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General Category => Investment Ideas => Topic started by: DTEJD1997 on May 24, 2017, 11:52:46 AM

Title: CLWY - Calloway's Nursery
Post by: DTEJD1997 on May 24, 2017, 11:52:46 AM
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?
Title: Re: CLWY Calloway's Nursery
Post by: oddballstocks on May 24, 2017, 12:36:38 PM
Only thought is don't post great ideas like this on here?

DTEJD1997 is like a hound dog on the trail of OTC turnarounds..something worth following.
Title: Re: CLWY Calloway's Nursery
Post by: maybe4less on May 24, 2017, 12:53:28 PM
Only thought is don't post great ideas like this on here?


Where should they be posted?
Title: Re: CLWY Calloway's Nursery
Post by: awindenberger on May 24, 2017, 01:34:44 PM
Only thought is don't post great ideas like this on here?

DTEJD1997 is like a hound dog on the trail of OTC turnarounds..something worth following.

Insn't this board the perfect place for posting great ideas? What else are we here for?
Title: Re: CLWY Calloway's Nursery
Post by: writser on May 24, 2017, 01:43:59 PM
Only thought is don't post great ideas like this on here?


Where should they be posted?

Probably Nate wants them only in his $590 / year newsletter.
Title: Re: CLWY Calloway's Nursery
Post by: stahleyp on May 24, 2017, 01:49:04 PM
Speaking of the newsletter, anyone have any idea what the returns are on the stocks profiled?
Title: Re: CLWY Calloway's Nursery
Post by: Travis Wiedower on May 24, 2017, 02:02:18 PM
I own it. I'm expecting a big Q2 based on how much inventory and accounts payable/accrued expenses built up during Q1. My biggest concern is how levered to the economy it (probably) is. This economy can't keep going up forever.

Here's my write-up on it: https://traviswiedower.com/2017/05/01/calloways-nursery-undervalued-with-aligned-ownership/ (https://traviswiedower.com/2017/05/01/calloways-nursery-undervalued-with-aligned-ownership/)
Title: Re: CLWY Calloway's Nursery
Post by: valcont on May 24, 2017, 02:06:23 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: NeverLoseMoney on May 24, 2017, 02:35:56 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: DTEJD1997 on May 24, 2017, 02:43:31 PM
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?
Title: Re: CLWY Calloway's Nursery
Post by: Travis Wiedower on May 24, 2017, 02:48:25 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: valcont on May 24, 2017, 02:53:22 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: mbrock77 on May 24, 2017, 05:27:29 PM
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?
Title: Re: CLWY Calloway's Nursery
Post by: Travis Wiedower on May 24, 2017, 05:46:44 PM
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
Title: Re: CLWY Calloway's Nursery
Post by: oddballstocks on May 24, 2017, 08:17:19 PM
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. 
Title: Re: CLWY Calloway's Nursery
Post by: JayGatsby on May 24, 2017, 11:54:13 PM
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
Title: Re: CLWY Calloway's Nursery
Post by: _JJ_ on May 25, 2017, 03:24:07 AM
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
Title: Re: CLWY Calloway's Nursery
Post by: Pelagic on May 25, 2017, 08:01:17 AM
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 
Title: Re: CLWY Calloway's Nursery
Post by: oddballstocks on May 25, 2017, 09:00:10 AM
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.
Title: Re: CLWY Calloway's Nursery
Post by: mrholty on May 25, 2017, 12:22:21 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: Paarslaars on May 25, 2017, 12:33:24 PM
Have to agree here, I buy almost everything online except for two things:
- Food
- Flowers

Both for the same reason, you want to pick out quality.
Title: Re: CLWY Calloway's Nursery
Post by: Pelagic on May 25, 2017, 12:35:27 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: valueyoda on May 25, 2017, 04:32:04 PM
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.
Title: Re: CLWY Calloway's Nursery
Post by: awindenberger on May 25, 2017, 08:15:33 PM
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?
Title: Re: CLWY Calloway's Nursery
Post by: gfp on May 25, 2017, 08:18:53 PM
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?
Title: Re: CLWY Calloway's Nursery
Post by: DTEJD1997 on May 25, 2017, 09:06:26 PM
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

This is where the market is not efficient and an edge can be gained in these micro-cap stocks.  If anybody doubts the Voss Rd. location is not truly "mega super class A+ property", they have not seen it with their own eyes.  Further...the value of this ONE location could be 1/3 of the market cap. of the company EVEN at this heightened share price.  Thus, it makes the evaluation extremely simplistic...kind of like a 1 foot hurdle.

Compare this to another retailer...oh I don't know...one that is run by a "hedgie"...one that has hundreds or thousands of properties...is anyone of those properties with 35% of the market cap of the company?  20%  10%  5%?  More than 1%?

Finally, CLWY sold their crummier Houston location...they booked a gain on it...a "mega super A+ gain".  If they choose to do it again, they can...
Title: Re: CLWY Calloway's Nursery
Post by: hooplaer23 on August 16, 2017, 02:27:47 PM
Calloway's posted its quarterly results today (see http://www.otcmarkets.com/stock/CLWY/filings).  EPS for the first half of the year is $0.71, compared to the share price of around $6.  Historically the company has incurred modest losses in the second half of the year due to the seasonality of the business, but if it can break even the company would be trading at 8.5x earnings. 
Title: Re: CLWY Calloway's Nursery
Post by: DooDiligence on August 16, 2017, 04:57:48 PM
The recapitalization turned out well for these guys.

Anyone know what happened with the big management shakeup in 2016?

---

Calloway's Nursery And 3K Limited Partnership Announce Final Results Of Joint Tender Offer And Closing Of Recapitalization

(excerpt)

In addition, pursuant to the terms of the Recapitalization Agreement, Mr. Estill resigned as the Chief Executive Officer and Chairman of the Board of Directors of Calloway's at the closing of the Recapitalization, and Marce Ward, the President and Chief Operating Officer of Calloway's prior to the Recapitalization, was appointed as President and Chief Executive Officer. Furthermore, pursuant to the Recapitalization Agreement, five members of the Calloway's Board of Directors, consisting of Mr. Estill, Dan Feehan, Alan Howe, Daniel Reynolds and David Straus, resigned from the board. The post-Recapitalization Board of Directors consists of continuing directors Peter Kamin, David Alexander and Mr. Ward, as well as two designees appointed by 3K, David Schneider and Terry Shaver.
Title: Re: CLWY Calloway's Nursery
Post by: DTEJD1997 on August 25, 2017, 10:35:28 PM
Hey all:

WOW, CLWY really had tremendous earnings...I am shocked this stock is not higher.

The balance sheet has shown marked improvement also.

There is a very good chance that CLWY is still very "cheap" at $6/share.
Title: Re: CLWY Calloway's Nursery
Post by: DooDiligence on August 26, 2017, 10:35:48 AM
The recapitalization turned out well for these guys.

Anyone know what happened with the big management shakeup in 2016?


Thanks to Travis Wiedower for having the clairvoyance to answer my question before I even asked it.

(I gotta learn to read the whole thread...)
Title: Re: CLWY - Calloway's Nursery
Post by: Travis Wiedower on August 28, 2017, 07:20:03 AM
Hey all:

WOW, CLWY really had tremendous earnings...I am shocked this stock is not higher.

The balance sheet has shown marked improvement also.

There is a very good chance that CLWY is still very "cheap" at $6/share.

Agreed. I added to my position after earnings. I'm surprised the stock isn't higher.
Title: Re: CLWY - Calloway's Nursery
Post by: oddballstocks on August 28, 2017, 07:25:20 AM
What's the hit from this storm for them?  Are locations underwater?
Title: Re: CLWY - Calloway's Nursery
Post by: _JJ_ on August 28, 2017, 07:36:44 AM
I think DFW area is safe for now. Wondering what their Houston location is like at the moment. They don't mention anything on their FB-page.
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on August 28, 2017, 11:34:20 AM
I think DFW area is safe for now. Wondering what their Houston location is like at the moment. They don't mention anything on their FB-page.
I believe Dallas has had minimal damage (if any) from the Hurricane.

Houston is a much different case.  One of my ex-employees has had to evacuate their house...too much water in it.  My ex-girlfriend had over a foot of water on the 1st floor of her house.  Other people I know had NO damage or very minimal.

A lot of landscaping may need to be reworked/redone in a week or two?  Could actually lead to increased sales for the Houston location?
Title: Re: CLWY - Calloway's Nursery
Post by: Travis Wiedower on September 01, 2017, 11:27:12 AM
Been calling their Houston location everyday this week and they reopened today. The guy I spoke to assured me the store is fine and their inventory is fully stocked. According to Drive Texas there are zero road closures in Piney Point Village (where the store is located), which is also a good sign. I've always thought that Houston location is Calloway's biggest store so I still expect it to affect Q3 results, maybe a 1-2% hit to revenue or something like that. As DTE said, it could also turn out to be a positive over the next few quarters.

I haven't bothered to call any Dallas stores. It seems like they got nothing more than wind and rain (similar to what we got in Austin).
Title: Re: CLWY - Calloway's Nursery
Post by: EricSchleien on September 02, 2017, 01:02:07 PM
Been calling their Houston location everyday this week and they reopened today. The guy I spoke to assured me the store is fine and their inventory is fully stocked. According to Drive Texas there are zero road closures in Piney Point Village (where the store is located), which is also a good sign. I've always thought that Houston location is Calloway's biggest store so I still expect it to affect Q3 results, maybe a 1-2% hit to revenue or something like that. As DTE said, it could also turn out to be a positive over the next few quarters.

I haven't bothered to call any Dallas stores. It seems like they got nothing more than wind and rain (similar to what we got in Austin).

I did bother calling Dallas. It took me 20 seconds. As Travis said, they're fine.
Title: Re: CLWY - Calloway's Nursery
Post by: bergman104 on September 03, 2017, 11:33:45 AM
It looks like they usually do very well at the 6 month mark but then actually lose money the rest of the year in terms of net income. June 2014, 2015 and 2016 were $0.39, $0.29 and $0.41 EPS respectively, while full-year was ~$0.28, $0.19 and $0.26. Full year 2014 was an estimate because of their property sale. Anyway, I agree with most of this post that this is a great underfollowed company with a business model I can understand. But what are full year expectations? Is ~$7 actually cheap if they lose money the next 6 months?
Title: Re: CLWY - Calloway's Nursery
Post by: Travis Wiedower on September 03, 2017, 01:20:51 PM
It looks like they usually do very well at the 6 month mark but then actually lose money the rest of the year in terms of net income. June 2014, 2015 and 2016 were $0.39, $0.29 and $0.41 EPS respectively, while full-year was ~$0.28, $0.19 and $0.26. Full year 2014 was an estimate because of their property sale. Anyway, I agree with most of this post that this is a great underfollowed company with a business model I can understand. But what are full year expectations? Is ~$7 actually cheap if they lose money the next 6 months?

I posted the following on SumZero yesterday:

"If the second half of this year is identical to 2016 (conservative assumption in my opinion), my estimate of full year NOPAT is $4.4 million. A 12.5x multiple on that results in a yearend enterprise value of $60 million (equivalent to a stock price of $7.80).

In terms of updating my discounted cash flow, the biggest factor is operating margins going forward. One could easily argue that 2017 is nearing the end of a bull cycle and these operating margins are not sustainable. On the other hand, one could argue margins have increased since the new management team came in so they are likely to be permanent operational improvements. Likely a bit of both. Depending on operating margin movement going forward (stays at current levels vs some mean reversion), I can get a realistic fair value between $7.10 and $9.00. Don't forget this only values the operating business. They also own a couple dollars worth of real estate."
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on November 16, 2017, 08:50:48 AM
Q3 out

https://www.otcmarkets.com/financialReportViewer?symbol=CLWY&id=182777
Title: Re: CLWY - Calloway's Nursery
Post by: Radio Free Cash Flow on November 16, 2017, 04:37:42 PM
This company just keeps executing. Operating income and profits hitting new highs. Operating margin is up 800 basis points since 2012. Excellent returns on capital as well, which leads me to think they'll consider opening another garden center or two in 2018. The return on capital does benefit somewhat from legacy low-cost real estate, but the two centers they opened in 2016 seem to be contributing strongly already.

Still a bargain at ~11x 2017 earnings and under 7x EBIT. My biggest fear is that Peter Kamin & Co. take my shares away from me in a buyout.
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on November 21, 2017, 06:36:09 AM
Although I don't see any official announcement, it looks like they will be paying a special div of $0.50 (ex div Dec 14).

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

Title: Re: CLWY - Calloway's Nursery
Post by: sbalsam on December 14, 2017, 09:08:30 AM
I tried reaching out to the Company a couple of weeks ago to confirm the dividend (by email and phone-voicemail) but did not receive a reply. Nonetheless, based on the adjustment to the closing price from $7.90 to $7.40, it does appear that the company went ex-dividend today as the OTC markets profile page had listed.

Separately, for purposes of valuation, keep in mind that the republican tax plan will have an extremely beneficial impact on Calloway.

Calloway pays a very low state tax under Texas's franchise tax (my estimate is an effective rate of about 2.5% of earnings before tax) so almost its entire tax burden is federal which would be significantly reduced. Changing Calloway's tax rate from the 38% it showed on its 2016 income statement to 23% (20% federal + another 3% to cover state tax) would have increased its net income by 25%.

Steve   
Title: Re: CLWY - Calloway's Nursery
Post by: sbalsam on January 18, 2018, 11:50:22 AM
While I don't want to interrupt the crickets, thought I'd mention that the $.50 special dividend was paid and received in my account as per the announcement on OTC Markets. Thanks mbrock77 for pointing this out as I would never have noticed the announcement and I gained comfort with the valuation and bought shares because of it.
Steve
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on March 06, 2018, 06:57:08 AM
New store opening soon:

https://www.prnewswire.com/news-releases/calloways-nursery-to-open-19th-location-in-hebron-texas-300608728.html
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on May 17, 2018, 06:57:15 AM
Q1 2018 is out, for those interested:

https://backend.otcmarkets.com/otcapi/company/financial-report/193634/content
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on May 17, 2018, 08:10:28 AM
Q1 2018 is out, for those interested:

https://backend.otcmarkets.com/otcapi/company/financial-report/193634/content

Thank you for posting that.  CLWY has been up the past couple of days and I was wondering if there was something behind it.

Looks like CLWY might hit a new high.  Very impressive considering they paid out a $.50/share dividend in December.
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on August 15, 2018, 01:26:00 PM
Q2 below. Really solid quarter:

https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on August 15, 2018, 03:57:17 PM
Q2 below. Really solid quarter:

https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content

Wow, that is truly impressive....however it looks like the reduction in the corporate tax rate is responsible for a good percentage of the YoY gain in income.

Will be interesting to see if the stock spikes on opening tomorrow.
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on August 15, 2018, 04:03:15 PM
Q2 below. Really solid quarter:

https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content

Wow, that is truly impressive....however it looks like the reduction in the corporate tax rate is responsible for a good percentage of the YoY gain in income.

Will be interesting to see if the stock spikes on opening tomorrow.

True. Net margin is about the same if you apply the same tax rate to operating profit. Did a write-up on this company recently. Let me know what you guys thinks. It's quite long, though.

https://lowtideinvestments.com/2018/08/10/calloways-nursery-inc/

FYI... I don't receive any compensation from this at all... more of just a site to put my ideas on writing... obviously gave a shoutout to COBF for this one!
Title: Re: CLWY - Calloway's Nursery
Post by: bci23 on August 16, 2018, 11:53:04 AM
Q2 below. Really solid quarter:

https://backend.otcmarkets.com/otcapi/company/financial-report/200028/content

Wow, that is truly impressive....however it looks like the reduction in the corporate tax rate is responsible for a good percentage of the YoY gain in income.

Will be interesting to see if the stock spikes on opening tomorrow.

True. Net margin is about the same if you apply the same tax rate to operating profit. Did a write-up on this company recently. Let me know what you guys thinks. It's quite long, though.

https://lowtideinvestments.com/2018/08/10/calloways-nursery-inc/

FYI... I don't receive any compensation from this at all... more of just a site to put my ideas on writing... obviously gave a shoutout to COBF for this one!

Couple comments on your post. 1. My understanding is that Peter Kamin and 3k partnership are psuedo-permanent capital so to assume he will be on some sort of timeline like 3-5 years to sell is probably not the best way to look at this situation. He might sell but i think it will be more because he thinks hes getting a great price rather than needing the liquidity. 2. I think special dividends like the one last year that you call out or a large tender offer are both likely to occur in the future as he has used that playbook in the past.
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on August 16, 2018, 02:31:48 PM
Yea I agree for the most part. The timing is definitely uncertain for when he will exit. I think that the more liquidity he draws, the better the price he will get... especially because this stock is so thinly traded. So I think he has an incentive to try and draw the most liquidity possible.
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on August 17, 2018, 09:32:53 AM
2Q18 was better than I anticipated on sales & GM.  The GM's in 1Q18 & 2Q18 are consistently better vs. '17.  I wonder why?  Perhaps the "plant it for me" business is adding a bit?  Seems like that would be high margin?

Question:  What makes you think 3K will sell-out? 

Strategically, at $4 million to $5 million FCF per year, it's in great shape.  Generating enough cash to open a new location when desired; buyback a large amount of stock each year (tender offer, or buy slowly in open market); and/or pay large dvd to yourself; pay-down debt. 

If I were them, given where the stock price is ($8 / share, $54.2 million EV), and $4 million to $5 million FCF per year (call it 7.5% to 9% FCF yield on EV - which is huge in current market), I'd do a tender somewhere in the $8 to $9 range and draw-out the weak hands.  See how that plays-out and then evaluate.  Even is they don't get much selling, worst case, they own more of the biz & collect the annual FCF. 

If Calloway's was trading in the 5% to 6.5% FCF/EV range, I'd be more tempted to sell-out ($11-$12.50 per share).

Thanks all,

Bryce
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on August 20, 2018, 06:44:18 AM
Stock is up 30%? Some news besides earnings, or is this just sloppy trading?
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on August 20, 2018, 07:21:54 AM
I don't see any news.
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on October 18, 2018, 09:34:01 AM
hey all:

CLWY appears to be moving up in price again.

Bid is $8.50, ask is $9.

No apparent news.

I will be anxious to see if there is another dividend declared this year.

Anybody know anything?
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on October 18, 2018, 03:12:02 PM
DT,

No news I know of. 

It's thinly traded lately, so when it went down to $7.90 I figure minor seller at market, then up to $8.50, same thing.

It's so cheap here on FCF to EV basis that it will go higher given time.  I wish 3K would do a mini-tender and draw-out the weak hands or owners who desire liquidity to get out...increase our ownership.  Could offer $8-$8.25/share, buy up to $5 million worth.  We'll see.

Bryce
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on November 14, 2018, 03:00:01 PM
Q3 results posted.
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on November 15, 2018, 08:34:48 AM
On track for $4.5 million FCF in 2018.  8% FCF yield on Enterprise Value of $57.2 million.
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on November 15, 2018, 09:00:42 AM
I think that might be optimistic? I have them at $3mm through Q3 and FCF is usually flat for them in Q4.
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on November 15, 2018, 11:04:50 AM
If you take out working capital swings (seasonal positive or negative), FCF YTD about $4.8 million ($1.5, $4.7, -$1.4).  My 4Q18 estimate -$0.275 FCF = $4.5.  But that 4Q18 estimate uses $250,000 capex vs. $40,000 3Q18...conservative.  I can try to post my #'s if you want.  I tried to cut & paste from Excel, but it looked awful.  Maybe can attach doc.

I'm guessing the $3.0 FCF YTD is with working capital swings.

Thinking about CLWY's stock price...

Not a huge growth company, so don't expect it to double or anything crazy.  But huge FCF vs. price for the business, combined with common sense use of it can produce good results.  Does help confidence that sales, margins, FCF in the business is fairly stable.
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on November 19, 2018, 05:56:19 PM
Looks like same store sales were down a bit (-.57%) when compared to the 9 months ending Dept. 30th, 2017.
Title: Re: CLWY - Calloway's Nursery
Post by: mbrock77 on November 19, 2018, 06:01:00 PM
Another 50 cent dividend announced today...
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on November 20, 2018, 04:53:29 AM
Another 50 cent dividend announced today...

Wow!

That is certainly great.  If CLWY can continue on with the $.50 yearly dividends, then this will morph into an income play.

For growth, simply open 1-2 stores a year.

Seems like a great plan action!
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on November 20, 2018, 09:11:20 AM
Looks like same store sales were down a bit (-.57%) when compared to the 9 months ending Dept. 30th, 2017.

Re the -0.57% same store sales:  Did you calculate that or did CLWY disclose?  I was curious what the same store sales % was, given CLWY opened one new store this year, and total company sales growth was low single digit % vs. 3Q17.  When I read its sales growth, I figured sales were basically flat among the established nurseries, with little growth from the one new nursery.

If you calculated, do you mind showing me how you did it?

Thank you.
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on November 20, 2018, 10:07:38 AM
Looks like same store sales were down a bit (-.57%) when compared to the 9 months ending Dept. 30th, 2017.

Re the -0.57% same store sales:  Did you calculate that or did CLWY disclose?  I was curious what the same store sales % was, given CLWY opened one new store this year, and total company sales growth was low single digit % vs. 3Q17.  When I read its sales growth, I figured sales were basically flat among the established nurseries, with little growth from the one new nursery.

If you calculated, do you mind showing me how you did it?

Thank you.

Yea sure. They had 19 stores in 2017. They added the Hebron store in April. Just take the average of 19 stores from January - March and 20 stores from April - September. Works about to be 19.667 stores for those 9 months.

Love the div... hoping its annual!
Title: Re: CLWY - Calloway's Nursery
Post by: brycepeterson on November 20, 2018, 12:29:22 PM
Nice aspect of the $0.50 dividend (6.25% @ $8 stock), is it only consumes $3.7 million of free cash flow.  This leaves Calloway's $500,000 to $1 million in FCF to grow or pay-off debt (although debt vs. cash on balance sheet about equal).  Assuming FCF stays steady.

Actually, I'd love it if instead of paying the dividend CLWY's tried to buyback stock in the open market perhaps $9 or below; or Dutch Tender at $8.50 to draw weak hands.  (I know I'm a broken record - said this before.)  Couple advantages of this strategy (a) reduce share count = increase existing shareholders ownership and (b) once you've drawn out the owners willing to sell at $9 or lower, the $0.50 dividend consumes less cash each year.

Bryce
Title: Re: CLWY - Calloway's Nursery
Post by: bci23 on November 21, 2018, 11:05:26 AM
Nice aspect of the $0.50 dividend (6.25% @ $8 stock), is it only consumes $3.7 million of free cash flow.  This leaves Calloway's $500,000 to $1 million in FCF to grow or pay-off debt (although debt vs. cash on balance sheet about equal).  Assuming FCF stays steady.

Actually, I'd love it if instead of paying the dividend CLWY's tried to buyback stock in the open market perhaps $9 or below; or Dutch Tender at $8.50 to draw weak hands.  (I know I'm a broken record - said this before.)  Couple advantages of this strategy (a) reduce share count = increase existing shareholders ownership and (b) once you've drawn out the owners willing to sell at $9 or lower, the $0.50 dividend consumes less cash each year.

Bryce

I view Peter Kamin as a pretty savvy/aggressive capital allocator and him deciding to pay dividends instead of buying back stock signals that he doesn't think the stock is cheap/attractive and would rather take the cash (and maybe pay taxes?) vs. buyback/tender.
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on January 15, 2019, 05:05:50 AM
Cornelius store opening up in Katy, TX at the end of January.

https://communityimpact.com/local-news/houston/katy/features/business/2019/01/14/cornelius-garden-center-nursery-to-open-in-katy-area/
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on January 15, 2019, 09:12:20 AM
Hey all:

The new Cornelius Nursery is certainly in a very good location.  I think the store has a good chance to do well.  Check it out on LoopNet:

https://www.loopnet.com/Listing/1403-Westborough-Dr-Katy-TX/14243407/

The bad news is that they are probably NOT considering selling off the Voss Rd. location and shutting down the Houston store(s).  There is a lot of capital tied up in that location.

Got the $.50/share dividend today.  Very nice indeed!
Title: Re: CLWY - Calloway's Nursery
Post by: Tag1911 on March 16, 2019, 04:27:22 PM
2018 Annual numbers are out.

https://www.otcmarkets.com/stock/CLWY/disclosure
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on March 17, 2019, 10:49:21 AM
Hey all:

I am bit surprised that 2018 numbers were lower than 2017's.  Not terrible though.

SG&A and interest expense is up, leading to the lower income.  I wonder if SG&A were up because of the new location being opened.

Sales were up a little.

In 2019, sales should go up because of the new location. 

If SG&A can move back towards 2017 levels, might be able to hit $.80/share in earnings?

If so, the stock might be able to move up a bit?
Title: Re: CLWY - Calloway's Nursery
Post by: writser on March 17, 2019, 02:32:57 PM
Maybe I'm being to simplistic but I find it hard to see a super compelling investment here at the moment. ~$60m market cap, more or less debt free. Maintenance CapEx is like what? 750k? So what are we looking at? 10x EV/EBIT and a ~7% FCF yield? Is that honestly so attractive for a microcap retailer with hardly any revenue growth? Why would this be much more attractive than, for example Dillard's?

Now I'm exaggerating a bit here. I see that the FCF yield is relatively juicy, they are returning cash to shareholders and there's a smart guy involved. Probably a very decent stock for a high single digit IRR and there's nothing wrong with that. But surely you guys don't expect this to double again in 2019? Or do you expect huge revenue increases? Margin improvements? Is there lots of value in excess real estate? Or can Kamin squeeze even more cash out of the company? The 2018 numbers suggest to me it is unlikely there are easy levers left to pull. Should this trade at double the multiples? What am I missing?

Would be great if someone could explain to me why this is an 'excellent' stock pick rather than an 'above average' stock pick at the moment because I don't see that at first glance.
Title: Re: CLWY - Calloway's Nursery
Post by: DTEJD1997 on March 17, 2019, 10:12:54 PM
Maybe I'm being to simplistic but I find it hard to see a super compelling investment here at the moment. ~$60m market cap, more or less debt free. Maintenance CapEx is like what? 750k? So what are we looking at? 10x EV/EBIT and a ~7% FCF yield? Is that honestly so attractive for a microcap retailer with hardly any revenue growth? Why would this be much more attractive than, for example Dillard's?

Now I'm exaggerating a bit here. I see that the FCF yield is relatively juicy, they are returning cash to shareholders and there's a smart guy involved. Probably a very decent stock for a high single digit IRR and there's nothing wrong with that. But surely you guys don't expect this to double again in 2019? Or do you expect huge revenue increases? Margin improvements? Is there lots of value in excess real estate? Or can Kamin squeeze even more cash out of the company? The 2018 numbers suggest to me it is unlikely there are easy levers left to pull. Should this trade at double the multiples? What am I missing?

Would be great if someone could explain to me why this is an 'excellent' stock pick rather than an 'above average' stock pick at the moment because I don't see that at first glance.

Writser:

You very well may be right about some things...Sure, CLWY is PROBABLY not a table pounding bargain...but it is not "expensive".  This is especially the case if they can indeed improve upon sales & earnings as I speculated earlier.

I think I could present a very good case that while DDS is "cheaper" on most financial metrics than CLWY, CLWY is probably a better investment.

Look at the history of the two stocks.  I can remember looking into DDS back when I was in Law School and visiting their Houston Galleria location!  That was over 20 years ago!  They really have not done much of anything since then.  I think they've gone up x2 in price (approximately) and this is in about a 20+ year time frame!  They have also paid some dividends also...but certainly NOT a good investment.  If I recall correctly, they have a dual share structure and the founding family controls all the votes, the board and sets the direction.  Their interests have been RADICALLY different than a shareholder looking for a return on their investment.

Contrast that to CLWY!  My family has a cost basis of LESS THAN ZERO due to dividends paying back the initial investment and then some.  Sure would be nice to get another $.50/share in dividends!  What if the stock goes from 8 to 10?  AND they pay another dividend?  A $2.50 return in the next 10 months is probably going to be A LOT more than what can be gained in DDS.

Finally, and perhaps most important of all...you've got a motivated Peter Kamin!  I trust him much more than family at DDS.  Look at his track record.  I predict he will make some goods moves in the future that benefit shareholders.  Can the same be said of DDS?
Title: Re: CLWY - Calloway's Nursery
Post by: Fitz on August 27, 2019, 05:45:59 PM
After CLWY's pretty poor first quarter they quietly had a decent Q2.

Revenue - 25,793
Gross Profit - 12,214
Net Income - 4,757

Gross profit compressed from 51% 2018Q2 to 47% 2019Q2
Net margin compressed from 19.5% 2018 Q2 to 18.4% 2019 Q2

SGA and Interest expense increased due to 21st store addition, without commensurate increase in revenue, and currently weighting on net income.
SGA and increased interest expense added 1.3 million to expenses in first 6 months with rev decline of 1 mil over same period.

CLWY did do a really good job of burning down some inventory to the tune of 2.7 million reduction and were able to get 7 million of cash flow from operations.

Anyone local have any insight on 2019 weather in Q1. Also looks like the Katy, TX property has come off loop net, not sure if this is due to pending sale or no interest...
Title: Re: CLWY - Calloway's Nursery
Post by: writser on October 23, 2019, 04:12:02 AM
For the Peter Kamin fans TTS might be an interesting stock to take a look at. -66% yesterday (https://seekingalpha.com/news/3507587-tile-shop-plunges-results-delisting-updated). A SPAC dumped this retailer on the public. Kamin's on the board. What's he doing in this trainwreck? Some juicy stories here (http://www.startribune.com/tile-shop-ceo-s-brother-in-law-fired-for-violations-of-business-ethics-policy/242300181/) .

Though I have to say: it looks like it might be a cheap train wreck. Insiders have been buying a bit the past few years and own ~30%. Might be a nice investment if they can execute the Kamin playbook. Probably too hard for me.
Title: Re: CLWY - Calloway's Nursery
Post by: Foreign Tuffett on October 23, 2019, 05:52:06 AM
For the Peter Kamin fans TTS might be an interesting stock to take a look at. -66% yesterday (https://seekingalpha.com/news/3507587-tile-shop-plunges-results-delisting-updated). A SPAC dumped this retailer on the public. Kamin's on the board. What's he doing in this trainwreck? Some juicy stories here (http://www.startribune.com/tile-shop-ceo-s-brother-in-law-fired-for-violations-of-business-ethics-policy/242300181/) .

Though I have to say: it looks like it might be a cheap train wreck. Insiders have been buying a bit the past few years and own ~30%. Might be a nice investment if they can execute the Kamin playbook. Probably too hard for me.

I haven't looked at TTS in two years, but my conclusion back then was that Floor & Decor was going to eat its lunch given the huge difference in gross margin (close to 30% at the time). Looks like TTS is still printing ~70% gross margin #s, so it's not hard to see why SSS are declining.

Peter Kamin was buying TTS shares in the open market in July 2017 at as high as $14.50!
Title: Re: CLWY - Calloway's Nursery
Post by: writser on October 23, 2019, 06:57:15 AM
Somebody is an eager buyer today. Will be interesting to see if it was Kamin. But it looks like it is a boiler room / Sykes / greater fool favourite today ( https://twitter.com/search?q=%24tts&src=typed_query&f=live )
Title: Re: CLWY - Calloway's Nursery
Post by: mwtorock on October 23, 2019, 07:12:29 AM
i mean i got tiny bit tts yesterday purely on the technical forced selling from going dark.

longer term though, anyone familiar with Kamin to comment whether he would take advantage of minority shareholders?

CLWY tender looked like a low ball offer in 2016?

Another case was Abatix buyout at about $15, which was about 30-40% premium to market prices at that time. But it did not look like minority shareholders had any choice...
Title: Re: CLWY - Calloway's Nursery
Post by: writser on November 08, 2019, 12:32:04 PM
I'm hijacking this thread but TTS still looks intriguing. I might open a topic about it if it weren't for the fact that I hardly know anything about the company. After a few hours of DD I can't say I'm super enthousiastic about it. Still, Peter Kamin bought ~4.3m shares the past three weeks, close to 12% of shares outstanding. On top of that another insider and private investor, Peter Jacullo, bought another 2.4m shares or ~5%. Pretty impressive. I wouldn't be surprised to see Peter Kamin taking this private at some point.
Title: Re: CLWY - Calloway's Nursery
Post by: porcupine on November 08, 2019, 12:45:56 PM
I will open one.