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He sounds like a student of Buffett. Is that true? I only read the most recent letter. Good material! Thanks, John!
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Hanover A shares traded as low as $55 in March and are currently $68, which is where they traded as long ago as 2003. Back then, with about 1.07 million A and B shares outstanding, the market capitalization was $73 million. Now with only 715k A and B shares the market capitalization is down to $49 million.
Shareholder equity then was $95 million. Now, as you'll see below, it is $242 million! Current assets net of all liabilities was only $13.6 million. Now it's $126 million. (So, the price to book is now 0.2x and the price to NCAV is 0.39x.)
Part of the problem is that earnings have declined. In the 2003 fiscal year, Hanover earned $9.8 million on $290 million of sales. In fiscal 2019, earnings were only $2.6 million on $395 million of sales.
The 1% return on equity translates into a 5% earnings yield thanks to the 80% discount to book value.
Will Hanover ever return to greatness? We will be writing about some ideas in the upcoming Issue of the Oddball Stocks Newsletter.