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Mike in STL's avatar

I agree with the DALN thesis but will point out that I think the Hoffman entity actually recently sold ~80,000 shares as the 13D fell from 6% to 4% ownership. I believe that worksheet incorrectly says "Securities purchased" but should say sold. They don't seem to know what they are doing, perhaps they were rebuffed by management as they bought the stake without ever talking to them in the first place. They have also gotten their teeth kicked in buying LEE.

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Daniel Pires's avatar

Hi Tiehack,

Appreciate your analysis and insights on this one. Bit of a downtick recently with Q4 results not being great and the management team not fully committing on timeline for the special dividend. Where do you see this heading, are you still holding? I feel like people have overreacted for a few reasons:

1) Special Divy:

Back in 2022, on 27 July earnings call they were asked when they were going to pay the special divy for the note receivable. The response was pretty much the same non commital as this time round:

" The Board will continue its regular discussion of capital allocation, including the possibility of a special dividend and a voluntary pension contribution at its regular meeting in September. And we're saying it's a September meeting because that's the next scheduled time, but there's nothing to say we wouldn't, wouldn't take action sooner."

Less than one month, on 22 August they announced the special dividend to be paid and put up for approval in September Board meeting.

Feels like we will see the same here, within one month we will know what the special dividend is and I'm expect $3.50 per share.

2) Shareholder register

Agree that it is ridiculous that Management have no skin in the game and are taking home golden salaries for the size of the company. Also unfortunate the Class B Shares and Decherd's voting rights accounting for >50%. Is there no other way for the likes of some of the institutionals such as Covista, AllSpring, Carlson Ridge, Hoffman etc to exert some pressure? Just across those there's still ~30%+ shareholding.

3) Q4 Results

Even annualising the soft December quarter and overlaying the $5m savings, the business is basically at breakeven (~-$0.4m). Hardly a disaster?

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