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CLWY - Calloway's Nursery


DTEJD1997
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Hey all:

 

I've been talking about CLWY for years.  Dave Waters over at "OTC Adventures" alerted me to this company as I was living in Houston at the time and could check on some of their real estate.

 

CLWY owned/owns some INCREDIBLY valuable real estate...at the time of my initial purchase, their best location was worth about the WHOLE of the market cap of the company.

 

Fast forward several years...CEO & BOD has been shaken up.  Activist hedge fund has come in and made changes.  They are now making SOLID money...have sold some locations, bettered the balance sheet.

 

The P/E ratio has a good chance of entering into the LOW single digits...all with a solid balance sheet, and potentially even more value to be unlocked from selling Voss Rd. location.

 

I am almost tempted to buy more at these high prices!

 

Anybody have any thoughts/ideas on this one?

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Speaking of the newsletter, anyone have any idea what the returns are on the stocks profiled?

 

I hope he is using this strategy:

 

Send newsletters to 1000 people; half the newsletters say stock A will go up, half say it goes down. Stock A goes down. Send 500 new newsletters to the people who got a correct prediction about stock A; half of the new newsletters say stock B is going up, half say it's going down. Then send 250 more newsletters... etc. Eventually there's a handful of people who've gotten eight straight correct picks from him, and hopefully they invest their life savings.

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Come on guys, Nate deserves a lot more respect and credit than he's being given by some in this thread. I'm sure his comment about not posting an idea like this here was tongue-in-cheek. After all, he has shared dozens of great ideas on his blog for free and did this for years. Don't resort to taking cheap shots or trying to discredit someone who's offered more valuable investment ideas than anyone who has posted in this thread.

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Speaking of the newsletter, anyone have any idea what the returns are on the stocks profiled?

 

I hope he is using this strategy:

 

Send newsletters to 1000 people; half the newsletters say stock A will go up, half say it goes down. Stock A goes down. Send 500 new newsletters to the people who got a correct prediction about stock A; half of the new newsletters say stock B is going up, half say it's going down. Then send 250 more newsletters... etc. Eventually there's a handful of people who've gotten eight straight correct picks from him, and hopefully they invest their life savings.

I very much doubt this is going on.  I would be willing to bet a substantial portion of my wealth that it is not.

 

I have read a few of the issues, and they contain good ideas that are the result of a TREMENDOUS amount of experience, research and hard work.  In fact, I would recommend the newsletter if a person is interested in small/nano cap stocks.

 

I would also go so far as to say this is a terribly unfair statement about Nate's newsletter.  You shouldn't accuse him of doing such UNLESS you've got some proof of that, which I doubt there is.

 

Believe me, I've literally got a BOOK of ideas that I don't talk/discuss/post on this board, or any other.  This is the result of DECADES of hard work.  Sometimes I will discuss them with a small, select group of trusted people. 

 

Perhaps this is not the place?

 

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I don't know why this thread is going off the rails so quick. This is a perfectly fine company to discuss on this board. I assumed valcont was joking around, but in case not, what he described is illegal for a good reason.

 

DTEJD,

 

I'd be interested in what you think fair value is and how you get there. My estimate ($6-7ish) is lower than most bulls I've seen, but I have a hard time getting to $8-10+ like some have suggested.

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Speaking of the newsletter, anyone have any idea what the returns are on the stocks profiled?

 

I hope he is using this strategy:

 

Send newsletters to 1000 people; half the newsletters say stock A will go up, half say it goes down. Stock A goes down. Send 500 new newsletters to the people who got a correct prediction about stock A; half of the new newsletters say stock B is going up, half say it's going down. Then send 250 more newsletters... etc. Eventually there's a handful of people who've gotten eight straight correct picks from him, and hopefully they invest their life savings.

I very much doubt this is going on.  I would be willing to bet a substantial portion of my wealth that it is not.

 

I have read a few of the issues, and they contain good ideas that are the result of a TREMENDOUS amount of experience, research and hard work.  In fact, I would recommend the newsletter if a person is interested in small/nano cap stocks.

 

I would also go so far as to say this is a terribly unfair statement about Nate's newsletter.  You shouldn't accuse him of doing such UNLESS you've got some proof of that, which I doubt there is.

 

Believe me, I've literally got a BOOK of ideas that I don't talk/discuss/post on this board, or any other.  This is the result of DECADES of hard work.  Sometimes I will discuss them with a small, select group of trusted people. 

 

Perhaps this is not the place?

 

My apologies if Nate is offended. I was just joking. I have known and read Nate's blog for years and am a fan of his approach. If he can make money writing about it , all the better.

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DTEJD,

 

I'd be interested in what you think fair value is and how you get there. My estimate ($6-7ish) is lower than most bulls I've seen, but I have a hard time getting to $8-10+ like some have suggested.

 

Just curious: have you incorporated Q1 2017 numbers into your DCF model?

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mbrock,

 

That write-up was done before Q1 results so no, but I also haven't updated it since. Even though Q1 was great, it's not enough to change my basic assumptions that go into the model (a few more quarters like this one and adjusting some assumptions will be justified). If operating margins stay anywhere close to 17% my model will be off by quite a bit (as all models are). I just quickly punched in 17% operating margins as the perpetual number and it bumped the value to over $10... so let's hope I was wrong  ;D

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I posted a joke and come back to see this thread has gone crazy.  No offense taken from anyone.

 

I have not written about Calloways yet, no immediate plans either.

 

In terms of returns, email me and I'll send them.

 

I get that offering research for sale isn't sexy, but it pays.  I think it's a better platform for small stocks compared to a hedge fund.  Anyone can buy research, but only accredited investors can invest in a fund.  Other issue is a fund quickly tops out in size and becomes a limiting factor.  This is because you're dragging along all clients into these names.  I know that most subscribers don't invest in all names, most find a few ideas that pay for the letter the rest of their life.  I'd prefer to monetize my writing via high value research verses google ads or other venues.

 

Value is in the eye of the beholder.  I've had a few people ask if I could increase the subscription price to something high such as $50k per year as a way to limit the pool of people who get the ideas.

 

I'm still writing more than I had in the past, but most is behind a paywall.  I create about 200pgs of content for the newsletter a year, and another ~50 or so for the blog.  A solid book per year. 

 

For the cheapskates out there I'm almost finished with the bank investing book.  It'll cost about the same as two or three McDonalds value meals. 

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I couldn't find financials (presumably they're not public? perhaps they could add a subscription option to boost revenue?  ;)), but what drives the margin expansion? If they reduce the amount of overhead does that drive people to Home Depot? Seems a bit like REI... people are willing to pay more because there's somebody there to help you. I guess the other side of that question is why do customers go to Calloway's given their higher prices?

 

This article seems to summarize the situation? https://seekingalpha.com/article/4040237-calloways-nursery-radar-trading-liquidation-value

 

I was over in the UK recently and interestingly their "garden centres" tend to have cafes because they're more profitable than additional plants: http://www.telegraph.co.uk/gardening/gardeningadvice/10592702/Top-25-garden-centres-for-food.html

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I couldn't find financials (presumably they're not public? perhaps they could add a subscription option to boost revenue?  ;)), but what drives the margin expansion? If they reduce the amount of overhead does that drive people to Home Depot? Seems a bit like REI... people are willing to pay more because there's somebody there to help you. I guess the other side of that question is why do customers go to Calloway's given their higher prices?

 

This article seems to summarize the situation? https://seekingalpha.com/article/4040237-calloways-nursery-radar-trading-liquidation-value

 

I was over in the UK recently and interestingly their "garden centres" tend to have cafes because they're more profitable than additional plants: http://www.telegraph.co.uk/gardening/gardeningadvice/10592702/Top-25-garden-centres-for-food.html

 

Their filings are public:

https://www.otcmarkets.com/stock/CLWY/filings

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A retailer with real estate that provides a margin of safety, now where have I heard that story before  ;D

 

I thought this seekingalpha writeup on it was well done, only wish I'd seen it when it first came out.

 

https://seekingalpha.com/article/4040237-calloways-nursery-radar-trading-liquidation-value

 

I guess the thing is you need to come to a conclusion:

1) Is all real estate worthless?  If so then yes ANY company with RE isn't worth a look.

2) Some RE will hold value, even if there is a retailer on top of it.

 

I'm in the #2 camp.  Have you ever ordered plants from Amazon?  How about mulch?  Of course 90% of this board probably lives in NYC or Toronto where people don't do those things.  But in the heartland people buy mulch, grass seed, living and established plants.

 

I have purchased from Lowes, HD, Costco, local nurseries.  My experience is this.  If you want a cheap plant with a 30-40% chance of living the big box stores are the way to go.  Costco's plants are bigger and usually do better.  A local nursery is the best bet.  Most local nurseries have guarantees too.  One we use has a three year guarantee, I think five years for trees.  If something happens in that time they just replace it.

 

The value-add thesis is about as popular in investing circles as low book value stocks.  But as a customer I know I prefer to go to a place and pay a little more for good service, a good product, and advice from someone who knows what they're doing.  I know friends do as well.  Most go the cheap route until they're burned and then pay slightly more.

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I live squarely where Oddball described.  I'm smack in the middle of flyover country.  My wife swears by a particular greenhouse but realistically you go to the one closest to you.  The one she loves closed last fall.  Well, like the thesis here they upgraded the land and are building a commerical/apartment building on it.  Guess what the owners built out in the country a new location that is closing to new housing starts.  Its a winning formula.

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A retailer with real estate that provides a margin of safety, now where have I heard that story before  ;D

 

I thought this seekingalpha writeup on it was well done, only wish I'd seen it when it first came out.

 

https://seekingalpha.com/article/4040237-calloways-nursery-radar-trading-liquidation-value

 

I guess the thing is you need to come to a conclusion:

1) Is all real estate worthless?  If so then yes ANY company with RE isn't worth a look.

2) Some RE will hold value, even if there is a retailer on top of it.

 

I'm in the #2 camp.  Have you ever ordered plants from Amazon?  How about mulch?  Of course 90% of this board probably lives in NYC or Toronto where people don't do those things.  But in the heartland people buy mulch, grass seed, living and established plants.

 

I have purchased from Lowes, HD, Costco, local nurseries.  My experience is this.  If you want a cheap plant with a 30-40% chance of living the big box stores are the way to go.  Costco's plants are bigger and usually do better.  A local nursery is the best bet.  Most local nurseries have guarantees too.  One we use has a three year guarantee, I think five years for trees.  If something happens in that time they just replace it.

 

The value-add thesis is about as popular in investing circles as low book value stocks.  But as a customer I know I prefer to go to a place and pay a little more for good service, a good product, and advice from someone who knows what they're doing.  I know friends do as well.  Most go the cheap route until they're burned and then pay slightly more.

 

I don't disagree with you on the big box stores. I'm currently in the process of converting most of the trees in my yard to fruit trees, mainly avocado and mangos. I figure if I'm going to be taking care of them anyway, I might as well get something in return. HD might carry one or two different varieties whereas a nursery specializing in them may carry as many as 30 with someone knowledgeable about the different qualities of each. If a store like Calloway's existed where I live I would probably shop there for gardening supplies. I am concerned how it would perform in an economic downturn, spending money on new trees and yard beautification is an easy cut to any family budget when times are tight but for now it seems attractively priced.

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Have been trimming my position in the last few days after holding the stock since 2013. This was the perfect little underfollowed gem guided by a wonderful investor Peter Kamin, the former Valueact cofounder, through his family office 3K. You should definitely follow some of his other investments as well. The stock is becoming fairly valued now.

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Have been trimming my position in the last few days after holding the stock since 2013. This was the perfect little underfollowed gem guided by a wonderful investor Peter Kamin, the former Valueact cofounder, through his family office 3K. You should definitely follow some of his other investments as well. The stock is becoming fairly valued now.

 

Whats the best way to follow his other investments?

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This is a decent starting place - http://3klp.com/portfolio.html

 

https://www.sec.gov/cgi-bin/own-disp?action=getowner&CIK=0000937541

https://www.sec.gov/cgi-bin/browse-edgar?company=Kamin+Peter&owner=exclude&action=getcompany

 

Have been trimming my position in the last few days after holding the stock since 2013. This was the perfect little underfollowed gem guided by a wonderful investor Peter Kamin, the former Valueact cofounder, through his family office 3K. You should definitely follow some of his other investments as well. The stock is becoming fairly valued now.

 

Whats the best way to follow his other investments?

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