5/10/2010

Clarus (CLRS.PK) announces a deal

“Clarus said it was paying $90 million in cash for Black Diamond and $45 million for Gregory Mountain Products. Half of the Gregory payment will be in stock at $6 a share and the rest in a seven-year, 5-percent note.”

The stock was up today 20% today. I was expecting a higher price from today’s announcement.I need to listen to the conference call for more details.

Today’s direct Insider micro cap value buying was seen with NUTR, AFFX, ATGN.PK, EVOL and SLI.

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i was buying additional NUTR and LUB shares today.

9 comments:

Benjamin said...

I am also curious about your thoughts after listening to the conference call. I have had a small position in CLRS for over a year and thought it would go up more then 20% after a deal was announced. I can't decide whether to hold this. I would love your thoughts after you get more information.

ShadowStock said...

Hi Benjamin

I missed the conference call but there is a 8k transcript of the event. Work has prevented me from reading but will check out tomorrow.

I still own shares but did sell some shares to deploy in other ideas. My position is still relatively significant to my total highly diversified portfolio. At the current price of ~ 5.90 this is not a sell in my opinion.
Kanders comments were expected but they do have some merit with a strong management team ready to go. The listing on a major exchange will also help with the price as other institutions may take a stake in the new company. This deal is not a slam dunk and disappointing for me based based on total revenues of ~ 113 million for the combine companies.

Gregory was owned and sold to CLRS by Kanders.

The stock is a hold for me at these prices and dont expect the stock to drop.

Thanks
John

ShadowStock said...

Kanders' comments

We set a high bar for the companies we considered, and I am very pleased to report that the new platform Company created through these transactions meets all of the criteria which guided our analysis throughout this process:
• An industry-leading management team with a leading market position,
• An established company with a history of strong operating and financial results and substantial free cash flow generation,
• Organic growth opportunities with favorable macro trends underlying the business,
• Significant domestic revenue coupled with broad geographic reach,
• Solid market barriers to entry, and
• Viable opportunities for targeted acquisitions and industry consolidation

Anonymous said...

I tried making some headway into LUB's last 10K. Can only describe it as brutal. A few items : $31 million of non-canceable op leases - in my world this is LT debt; same store sales have declined 11 quarters in a row; they took a $5.1 million valuation allowance charge against deferred tax benefits, basically seems they don't think they will generate the business to take advantage of it, at least in 2010. They expect to incur another $4 to 4.6 million related to store closings in 2010; and they may elect to close another 5 to 10 stores in 2010. And their share count seems to be increasing, I get something like one cent reduction to per share BV for every 70K shares issued. Also seem they've got liquidity problems with respect to their LT investments in municipal bonds. Something about auction rate securities which I didn't understand. Their prototype restaurant model was scrapped. All that said, I think they are trading around 72% of BV. Need to look at their 10Q see how they are doing compared to expectations set forth in 10K. -W

Anonymous said...

I tried making some headway into LUB's last 10K. Can only describe it as brutal. A few items : $31 million of non-canceable op leases - in my world this is LT debt; same store sales have declined 11 quarters in a row; they took a $5.1 million valuation allowance charge against deferred tax benefits, basically seems they don't think they will generate the business to take advantage of it, at least in 2010. They expect to incur another $4 to 4.6 million related to store closings in 2010; and they may elect to close another 5 to 10 stores in 2010. And their share count seems to be increasing, I get something like one cent reduction to per share BV for every 70K shares issued. Also seems they've got liquidity problems with respect to their LT investments in municipal bonds. Something about auction rate securities which I didn't understand. Their prototype restaurant model was scrapped. The one word that comes to mind for me is retrenchment. All that said, I think they are trading around 72% of BV. Need to look at their latest 10Q see how they are doing compared to expectations set forth in 10K. -W

Anonymous said...

Forgot to mention one positive in last 10K. LUB management said they expect to generate $20-$30 million from the sale of properties related to the 20 or store closings. Checking their latest 10Q they seem to be progressing on this plan having generated $5.7 million of cash flow from such closings. They also noted that the auction rate securities market continues to fail but they did manage to sell one bond at a 12% discount for $1.4 million, earning about $50K interest. They also booked a gain through P&L from these bonds. -W

Stephen said...

I bought into CLRS two months ago at 4.80 and am happy to sell out now at $6. I cant see this stock being cheap at this price. EV is about $154m here and while we dont have much detail on acquisitions, dont see $154m as cheap price on $113m in sales

ThomasCapital said...

Can you re-discuss LUB, I'm curious what you see now in May at $4.00 compared to when the stock traded at $3.50 in Feb. when you first took a look.

Thanks.

ShadowStock said...

LUB is not my near my strongest conviction but in a volatile market the stock could prove an outperformer.It’s a small part of my highly diversified portfolio.

Hidden value with a real estate portfolio recorded on the balance sheet at historical cost. This should provide a margin of safety as the real estate could prove valuable for other restaurants if they decide to monetize. Book value is 5.65 even with Real Estate recorded below fair value.
Operating results are improving based on the most recent quarter.
Its ugly but the price is reasonable in this market. Up ~ 26% from the date of the listing on 02/04/10.

Good Luck
John