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Posted

I hope the Colombia business is where the value lays..it sure was not in Argentina

 

On March 28, 2014, SED International Holdings, Inc. (“SED”) and its wholly owned subsidiary, SED International, Inc., sold all of the outstanding capital stock of Intermaco S.R.L., a limited liability company organized under the laws of Argentina, to individuals in Argentina for a purchase price of $1.00. Intermaco S.R.L. is the indirect subsidiary of SED that operates the company’s distribution business in Argentina. In connection with the transaction, SED also agreed to pay $410,000 to the purchasers’ broker on their behalf, conditioned on SED receiving the benefit of $310,000 in vendor credits.

 

 

 

The board of directors of SED determined that it was in the best interests of SED to dispose of the company’s distribution business in Argentina on these terms, as opposed to continuing to operate the business or winding-down and dissolving the business, due to the greater financial losses that would be expected to be incurred in connection with either of these alternatives.

 

 

  • 2 months later...
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Posted

Looks like SEDN dropped to 25 cents/share. Could be a great opportunity to get in if one believes in the turn around thesis  :D

 

Looks like there were some trades at 0.10 cents/share today

Guest deepValue
Posted

I groaned when I read this paragraph in the letter:

 

Paragon has also made its first investment in a property and casualty insurance company. Currently

Paragon is in the process of acquiring additional shares as they become available at attractive prices.

The security is thinly traded, so at this time Paragon is better served by not disclosing the investment

until we have completed acquiring our stake or securities regulations require disclosure. As of May

31, 2014, Paragon’s investment in this insurance company has a cost basis of $127,500 and a market

value of $143,000, respectively.

 

Why do so many people want to be exactly like Buffett? I can't imagine that a sub-$10mm market cap P&C insurer is anything short of awful. And his letter might as well read "just whatever Warren might say."

 

Despite his shortcomings, I give Gad some credit for at least trying to be an intelligent investor. Running a business is harder than it looks and it's hard to be your own man when you're in over your head. I'm still not touching the stock, though.

Posted

While SED is creating havoc and more disclosure is naturally desirable, I'm at least pleased the name of the company isn't "Paragon by Gad" or that he's mounting a huge change in the compensation package! 

 

Give the guy credit for getting his hands dirty without expecting the world to fall at his feet.  He also hasn't told shareholders that the stock may be wrong for you if you don't agree with him.

 

If he manages to turn SED around and save this thing, and naturally I'm still betting that he can, then it would probably be one hell of a story!  Cheers!   

Posted

Is this the small cap that you are on the board of?

 

Agree that it will be an incredible story if Gad saves this thing, but he absolutely did "mount a huge change in the compensation package". He has made himself the CEO of each company he's acquired, and taken large salaries for each role. So large, in fact, that he almost certainly makes more money from the CEO pay than he does from his fund management and performance fees.

 

Also, how can they not provide any information to SED shareholders, and then make all these disclosures to PGNT shareholders? Seems a little unethical

Posted

Is this the small cap that you are on the board of?

 

Agree that it will be an incredible story if Gad saves this thing, but he absolutely did "mount a huge change in the compensation package". He has made himself the CEO of each company he's acquired, and taken large salaries for each role. So large, in fact, that he almost certainly makes more money from the CEO pay than he does from his fund management and performance fees.

 

Also, how can they not provide any information to SED shareholders, and then make all these disclosures to PGNT shareholders? Seems a little unethical

 

While the compensation is large compared to his fund...which was a very small fund...based on the size of the company and the scope of the change he's having to undertake to save it, the compensation is low...just like Sardar's was until the turnaround was complete. 

 

If Gad gives himself a fat check or starts to take a percentage of intrinsic value, then I'll be happy to criticize him...the reason we tried to take a substantial piece of ownership, but unfortunately could not because of a poison pill in place by previous management. 

 

I did not want to get screwed over again on name changes, compensation, voting structure, etc like I was as a former Steak'n Shake shareholder because one of the executives is paranoid of losing control.  Cheers!

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Posted

Sham Gad has been abject failure at allocating capital within the firm. Clearly, he has redemptions, as his ownership stake has dwindled to 12%. Now even the core business is crumbling for 2 quarters in addition to the problems he continues to face at SED International. I am sorry that I had ever heard of him or this company.

  • 3 months later...
Posted

Looks like they now have some financials...

 

http://finance.yahoo.com/news/sed-international-holdings-news-release-183900117.html

 

"For the six month period ended December 31, 2014, consolidated revenues were approximately $69.5 million. Gross margin was $6.0 million, or 8.6% of sales, and the company incurred a net loss of $0.9 million. As of December 31, 2014, shareholders’ equity was a deficit of $6.8 million, compared with a deficit of $5.9 million at June 30, 2014.

 

The Company continues to proactively work to restructure its legacy liabilities, which approximated $17.5 million as of December 31, 2014 of which over $12 million have been settled or subject to settlement agreements at discounts to face value."

  • 4 weeks later...
Posted

Book value declined slightly from Q to Q, albeit from already severely depressed levels thanks to SEDN. I'm curious to see the most recent 6 months of SEDNs filings, and the markets reaction (if one exists) once they catch up with OTC listing requirements and begin trading again. Probably the fact that it's still "half alive" should be net positive to the stock, and therefore accretive to PGNT at least to the tune of several hundred thousand dollars. The breakdown of SEDNs results to US/Latin America makes clear that most (or all) existing value rests in the Columbian business.

 

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Posted

Shareholder letter, pgnt going below book - opportunity to buy  ;)

 

http://pgntgroup.com/wp-content/uploads/2014/02/PGNT-2016-Letter-to-Shareholders.pdf

 

I wrote a decent length post which I deleted because its such a small startup i don't want to indirectly influence anyone's decision making process. That said, i actually want shareholders to win. Where the only winner is Sham currently heres why:

 

1.) Since Sham become ceo in 2012 shareholder equity has gone from 5.21 million to currently Q1 2016 3.578 million.

 

Yet his salary in 2012 was 110k (combo cash and stock) to 2016 of 150k.

 

2.) Negative Intrinsic Value and Book Value since 2012. Yet roughly 40 percent increase in yearly salary not including director payments and Sed salary

 

3.) Announced share buyback authorization last year yet he buys 68.58k shares at 0.85 on 6/4/15 and 67.22k at 0.89 on 6/11/15 for himself before the company shows an operating profit knowing that would increase the share price. He could of finally gave value to his shareholders by buying back shares below IV but he decided to increase his personal stake. Bad PR move. No shares bought back below IV for shareholders.

 

4.) Choosing to run a proxy on rubicon while owning only  0.1 of stock. This seems like a desperate move and someone struggling to increase earning power of pgnt. Since his biggest investment Sed is supposedly bankrupt ( he earned salary running SED). 

 

Only Winner is Sham so far. Good for his family that he has earning power. 

 

Full disclosure = no position 

 

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