Just Published: "Highlights Issue" of the Oddball Stocks Newsletter

We've recently had some new subscribers join the Oddball Stocks Newsletter community. Several of them have said that they had been reading the OddballStocks.com blog for years (it has been around for more than a decade) but they did not know what to expect if they subscribed to the Newsletter.

It's understandable. The truth is that there is nothing quite like the Newsletter – especially as we have expanded it over the past two years – and so we have put together a collection of sample pieces from the back catalog to demonstrate what the Newsletter is, or what it hopes to be: topical, philosophical, talking about companies that the market ignores, pounding the table for value investing while grappling with problems like rapacious managements that are consuming value.

The "Highlights Issue" is available here for purchase as a single Issue. If you have been curious about the Newsletter, this is the perfect opportunity to try about two Issues worth of content (much of which is still topical and interesting) at a low cost.

This is a "highlight reel," but it is not a victory lap or a tout of what we have written about. A lot of these highlights are our thinkpieces: on shareholder rights, on banking as a business model, on value investing. There are pieces about companies that got taken out at a premium but also about ones that are trading lower now some years later... of course, those may be the most interesting to pay attention to now. There are two companies – Scheid Vineyards and Enterprise Diversified (formerly known as Sitestar) – where we warned about significant risks that ended up materializing.

If you are a subscriber, the Highlights Issue should be in your inbox right now. (If you are not a subscriber yet, you can sign up right here.) Remember that we have made some back Issues of the Newsletter available à la carte, so you can try those before you sign up for a subscription: Issues 19, 20, 21, 22, 23, 24, 25, 26, and 27.

Some comments from happy subscribers:

• "You need to raise the price!"
• "I think you guys are selling yourself short on your company visits. Saying that you are visiting or reporting from a company in your marketing, doesn’t give justice to the insight and analysis you are providing."
• "The quality of the writing (even including your new contributors) is really top-drawer."
• "Great newsletter! - you guys are either providing too much info or not charging enough..."

We have also posted some excerpts over the past year to give a taste of the Oddball writing and coverage style - but just remember that the most interesting content is for subscribers only.

The excerpts were on The Coal Creek Company, Tower Properties, Bank of Utica, small banks, Avalon Holdings, Boston Sand and Gravel, Conrad Industries, and Sitestar / Enterprise Diversified.

Don't miss the recent Oddball Stocks blog posts on: Pico Holdings and the Bank of Utica Annual Report (and investors' reactions to it).

Small Bank Investors React to the Bank of Utica Annual Report $BKUT $BKUTK

We posted the Bank of Utica annual report for 2019 yesterday. Here are some investors' reactions:

How does a banker buy $86MM worth of stocks for his own bank’s account and neglect his own bank’s shares trading for 45% of book value? $BKUT $BKUTK
Has he no faith in himself?

— Phil Timyan (@TimyanBankAlert) February 16, 2020

I spend way too much time railing on second and third generation bankers who are very poor stewards of shareholders’ capital.
Gates Little $SRNN
Chevis Swetman $PFBX
Tom Sinnott $BKUT
John Demyan $GLBZ
But by owning their stocks I am also being a poor steward of my own capital.

— Phil Timyan (@TimyanBankAlert) February 16, 2020

Repurchases are a win-win yet they still don’t undertake them. The Sinnotts gain a higher stake in the company and reduce pesky shareholders meanwhile the balance sheet gets optimized for better returns. I think I’ll be moving on to greener pastures.

— Shadowridge Value (@Shadow_Value) February 16, 2020

Some quick updates on two OTC banks $BKUT $BKUTK $FINN https://t.co/bYAjPudvea

— Shadowridge Value (@Shadow_Value) February 2, 2020

Shareholder letters from Tom Sinnott @ $BKUT Bank of Utica are always cringeworthy. ⁦@MidwestHedgie⁩ pic.twitter.com/8Wzk2uGYls

— Phil Timyan (@TimyanBankAlert) March 16, 2019

Bank of Utica - 2019 Annual Report

Most Oddball investors will know about Bank of Utica. We've talked about it before on the blog and in the Newsletter.

We just received their 2019 annual report in the mail, included below. More detailed analysis and commentary will be in the March Issue of the Oddball Stocks Newsletter.

Bank of Utica - 2019 Annual Report by Nate Tobik on Scribd

PICO Holdings, Inc.

In Issue 14 of the Oddball Stocks Newsletter, we had a writeup by Nick Bodnar about an Oddball company called PICO Holdings. There was an activist campaign, a special dividend, and the board of directors of the company is now in much stronger hands - and it is in liquidation mode.

In the past, we have described PICO as a "rare Oddball that combines a sum-of-the-parts cheapness, a catalyst, appropriate management incentivization (bonus formula of a time value of money charge against invested capital), and even ongoing share repurchases." As they have disclosed,

Any significant additional monetization proceeds [are] anticipated to be returned to shareholders through tender offer, and/or open market repurchases, and/or special dividends depending on facts and circumstances existing at the time of monetization

The executives of the company are incentivized to wind down the company with a bonus formula that provides for a time value of money charge against invested capital. Yesterday (January 31st), PICO put out a press release with an update on its share repurchase program:

PICO Holdings, Inc. (Nasdaq: PICO) announced today that its Board of Directors has approved the repurchase of up to an aggregate of $100 million of its common stock which would be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market, as capital becomes available.

The Company's Board of Directors had previously authorized in November 2015 an aggregate of $50 million for its stock repurchase program and to date the Company has repurchased 3,494,443 shares for approximately $38.9 million.

We also saw an interesting (provocative) comment on this announcement on the Corner of Berkshire and Fairfax message board:

Lost amongst the pandemonium Friday after the close PICO announced and expansion of its share repurchase program. PICO is a bad investment and basically a slow liquidation play at best, but they've been remarkably consistent repurchasing their shares at prices averaging mid 10s and even 11s. With firepower authorization equal to basically half of the current market cap and ~$60M remaining plus a lot of bag holders with no interest selling shares around here, buying at/around/under $10 seems like a pretty reasonable and safe trade, even if its only for a few percent back to this mid 10s. This has no correlation to all the current hysteria either, and really only relies on the continuance of the status quo in Vidlers core markets.

We do not know what makes this particular commenter believe that PICO is a bad investment, although there are certainly risk factors. The biggest concern with PICO would seem to be that its investment in the 35 mile long water pipeline from Fish Springs Ranch to Reno, Nevada needs new home development there in order to be monetized, and as they say: "To date, we have sold only a small amount of the water credits, and we cannot provide any assurance that the sales prices we may obtain in the future will provide an adequate economic return, if at all."

In Oddball Stocks Newsletter Issue 24, we published an extensive piece on PICO Holdings, and have written other updates subsequently. If you are curious about PICO Holdings and you are not already an Oddball Stocks Newsletter subscriber, a back issue of Issue 24 would be a research starting point. (Don't miss our most recent Issue 28 and other back Issues, either!)