Author Topic: RHDGF - Retail Holdings  (Read 35604 times)

writser

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Re: RHDGF - Retail Holdings
« Reply #90 on: March 12, 2019, 11:56:33 AM »
Yeah. Singer Bangladesh shares have been on a tear this year (and Singer India is up nicely since December as well). I don't have super strong views on whether the subs are cheap or not but there's decent volume in Singer Bangladesh.

At this point you pay ~$11 / share for Retail Holdings, for that you get (by my simple calculations):

- ~$2 / share in cash.
- ~$13 / share in freely tradable shares of Singer Bangladesh / Singer India.
- A liability of ~$1 / share of CEO compensation.
- ~$5.50 / share in non-remittance shares of Singer Bangladesh.
- ~$1.50 / share in dividends held back at Singer Bangladesh because they cannot be paid out to the non-remittance shares.

We can have a discussion about the fair value of the last two items (a huge haircut is probably fair) but at a minimum you are buying $14 / share of net assets with a potential $7 / share kicker. And my guess is that the excess cash will be returned to shareholders in a few months, i.e. the pro-forma discount is even juicier. Apart from that, not much has changed. The company has been steadily liquidating and wants to commence the final liquidation in 2018 / 2019. They've been selling some Singer India shares the past few months. The CEO owns a boatload of shares. Company insiders also chair the board of the Bangladesh subsidiary. I like it all.

This is now my largest position (though in my case that doesn't mean much - small balls). We haven't heard much from the company the past few months and I think we're at a point where basically any news is good news. If they issue a press release tomorrow: "We gave away all our non-remittance shares and we sold the controlling stakes in our subsidiaries at a 20% discount to market prices" IV is still above the current price ..

Then again, maybe I'm just fooling myself by buying Singer BD at a smallish discount.
« Last Edit: March 12, 2019, 12:16:28 PM by writser »
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Foreign Tuffett

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Re: RHDGF - Retail Holdings
« Reply #91 on: March 14, 2019, 10:39:15 AM »
@ 278 taka per share I have Singer Bangladesh trading @ 14.3X 2018 EBITDA. While that might seem expensive at first glance, this is a well capitalized, solidly profitable business that grew nearly 24% last year while also paying a 10 taka per share dividend.

writser

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Re: RHDGF - Retail Holdings
« Reply #92 on: March 15, 2019, 01:14:33 PM »
Bought even more. Couldn't help myself. F me.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Foreign Tuffett

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Re: RHDGF - Retail Holdings
« Reply #93 on: March 22, 2019, 06:50:36 AM »
RHDGF's controlling stake in Singer Bangladesh has been sold, with the transaction expected to close next month.

http://www.retailholdings.com/pressReleases/pressReleasesFile_173.pdf

Did the sale happen at an awesomely high price? No, but it does the resolve the non-remittance shares problem.

Does this mean that the company is now much closer to liquidation? Yes. Given that RHDGF's only remaining operating asset is Singer India, I think it's very possible the liquidation will complete this year.



Tim Eriksen

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Re: RHDGF - Retail Holdings
« Reply #94 on: March 22, 2019, 07:32:59 AM »
Is the $75 million a 50% discount or am I missing something?

bobozou

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Re: RHDGF - Retail Holdings
« Reply #95 on: March 22, 2019, 07:40:14 AM »
Agreed, the sale price seems like a dramatic discount to market price (even adj 15M remittance shares to $0)?

writser

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Re: RHDGF - Retail Holdings
« Reply #96 on: March 22, 2019, 07:41:38 AM »
Zero value in the non-remittance shares & dividends and selling a controlling stake at a ~18% discount to market value. Was hoping for more. Anyway, this is pretty much my worst case scenario and shares are still up 4% today. I guess I can't complain too much.

Is the $75 million a 50% discount or am I missing something?

They own 15.33m non-remittance shares (i.e. sales proceeds / dividends can't get out of Bangladesh). These were always going to be problematic.
« Last Edit: March 22, 2019, 07:44:44 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Foreign Tuffett

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Re: RHDGF - Retail Holdings
« Reply #97 on: March 22, 2019, 08:25:33 AM »
Yeah, this isn't a Panglossian outcome (a control premium + full price for the non-remittance shares), but I think it's far from the worse case scenario.

Even though NAV is now lower, I think the market's initial reaction* is basically correct since (1) where there was significant uncertainty, there is now something that approaches certainty (2) the ultimate liquidation (and realization of NAV) is now in sight, as opposed to being in some indeterminate, possibly distant, future.

All this said, I think the stock should trade within 10% of NAV.


* acknowledging that this is an illiquid nano cap with limited volume


lathinker

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Re: RHDGF - Retail Holdings
« Reply #98 on: March 22, 2019, 02:35:07 PM »
I find the outcome disappointing too and would have am really wondering what makes them sell at such a crappy price.
It seems like there was only one bidder and maybe they felt under time pressure to monetize. I find the first aspect surprising in world where there is so much dry powder capital looking to be invested. It feels like they might even have done better by selling in the open market.
Also, I do not get how the non-remittance shares should be priced at zero...

Anyway, a humbling lesson on how important margin of safety is and that many great outcomes can not be taken for granted.

Hielko

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Re: RHDGF - Retail Holdings
« Reply #99 on: March 22, 2019, 02:44:11 PM »
Well, someone pointed out to me that the CEO is entitled to 3.5% of distributions made before 30 April, 2019... so guess he didn't want to miss out on 1.5 million bucks...