The Deep Value Week – 2024/50
A successful arbitration, some seasonal stock giftings & real estate divestments
The Deep value Week is created in the spirit of Shelby Cullom Davis who wrote a market letter (on insurance) that “no one read”, and when questioned on the why of still writing it, answered that they wrote it for themselves, as a form of self-reflection on their activities – helping them refine their thoughts, test their theories and maintain discipline.
Companies mentioned:
· Charles & Colvard (CTHR)
· Hurco Companies (HURC)
· Coffee Holding (JVA)
· Nacco (NC)
· Seneca Foods (SENEA)
· Sigmatron International (SGMA)
· Strattec Security (STRT)
· Tandy Leather Factory (TLF)
Benjamin Graham suggested that one barometer for market valuation of the overall market was to assess the number of net-nets available. When many such opportunities exist, it indicates a cheap market overall, while their absence suggests that the market is expensive.
Note though that today’s net-nets are not the same as Graham’s net-nets. We view most of these as un-investable being Chinese RTO’s, loss-making biopharma’s etc. There are also quite a few false positives with aged financials or de-listed companies still floating around in the database. But even though we would not touch most of today’s crop with a ten-foot pole we think it could be interesting to follow this raw number over time, and what percentage of total listed stocks qualify as a “naked” net-net without any type of quality adjustments to make them investable.
Below is this week’s net-net screen from Stockopedia.
Charles & Colvard - Resolves Arbitration with Wolfspeed, Avoids $22.8M in Damages
CTHR │ New Report │ P/TB 0.17 │ Lab Grown Moissantie │ URL
Charles & Colvard announced the resolution of its arbitration with Wolfspeed, significantly reducing potential damages. Wolfspeed had sought $28M, including $22.8M in expectation damages, but the arbitrators rejected these claims. The company is required to pay $1.3M for past purchases and $2M for consigned inventory, which will positively impact its balance sheet by increasing inventory value. Additional costs include interest at 8% and arbitration-related fees. The interim ruling is seen as a major win for Charles & Colvard, enabling it to focus on strategic goals without the constraints of its long-term purchase commitments under the Wolfspeed supply agreement. Wolfspeed retains the right to petition for attorneys’ fees and costs, with final awards expected after January 2025.
Hurco Companies - Michael Doar, Executive Chairman of Adjusts Stock Holdings
HURC │ Insider Transaction │ P/TB 0.64 │ Machine Tool │ URL
Michael Doar, Executive Chairman of Hurco Companies, reported changes to his beneficial ownership of the company’s stock. On December 4, 2024, Doar disposed of 3,000 shares of Hurco common stock via a transaction coded as "G," which signifies a gift. This leaves him with direct ownership of 192,329 shares. (3%)
Extreme Drought in Brazil Pushes Arabica Coffee Prices to Record Highs
JVA │ Market Update │ P/TB 1.05│ Coffee │ URL
See link to Seeking Alpha article above.
Nacco “Balancing Opportunity And Risk: Why NACCO Industries Remains A Hold”
NC │ Analysis │ P/TB 0.57 │ Coal Mining Services │ URL
A new analysis by Pepijn Vereecken on Seeking Alpha.
Seneca Foods - CEO Reports Stock Transaction and Gift of Securities
SENEA │ Ownership Change │ P/TB 0.86 │ Food Production │ URL
Paul Laurence Palmby, President and CEO of Seneca Foods Corporation disclosed a stock transaction on for December 9, 2024. Palmby gifted 1,000 shares of Class A Common Stock as a bona fide donation to a charitable foundation, reducing his direct holdings to 23,098 shares. Additional holdings include indirect ownership of 1,589 Class A shares and 384 Class B shares through the company's 401(k) Stock Fund, as well as 2,033 Class B shares held directly.
Sigmatron International - Announces Resignation of Director Linda K. Frauendorfer
SGMA │ BOD Change │ P/TB 0.24 │ Contract Manufacturing │ URL
SigmaTron International, Inc. a provider of electronic manufacturing services, reported the resignation of board member Linda K. Frauendorfer, effective December 12, 2024. Frauendorfer cited personal reasons for her decision, which was communicated to the Board of Directors on December 10, 2024. The company did not announce an immediate replacement for Frauendorfer, who served as a director during a critical period of SigmaTron’s operations.
Strattec Security - Announces Facility Sale and Operational Streamlining & GAMCO selling
STRT │ Facility Selling │ P/TB 0.84 │ Automotive Security │ URL / URL
STRATTEC Security Corporation announced plans to list its Milwaukee facility for sale as part of a broader initiative to modernize operations. The evaluation will explore upgraded manufacturing and office accommodations, ideally within the Milwaukee area, while optimizing the company’s operational footprint.
Additionally, STRT will transition its Milwaukee manufacturing facility from a three-shift operation to two shifts beginning in the first quarter of 2025. This move will eliminate approximately 20 direct labor roles and shift to a 10-hour, four-day workweek, a change welcomed by the manufacturing team for its flexibility. Despite these adjustments, STRATTEC affirmed it maintains sufficient capacity to meet customer demands and deliver high-quality products on schedule. CEO Jennifer Slater emphasized the importance of streamlining operations and enhancing the work environment. The facility evaluation process is expected to take several months, with updates provided as plans progress. These changes align with STRATTEC’s long-term strategy to strengthen its position in the competitive automotive industry.
GAMCO Investors, Inc. and Associated Capital Group, Inc., along with affiliated entities, reported a transaction involving STRATTEC Security Corporation shares on December 10, 2024. 200 shares of STRATTEC common stock were sold at a price of $41.77 per share, leaving 300 shares under indirect beneficial ownership through an investment partnership.
Tandy Leather Factory - to Sell Headquarters for $26.5M, Plans Relocation
TLF │ Real Estate Sell │ P/TB 0.56 │ Leather Retail │ URL
Tandy Leather Factory, Inc. announced the execution of a Purchase and Sale Agreement for its corporate headquarters, primary distribution center, and flagship store in Fort Worth, Texas. The facilities will be sold to Colonna Brothers, Inc. for a cash purchase price of $26.m, with the transaction expected to close in January 2025. Following the sale, Tandy Leather Factory plans to lease back its current spaces until September 2025 while preparing to relocate to new facilities in the Fort Worth area. The company aims to ensure a seamless transition to new premises that meet its operational and strategic needs. This move reflects Tandy Leather’s strategic realignment to optimize its footprint and operational efficiency.
We guesstimate that TLF looks like something below right now.
The writer may own shares of the companies mentioned. This communication is for informational purposes only.