posted
here's another one have been buying a few chunks of lately whenever it dips into the 1.40's, and another email i sent to my dad yesterday, copied and pasted.
anyone have any opinion on this one - littlefield?
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hmm, was reviewing SEC filings early this am and came across this obscure but very interesting sec13D filed by jeffrey minch, CEO of littlefield. My guess is that probably only 25 people in the USA have bothered to read it:
"I intend to acquire in excess of 50% of the issuer’s outstanding common stock in transactions priced at levels I find to be attractive. It is anticipated that such purchases will be open market transactions and I may utilize financing. I may, from time to time, dispose of shares of the issuer."
as near as I can tell, he owns about 35% of the O/S shares now, so another 15% would be about 1.5M more shares he is looking to buy.
I see two positives, and one negative with this. The first positive is: obviously minch knows the company better than anyone else, and he is looking to take a bigger stake. I doubt he'd want to do this if he felt poorly about the company's prospects going forward. Second is: 1.5M is a lot of shares to buy, that is more than a month of normal trading in LTFD. At least short-term, his buying might help provide real price support for LTFD - one would guess he would "buy up dips". Ideally of course, his driving would hopefully drive up the price.
Potential negative: he truly becomes "king" once he gets his 50+% ownership, he can pretty much do whatever he wants with the company and can't be voted down. He could give himself a $500k salary, for example, and try to bleed out all the profits to himself; nobody could stop him. On the other hand, he doesn't have a history of this: his salary has remained basically flat at $180k for the last 3 years, actually went down by $3K over the last 2 years.
LTFD's website http://www.littlefield.com/ is actually pretty interesting and even pretty funny in a few places, their PR's are funny too - very "plain talk" southern and don't pull any punches. They don't sugarcoat or try to spin bad aspects - for example their hospitality division fared poorly last Q, and they came right out and said it in so many words: "Hospitality's performance was consistent with the seasonality of that industry but is still disappointing." most companies would have tried to put some business-speak doubletalk spin on that, I find LTFD's "plain-talk" refreshing. They are similarly amusing and plain when things go well, the last Q minch said: "The results for the quarter were good, very good!".
Right out in their home page they describe their business as boring: "Imagine that … predictable income, logical investment philosophy, consistent strategies, real cash flow. This is not the most cutting edge idea. It may even be a little boring, but it is also predictable, logical, consistent, and profitable." amusing.
they even have a whole separate section naming their philosophy "adventureless capital" and talking about how nonglamorous it is, ie acquiring mom and pop stores cheap:
"The key tenet of Adventure-less Capital™ is building value by acquiring private companies that are profitable and well established and that generate real, verifiable cash flow. These businesses are frequently not glamorous."
pretty funny. I must admit - as a peter lynch disciple, I love boring and nonglamorous and actively seek out boring: one of my favorite type of companies to buy. I particularly like how LTFD "embraces and loves boring", amusing. Get rid of that pesky adventure!
Anyway, stepping back and trying to reevaluate pro/con, I really think LTFD is worth keeping a close eye on, and potentially going in for a larger investment. But - of course would be happy to hear any input, maybe I am missing something. Trying to break it down:
*** PRO
* I'm quite fond of their business model: bingo, gotta love it. Can't get much more boring and almost laughable than - bingo, mom and pop stores, and the like! I also find myself liking minch and his plaintalk, southern, no-nonsense nature.
* their growth, both topline and bottomline, is undeniable - really ramped up nicely over the last few years, 8 consecutive Q's of improved operating earnings - don't find that all that often. This can perhaps best be seen summarized by the company here:
* really quite a stellar last Q, helped by a reduction in legal fees, which hopefully will become more the norm. earned .07 in the 1st Q, in what historically has been a relatively slow Q for them. I think is possible they could do .25+ this year, which would sure put them at a low multiple of earnings, especially for a company with such growth. Growth and value are all you can ask for in a stock, and littlefield seems to me to offer both.
* previously mentioned positive aspects of the CEO looking to take a larger stake
* CEO has publicly stated a few times that he'd like to take LTFD to a larger exchange (most likely AMEX), but - that has to be seen as a long-term goal, I can't imagine it'd happen this year.
*** CON
* has risen a large amount already this year, some people have no doubt made large gains on it and might take profits, LTFD has to convince the market through continued good results that they are worthy of the next leg up
* only an "OK" balance sheet whereas usually I look for pristine - has some relatively minor debt
* previously mentioned negative aspect of minch potentially taking 50%+ control
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posted
vg - good points. float would only be about 4M shares, assuming minch follows his plan to acquire 50% of the o/s.
i believe you are correct as well about minch's salary. i had jotted that his salary was reduced from 183k to 180k back in 2003, but i really it should have read 160k, thanks for pointing that out.
one other con i should note: their goodwill accounting is too large on their balance sheet - i always reject what i consider to be goodwill padding.
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posted
stuck in the low-mid 1.40's, am still hoping this one will have a dip to the 1.30's to take a larger position.
any technicians/chartists out there want to take a guess as to where bottom support might be for LTFD/if i might have any luck waiting for 1.30's?
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posted
nice, i see one of my limit buys in the 1.30's triggered yesterday; up to about half the amount of LTFD i'd like to be holding. we'll see if it dips some more. i'd be surprised, but - who knows, especially with the market being in the toilet the last few days, it might.
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nice numbers, about .03 net income in the month of may alone. despite the disappointing setback on the 1Q numbers, i continue to like their upward trend both top and bottom line.
as usual, minch tosses in a folksy comment:
"These results represent the efforts of a lot of folks and I appreciate all of their hard work. Thank you and well done!"
i still have high hopes for LTFD over the next few years, starting with what i hope will be a good upcoming Q, as today's numbers point towards. have a good-sized position now, would continue to add on any further weakness now.
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posted
am still accumulating chunks of LTFD in the 1.20's, more 1.30+ trades are starting to go through though. now my #4 OTC holding.
i can see why it was knocked down some - they deserved to be penalized for the disappointing charge that took away some of their very good profit last Q. am still a few cents underwater on it after tripling my position on the big dip. but - am willing to hold this one long and take a chance on LTFD, company looks solid and i can't help but like minch. next Q should be quite interesting and telling.
anyone else with any thoughts, pro or con?
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posted
charts show some UTs coming, as I read; tiny buy signal from ADX, but then this one does not seem particularly sensitive to ADX, as shown by the breakout from that long channeling period:
posted
thank you for your thoughts tex, interesting charts. being a "90% fundamentals guy", i'm always particularly interested in hearing from those more technically oriented and skilled than myself!
one other mild con i see re: LTFD - after minch's sc-13 filed on 4/25 stating his intent to acquire more than 50% of the o/s, i see no new S4's filed at edgar online since then. a little surprising - i was buying on their sharp dip to $1, seems like would have been an ideal opportunity for minch to load up.
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posted
ok...the "report" is this has a gap to fill...back in June...
Needs to maintain close above 1.32; else, likely to fill that gap around 1.15 (buying opp?), which would "free" it to climb into "free-trading range" without "baggage" of an unfilled gap... In a hard fall? likely bounce off 1.10... which is fine, re the gap.
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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"Troy Zinn has resigned as Chief Financial Officer effective immediately. He will continue to be available for continuity purposes through the end of August 2006."
fell all the way to $1 on the PR, before slowy rising back to 1.19 close today. hard to interpret this: not a good sign to have your CFO resign without much in the way of explanation, but - perhaps he found a more lucrative or otherwise better opportunity. really no way to tell. i added a little on the dip but am proceeding with a little more caution due to the PR, it adds a bit more trepidation.
on a more positive note, nice to see an insider buy earlier this week:
i believe next Q results for LTFD are due in about a month: mid-august.
in a tangentially related note, i had a limit buy trigger for EZEN today, have watched it for awhile. after the bell: this PR noting that they canned their accountant:
tangentially related in that: maybe is nothing, maybe is significant; much like LTFD's CFO resigning. just no way to know, though is interesting that EZEN has been dipping more than i'd think would be likely lately. does someone have some insider info and dumped? dunno.
EZEN is typical of the companies i always try to search out: nice solid balance sheet with good cash and no debt, slowly but nicely rising top and bottom line both Y-over-Y and Q-over-Q:
looks cheap to me. despite the bit of uncertainty with the beancounter-departures, i'm going to keep holding both of these companies. we'll see how it goes.
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still reading, is a lengthy PR and i haven't even gotten to the Q on edgar online yet, but - looks quite good at first glance. 9th straight Q of improved earnings, don't find that too often on the OTC.
from today's PR:
"Earnings per share for the quarter increased from $0.0553 to $0.0561. Stripped of the noteworthy, non-cash and non-recurring expenses identified above, earnings per share for Q2-2006 increased from ($0.0074), a loss, to $0.0632.
Earnings per share for the YTD 2006 increased to $0.1069 from $0.0701 in 2005 -- an increase of 52%."
still holding, now my third biggest OTC holding actually
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