Boole Microcap Fund - Page 15 of 18 - Quantitative Deep Value Investing

“Delta Apparel, Inc., along with its operating subsidiaries…is a vertically-integrated, international apparel company that designs, manufactures, sources, and markets a diverse portfolio of core activewear and lifestyle apparel products. The Company is a market leader in the direct-to-garment digital print and fulfillment industry, bringing DTG2Go technology and innovation to the supply chain of its customers. The Company specializes in selling casual and athletic products through a variety of distribution channels and tiers, including outdoor and sporting goods retailers, independent and specialty stores, better department stores and mid-tier retailers, mass merchants and e-retailers, the U.S. military, and through its business-to-business e-commerce sites. The Company’s products are also made available direct-to-consumer on its websites…as well as through its branded retail stores.”

DLA has a market cap of $102 million, with net debt of $141 million and an enterprise value of $243 million. (The company has $14.5 million in cash.)

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Delta Apparel:

- EV/EBITDA = 4.41
- P/E = 7.38
- P/B = 0.76
- P/CF = 1.85
- P/S = 0.28

(Normalized EBITDA is approximately $55 million, while normalized earnings is about $2.00 per share.)

Step Two

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company. For more on the Piostroski F-Score, see my blog post here: https://boolefund.com/piotroski-f-score/

DLA has a Piotroski F-Score of 5. (The best score possible is 9, while the worst score is 0.) This is mediocre, but not bad.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). DLA has TL/TA of 67%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At DLA, insider ownership is approximately 10%. This is good.

Shareholder yield is the dividend yield plus the buyback yield. At Delta Apparel, dividend yield is zero. The buyback yield is also zero. Thus, shareholder yield is zero.

Each component of the ranking has a different weight. The overall combined ranking of Delta Apparel places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

The final step is to study the company’s financial statements, presentations, and quarterly conference calls to (i) check for non-recurring items, hidden liabilities, and bad accounting; (ii) estimate intrinsic value–how much the business is worth–using scenarios for low, mid, and high cases.

The company’s latest 10-K for the year ended October 3, 2020: https://ir.deltaapparelinc.com/all-sec-filings/content/0001437749-20-024322/0001437749-20-024322.pdf

Finally, check out the following: https://valueinvestorsclub.com/idea/DELTA_APPAREL_INC/3235701808

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: EBITDA may be $40 million on the low end. DLA is probably worth at least 6x EV/EBITDA. That translates to $14.38 a share, which is 2.5% lower than today’s $14.75.
- Mid case: Normalized EBITDA is approximately $55 million. DLA is likely worth at least 6x EV/EBITDA. That translates to $39.86 per share, 170% higher than today’s $14.75.
- High case: Normalized EBITDA is at least $55 million. DLA may easily be worth 8x EV/EBITDA. That translates to $63.81, which is over 300% higher than today’s $14.75.

BOOLE MICROCAP FUND

An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/

This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approachesintrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.

AdvanSix, Inc. (ASIX)

(Image: Zen Buddha Silence, by Marilyn Barbone)

August 30, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Universal Technical Institute (UTI): https://boolefund.com/universal-technical-institute-uti/

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at AdvanSix, Inc. (ASIX). AdvanSix is a leading manufacturer of Nylon 6, a polymer resin used to produce engineered plastics, fibers, filaments, and films. These products are used in a wide range of applications, including automotive, food and industrial packaging, carpeting, wire and cable, building and construction, and sports apparel. (AdvanSix is also an integrated manufacturer of caprolactam, ammonium sulfate fertilizers, phenol, acetone, and more.) ASIX has a market cap of $389 million, with $73 million in cash and $509 million in debt.

Note: AdvanSix is the low-cost producer of Nylon 6.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for AdvanSix:

- EV/EBITDA = 6.71
- P/E = 8.46
- P/B = 0.87
- P/CF = 11.04
- P/S = 0.42

Step Two

ASIX has a Piotroski F-Score of 6. (The best score possible is 9, while the worst score is 0.) This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). ASIX has TL/TA of 67%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At ASIX, insider ownership is approximately 1%. This is low.

Shareholder yield is the dividend yield plus the buyback yield. At AdvanSix, dividend yield is zero. The buyback yield is 3%. Thus, shareholder yield is 3%.

Each component of the ranking has a different weight. The overall combined ranking of AdvanSix places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

The company’s investor presentation from June 9, 2020 can be downloaded here: https://investors.advansix.com/~/media/Files/A/AdvanSix-IR/reports-and-presentations/stifel-virtual-cross-sector-insight-conference-presentation.pdf

Also see: https://valueinvestorsclub.com/idea/AdvanSix_Inc./4161299349

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: The company may be worth book value of $15.01. That’s 8% higher than today’s $13.87.
- Mid case: Normalized EBITDA is approximately $250 million. ASIX is likely worth at least 8x EV/EBITDA. That translates to $55.81 per share, over 300% higher than today’s $13.87.
- High case: Normalized EBITDA may be $300 million. ASIX may be worth 10x EV/EBITDA. That’s $91.49 per share, about 560% higher than today’s $13.87.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Universal Technical Institute (UTI)

(Image: Zen Buddha Silence, by Marilyn Barbone)

August 16, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Burnham Holdings Inc (BURCA): https://boolefund.com/burnham-holdings-inc-burca/

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Universal Technical Institute (UTI). The company is the nation’s leading provider of technical training for automotive, diesel, collision repair, motorcycle, and marine technicians. UTI has a market cap of $266 million, with $92 million in cash and $147 million in debt.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Universal Technical Institute:

- EV/EBITDA = 4.28
- P/E = 8.86
- P/B = 1.55
- P/CF = 3.54
- P/S = 0.73

(These figures are based on normalized EBITDA of $75 million and normalized earnings of $30 million.)

Step Two

UTI has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). UTI has TL/TA of 59%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At UTI, insider ownership is approximately 17%.

Shareholder yield is the dividend yield plus the buyback yield. At Universal Technical Institute, dividend yield is zero. Also, buyback yield is usually zero. Thus, shareholder yield is usually zero. (Some preferred shares were converted to common shares recently. That’s a one-time event.)

Each component of the ranking has a different weight. The overall combined ranking of Universal Technical Institute places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

The company’s investor presentation from August, 2020 can be downloaded here by clicking on Q4 FY2020 Investor Presentation (near the bottom of the page): https://investor.uti.edu/

Also see: https://valueinvestorsclub.com/idea/UNIVERSAL_TECHNICAL_INST/3858201884#description

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: EBITDA may only be $50 million. Fair value for EV/EBITDA is probably at least 9x. That translates to a share price of $12.10, which is over 45% higher than today’s $8.15.
- Mid case: Normalized EBITDA is approximately $75 million. UTI is likely worth at least 9x EV/EBITDA. That translates to $19 per share, over 130% higher than today’s $8.15.
- High case: UTI may be worth 12x EV/EBITDA. That’s $25.90, which is over 215% higher than today’s $8.15.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Burnham Holdings Inc (BURCA)

(Image: Zen Buddha Silence, by Marilyn Barbone)

August 2, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Select Interior Concepts (SIC): https://boolefund.com/select-interior-concepts-sic/

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Burnham Holdings Inc. (BURCA). The company is a market leader in the design, manufacture, and sale of boilers and related HVAC products and accessories used in a wide range of residential, commercial, and industrial applications. BURCA has a market cap of $46.5 million, with $5.4 million in cash and $15 million in debt.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Burnham Holdings:

- EV/EBITDA = 5.04
- P/E = 7.96
- P/B = 0.56
- P/CF = 4.74
- P/S = 0.24

Step Two

BURCA has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Burnham Holdings has TL/TA of 41%, which is good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At BURCA, insider ownership is approximately 11%.

Shareholder yield is the dividend yield plus the buyback yield. At Burnham Holdings, dividend yield is 8.6% and buyback yield is usually zero, so shareholder yield is 8.6%.

Each component of the ranking has a different weight. The overall combined ranking of Burnham Holdings places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

Here is the company’s investor presentation from April, 2020: https://www.burnhamholdings.com/wp-content/uploads/2020/04/2020-SH-Presentation-Version-to-post-on-website.pdf

BURCA has paid a dividend for 75 consecutive years. Also, the company’s boilers are an essential business because people need to heat their homes.

Also see: https://valueinvestorsclub.com/idea/BURNHAM_HOLDINGS_INC/6768678962

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: Book value per share is $18.09. BURCA could be worth 50% of book value, or $9.05 a share. That’s 11.4% lower than today’s $10.21.
- Mid case: BURCA is likely worth at least book value. That’s $18.09, or 77% higher than today’s $10.21.
- High case: BURCA may be worth 1.5 times book value. That’s $27.14, which is 165% higher than today’s $10.21.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Select Interior Concepts (SIC)

(Image: Zen Buddha Silence, by Marilyn Barbone)

July 19, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Manitowoc (MTW): https://boolefund.com/manitowoc-mtw/

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look Select Interior Concepts, Inc. (SIC). Select Interior Concepts is a leading provider of interior surface products for residential and commercial builders. The company has two subsidiaries: Residential Design Services (“RDS”) and Architectural Surfaces Group (“ASG”). Select Interior Concepts offers a broad range of design-oriented products across flooring, countertops, cabinets, and other highly desirable and customizable high end interior products. SIC has a market cap of $107 million, with $37 million in cash and $211 million in debt.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Select Interior Concepts:

- EV/EBITDA = 5.40
- P/E = 15.30
- P/B = 0.68
- P/CF = 3.78
- P/S = 0.18

Step Two

SIC has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Select Interior Concepts has TL/TA of 65%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Select Interior Concepts, insider ownership is approximately 2%.

Shareholder yield is the dividend yield plus the buyback yield. At SIC, dividend yield is zero and buyback yield is about 1.4%, so shareholder yield is 1.4%.

Each component of the ranking has a different weight. The overall combined ranking of Select Interior Concepts places it in the top 10 stocks on our screen, or the top 0.4% of the more than two thousand companies we ranked.

Step Four

Here is the company’s investor presentation from December, 2020: https://ir.selectinteriorconcepts.com/static-files/34061be2-eecf-4793-982e-2ee3bdb1bcd2

Note that Select Interior Concepts has a new CEO, Bill Varner, as of June, 2020. Previously, Varner was CEO of United Subcontractors, Inc. (USI), a leading provider of insulation installation and distribution services to the residential and commercial construction markets. Prior to USI, Varner served as President and CEO of Aquilex Corporation, a leading provider of specialty services to the energy sector.

Select Interior Concepts has never missed a closing, and 90% of their business is repeat. Moreover, with its asset light business model and with variable costs, the company has been able to position itself well to weather the downturn caused by the coronavirus.

Also see: https://valueinvestorsclub.com/idea/SELECT_INTERIOR_CONCEPTS_INC/3197088490

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: Book value per share is $6.20. SIC could be worth 50% of book value, or $3.10 a share. That’s 26.5% lower than today’s $4.22.
- Mid case: SIC is likely worth at least 1.5x book value. That’s $9.30, or 120% higher than today’s $4.22.
- High case: Normalized EBITDA is roughly $60 million. SIC is probably worth an EV/EBITDA of at least 9x. That would mean the stock is worth $14.46, which is over 240% higher than today’s $4.22.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Manitowoc (MTW)

(Image: Zen Buddha Silence, by Marilyn Barbone)

July 12, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Ciner Resources LP (CINR): https://boolefund.com/ciner-resources-lp-cinr/

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look The Manitowoc Company, Inc. (MTW). Manitowoc has been producing cranes for nearly 100 years. MTW has a market cap of $351 million, with $104 million in cash and $347 million in debt. (The company has no significant debt due until 2026.) The current stock price is $10.17.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Manitowoc:

- EV/EBITDA = 4.16
- P/E = 5.40
- P/B = 0.56
- P/CF = 2.59
- P/S = 0.20

(These figures reflect the trailing twelve months of results. Revenues, earnings, and cash flows will be down this year due to the impact of the coronavirus, but should reach even higher levels in a few years.)

Step Two

MTW has a Piotroski F-Score of 8. (The best score possible is 9, while the worst score is 0.) This is very good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Manitowoc has TL/TA of 61%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Manitowoc, insider ownership is approximately 2.2%.

Shareholder yield is the dividend yield plus the buyback yield. At MTW, dividend yield is zero and buyback yield is about 4%, so shareholder yield is 4%. This is good. (Note: The company has suspended its buybacks for now in order to conserve cash to manage through the coronavirus.)

Each component of the ranking has a different weight. The overall combined ranking of Manitowoc places it in the top 10 stocks on our screen, or the top 0.4% of the more than two thousand companies we ranked.

Step Four

Here is the company’s third quarter 2020 presentation from November, 2020: https://s21.q4cdn.com/264200883/files/doc_presentations/2020/11/05/Q3-2020-MTW-Earnings-Call-Presentation_Nov-5-2020.pdf

CEO Barry Pennypacker and his associates have significantly improved Manitowoc’s operations. They have meaningfully improved margins. They have upgraded the product portfolio. They have reduced costs. And they have increased operating efficiencies. Moreover, Pennypacker has a track record of significantly improving operations, which he did when he was at Gardner Denver. See: https://www.valueinvestorsclub.com/idea/MANITOWOC_CO/6436441136#description

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: Book value per share is $17.87. Manitowoc could be worth 50% of book value, or $8.94 a share. That’s 12.1% lower than today’s $10.17.
- Mid case: Normalized EBITDA is approximately $230 million. Manitowoc is likely worth an EV/EBITDA of at least 6x. That would mean the stock is worth roughly $33.82, which is over 230% higher than today’s $10.17.
- High case: Normalized EBITDA may be $345 million. Manitowoc is probably worth an EV/EBITDA of at least 6x. That would mean the stock is worth $53.82, which is about 430% higher than today’s $10.17.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Ciner Resources LP (CINR)

(Image: Zen Buddha Silence, by Marilyn Barbone)

June 28, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Global Ship Lease (GSL): https://boolefund.com/global-ship-lease-gsl/

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Ciner Resources LP (CINR). Ciner Resources is structured as a fixed-distribution master limited partnership. Ciner is one of the largest and lowest cost producers of soda ash in the world. CINR has a market cap of $255 million, with $51 million in cash and $178 million in debt. The current stock price is $12.90. The current dividend yield is 10.54%.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Ciner Resources LP:

- EV/EBITDA = 4.73
- P/E = 9.07
- P/B = 1.49
- P/CF = 3.41
- P/S = 0.80

(These figures reflect Ciner Resources’s 51% ownership stake in its soda ash business. Also, the ratio’s are based on normalized numbers–using a 30% increase in production, which will happen in the next couple of years.)

Step Two

CINR has a Piotroski F-Score of 8. (The best score possible is 9, while the worst score is 0.) This is very good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Ciner Resources has TL/TA of 45%, which is good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Ciner Resources, insider ownership is approximately 25.5%. This is good.

Shareholder yield is the dividend yield plus the buyback yield. At CINR, dividend yield is 10.54% and buyback yield is zero, so shareholder yield is 10.54%. This is very good.

Each component of the ranking has a different weight. The overall combined ranking of Ciner Resources places it in the top 30 stocks on our screen, or the top 1.2% of the more than two thousand companies we ranked.

Step Four

Here is the company’s investor presentation from November, 2020: https://www.ciner.us.com/wp-content/uploads/2020/11/Investor-Presentation-Q3-2020.pdf

Ciner Resources has a structural cost advantage because it is a natural soda ash producer (from trona) rather than a synthetic soda ash producer. Ciner’s costs are about 50 percent lower than those of many international competitors.

Moreover, Ciner recently reduced its cash distribution by 40%. Its current cash distribution is $1.36 per share annually. That’s a yield of 10.54%. The company is using the extra cash to boost its production by 30% over the next couple of years. After production has been boosted, Ciner Resources will increase its cash distribution to roughly $2.60 per share annually. Assuming an 8-9% dividend yield, the stock would be worth $29 to $32.50. See: https://www.valueinvestorsclub.com/idea/CINER_RESOURCES_LP/1895980459

(To access the link to valueinvestorsclub.com, you may have to create a guest membership, which is free.)

Intrinsic value scenarios:

- Low case: Even if prices were to drop, Ciner Resources could likely pay over $1.00 per share in annual dividends. In this case, the stock would be worth $10. That’s 22.5% lower than today’s $12.90.
- Mid case: Ciner Resources is likely worth at least a dividend yield of 9% based on a dividend of $2.60 per share annually. That would mean the stock is worth roughly $29, which is 125% higher than today’s $12.90.
- High case: Ciner Resources may end up paying $4.00 in annual dividends. Assuming a dividend yield of 8%, the stock would be worth $50, which is over 285% higher than today’s $12.90.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Global Ship Lease (GSL)

(Image: Zen Buddha Silence, by Marilyn Barbone)

June 21, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Alico, Inc. (ALCO): https://boolefund.com/alico-inc-alco/

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Global Ship Lease (GSL). Global Ship Lease is a containership lessor. GSL has a market cap of $81 million, with $87 million in cash and $850 million in debt. (No debt is due until late-2022. Roughly half is due in 2024 and 2025.) The current stock price is $4.62.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Global Ship Lease:

- EV/EBITDA = 5.28
- P/E = 1.93
- P/B = 0.20
- P/CF = 0.81
- P/S = 0.29

Step Two

GSL has a Piotroski F-Score of 6. (The best score possible is 9, while the worst score is 0.) This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Global Ship Lease has TL/TA of 69%, which is OK.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Global Ship Lease, insider ownership is approximately 35.7%. This is good.

Shareholder yield is the dividend yield plus the buyback yield. At GSL, dividend yield is zero and buyback yield is zero, so shareholder yield is zero.

Each component of the ranking has a different weight. The overall combined ranking of Global Ship Lease places it in the top 10 stocks on our screen, or the top 0.4% of the more than two thousand companies we ranked.

Step Four

Here is the company’s investor presentation from November, 2020: https://www.globalshiplease.com/static-files/5a012a2c-bd35-4882-95f4-fccd60690399

Global Ship Lease focuses on mid-sized and smaller containerships, which service the majority of global trade routes. The company has $696 million in contracted revenue and a TEU-weighted average remaining charter term of 2.3 years.

Intrinsic value scenarios:

- Low case: Global Ship Lease may be worth 10% of book value. Book value is $23.10 a share, so 10% of that is $2.31 a share. That’s 50% lower than today’s $4.62.
- Mid case: Global Ship Lease is likely worth at least book value of $23.10 a share. That’s 400% higher than today’s $4.62.
- High case: Global Ship Lease may be worth 150% of book value. That’s $34.65, which is 650% higher than today’s $4.62.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Alico, Inc. (ALCO)

(Image: Zen Buddha Silence, by Marilyn Barbone)

June 14, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Genco Shipping (GNK): https://boolefund.com/genco-shipping-gnk/

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Alico, Inc. (ALCO). Alico is one of Florida’s largest citrus growers, with over 45,000 prime citrus acres. Alico is the lowest-cost citrus producer in Florida. The company has an additional 65,000 acres of land, 25,000 acres of which is being marketed for sale. Alico has a market cap of $226 million, with $220 million of debt and $80 million of cash. The current stock price is $30.13.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Alico:

- EV/EBITDA = 6.90
- P/E = 6.30
- P/B = 0.52
- P/CF = 3.10
- P/S = 1.95

P/B is based on liquidation value. The company itself has estimated liquidation value at $49 to $69 per share. The midpoint is $59. See slide 5 in Alico’s most recent investor presentation: https://tinyurl.com/y5jjy7mr

Step Two

Alico has a Piotroski F-Score of 7. (The best score possible is 9, while the worst score is 0.) This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Alico has TL/TA of 57%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Alico, insider ownership is approximately 15.3%. This is pretty good.

Shareholder yield is the dividend yield plus the buyback yield. At Alico, dividend yield is about 1%. Buyback yield is negligible, so shareholder yield is about 1%.

Each component of the ranking has a different weight. The overall combined ranking of Alico places it in the top 20 stocks on our screen, or the top 0.8% of the more than two thousand companies we ranked.

Step Four

Here is the company’s investor presentation from January, 2021: https://tinyurl.com/y5jjy7mr

Intrinsic value scenarios:

- Low case: Alico may be worth 50% of liquidation value of $59 a share. That’s $29.50, which is 2% lower than today’s $30.13.
- Mid case: Alico is likely worth at least liquidation value of $59 a share. That’s 95% higher than today’s $30.13.
- High case: Not only has Alico made itself the lowest-cost citrus producer; but it has also increased its plantings over the past several years, which will increase their annual harvest. Normalized earnings are about $40 million. At a P/E of 18, Alico would be worth $96.13 a share. That’s about 220% higher than today’s $30.13.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]

Genco Shipping (GNK)

(Image: Zen Buddha Silence, by Marilyn Barbone)

June 7, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

SEACOR Marine (SMHI): https://boolefund.com/seacor-marine-smhi/

Tidewater (TDW): https://boolefund.com/tidewater-tdw/

TravelCenters of America (TA): https://boolefund.com/travelcenters-america-ta/

Teekay Tankers (TNK): https://boolefund.com/teekay-tankers-tnk/

Ranger Energy Services (RNGR): https://boolefund.com/ranger-energy-services-rngr/

Macro Enterprises (Canada: MCR.V): https://boolefund.com/macro-enterprises-mcr-v/

This week, we are going to look at Genco Shipping (GNK). Genco Shipping is a leading provider of international seaborne drybulk transportation services. The company has a market cap of $290 million.

Step One

First we screen for cheapness based on five metrics. Here are the numbers for Genco Shipping:

- EV/EBITDA = 4.60
- P/E = 6.52
- P/B = 0.34
- P/CF = 2.07
- P/S = 0.70

(Normalized EBITDA is about $140 million, while normalized earnings is approximately $45 million.)

Step Two

Genco Shipping has a Piotroski F-Score of 6. (The best score possible is 9, while the worst score is 0.) This is decent.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA). Genco Shipping has TL/TA of 38.4%, which is pretty good.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders. At Genco Shipping, insider ownership is approximately 1%. This is low.

Shareholder yield is the dividend yield plus the buyback yield. The company has not bought back shares, but the dividend yield is 1.2%. So the shareholder yield is 1.2%.

Each component of the ranking has a different weight. The overall combined ranking of Genco Shipping places it in the top 50 stocks on our screen, or the top 2% of the more than two thousand companies we ranked.

Step Four

Here is the company’s investor presentation from November, 2020: http://s21.q4cdn.com/456963137/files/doc_financials/2020/q3/Genco-Q3-2020_Earnings-Presentation.pdf

Intrinsic value scenarios:

- Low case: Genco Shipping may be worth 50% of current book value (which is understated) of $20.36 a share. That’s $10.18, which is over 45% higher than today’s $6.94.
- Mid case: Genco Shipping is likely worth at least book value (which is understated) of $20.36 a share. That’s over 190% higher than today’s $6.94.
- High case: Genco Shipping may be worth 150% of book value (which is understated) of $20.36. That’s $30.54, which is about 340% higher than today’s $6.94.

BOOLE MICROCAP FUND

If you are interested in finding out more, please e-mail me or leave a comment.

My e-mail: [email protected]