipment, expanded client base, creates an opportunity for improved utilization rates and overhead reduction.
Sunday, March 29
McCoy has two primary segments, energy products/ services and mobile solutions.
The Energy Products and Services segment includes the Drilling and Completions division, also Coatings / Hydraulics division. Mobile Solutions is the Trailers division. It manufactures heavy haul, forestry and oilfield trailers along with drilling and well servicing chassis.
McCoy has an unique combination of value attributes making it a value outlier. The price trades below its tangible book value, growing YOY sales of 8.40%, growing book value per share since 2009, consistent strong ROIC of 12.62% TTM, multi year low valuation for EV/GP, growing dividend yield TTM = 5.90%, strong balance sheet and free cash flow, solid Z score with a high F score. 52 change in share price was negative -42.31%.
Trailing P/E (ttm): 5.76 , Price/Sales (ttm): 0.80
Price/Book (mrq): 0.93
Enterprise Value/Revenue (ttm): 0.62 , Enterprise Value/EBITDA (ttm): 3.73
Return on Assets (ttm): 7.22% , Return on Equity (ttm): 9.95%
Revenue (ttm): 96.26M , Revenue Per Share (ttm): 3.49
Qtrly Revenue Growth (yoy): 8.40%
52-Week Change: -42.31%
52-Week High (Jul 7, 2014): 6.18 , 52-Week Low (Feb 3, 2015): 2.78
Shares Outstanding:27.69M , Float: 20.70M
Trailing Annual Dividend Yield: 5.90%
Sunday, March 22
Value institutions have maintained or increased their positions. See below; Royce, Heartland,Robeco,TETON Westwood Mighty Mites and other respected value institutions.
CTG = $7.45
Market Cap: 139.67M , Enterprise Value:98.82M
Price/Book (mrq): 1.25 , Enterprise Value/Revenue (ttm): 0.25
Enterprise Value/EBITDA (ttm): 4.84
Revenue (ttm):393.27M , Qtrly Revenue Growth (yoy):-4.40%
Gross Profit (ttm): 79.34M , EBITDA (ttm): 20.43M
Total Cash (mrq): 40.86M , Total Cash Per Share (mrq): 2.18
Current Ratio (mrq): 2.57 , Book Value Per Share (mrq): 5.99
Operating Cash Flow (ttm): 6.71M ,Free Cash Flow (ttm): 7.32M
52-Week Change: -55.60%
52-Week High :17.47 , 52-Week Low : 7.27
Shares Outstanding: 18.75M Float: 13.34M
% Held by Insiders: 32.95% , % Held by Institutions: 58.10%
Trailing Annual Dividend Yield: 3.20%
Sunday, March 15
|2014 Insider Activity|
|Symbol||Year||Month||Type||Title||Price Paid||Shares||Value||Shares Activity / Shares Outstanding|
Sunday, March 8
Five Star Quality Care Inc. (FVE):Price = $3.56
60.22% off 5 year high, and 41.54% off 52 week high, 5 year range 2.15 to 8.95.
Price and valuation are near 2 year low.
IMPROVING valuations such as tangible book value per share, revenue per share, EV to revenue per share.
Own or lease 211 senior living communities