July 13, 2020

Just Published: Issue 28 of the Oddball Stocks Newsletter

Happy New Year to all Oddballs! We just published Issue 28 of the Newsletter. If you are a subscriber, it should be in your inbox right now. If not, you can sign up right here.

Remember that we have some back Issues of the Newsletter available à la carte, so you can try before you sign up for a subscription: Issues 19, 20, 21, 22, 23, 24, 25, and 26.

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 Tower Properties, Bank of Utica, small banks, Avalon Holdings, Boston Sand and Gravel, Conrad Industries, and Sitestar / Enterprise Diversified.

There were two Oddball blog posts in December which you may have missed: one about the Verified Complaint to Compel Inspection of Books and Records of Hauppauge Digital Inc. ($HAUP) and one about Wynnefield Capital, Inc. v. Tile Shop Holdings, Inc.

Wynnefield Capital, Inc. v. Tile Shop Holdings, Inc.

This is a developing situation. Tile Shop (TTS) was trading for around $3 until the company announced plans to de-register with the SEC, suspend its dividend, and cancel its share buybacks. The share price crashed by 2/3rds as a result.

They have been sued by a shareholder who claims that this was a deliberate scheme to take over the company at a fire sale price:
The board of directors of a Delaware corporation has a fundamental duty and obligation to “protect the corporation enterprise,” and to defend stockholders “from harm reasonably perceived, irrespective of its source.” This case involves a board that is purposely letting half of its members – including the known repeat fraudster who founded the company – buy a controlling stake in the company through open market purchases at depressed prices, without paying a fair price, much less a control premium. Instead of adopting a poison pill or taking other defensive measures to protect public stockholders in the face of a change of control transaction executed in the open market, this board helped turn a slowly developing creeping takeover into a modern street sweep.
The company is temporarily enjoined from deregistering, and some think that the stock is interesting at the current price. The complaint filed in Delaware court is posted below.

Lucy Macdonald Long Bloomsbury Publishing: Sohn London Conference

We're posting up notes from the Sohn London investment conference.  Next up is Lucy Macdonald of Allianz Global Investors who presented a long of Bloomsbury Publishing (LON:BMY).


Lucy Macdonald's Sohn London Conference Presentation

Long: Bloomsbury Publishing (LON: BMY)

The UK market and publishing sector are loathed at the moment. Publishing is quite a way through the digitalization process and much further than most other industries. It will soon be entering the post-digital phase. Half of books sales go through Amazon. The publishing industry has survived.  Quality is king. Publishers have had to redefine their part in the eco-system.

Bloomsbury has a strong content back catalogue. The books they have are still popular and high quality e.g., they have all the rights to the Harry Potter books.

They have strong growth drivers, especially the rise of audio books. Initially audio books sold to preschool children and to the visually impaired but now Millennials are listening to them on their phones. Bloomsbury have been supplying audio books since 2005. Children’s books have been Bloomsbury’s mainstay, but they have been developing a new market in academic and professional publishing that have a higher margin.

Bloomsbury also has international growth in areas like India, again with Harry Potter leading the way. They have invested in digitization in the academic area by building online archives on: Winston Churchill, The National Theatre and Shakespeare.

Revenue growth is steady in single digits. Margins have been improving due to the contributions academic and international sales. The founder is still CEO and in his early 60s.


Be sure to check out the rest of the presentations from Sohn London conference 2019.