Author Topic: GRIF - Griffin Industrial Realty  (Read 21762 times)

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #20 on: August 27, 2019, 11:52:25 AM »
Gregmal and I have been having this convo on the "what are you buying today" thread, I figure that I'll put the convo here as well

Quote from: Gregmal on August 26, 2019, 12:03:35 PM
Quote from: BG2008 on August 26, 2019, 11:58:04 AM
Quote from: Gregmal on August 26, 2019, 09:48:06 AM
GRIF @35 and MSGN @14

I would be buying more GRIF if it wasn't for the large position size already.

Yea while I don't think its got much of a catalyst I still kind of ask myself Who TF is selling at these prices? Its one thing to look at a stock and pass. Its another when you already own it because you have to at least peripherally be aware of what's going on. I mean, even on a super short term, trading based thesis, $35 is still where'd you'd be buying, not selling... got another 1250 today.

Gabelli has sold some recently.  I think he manages SMAs and when clients redeem, they tell him to sell out of the stock which he is always very reluctant to do.  That's why you see 40,000 shares sold from Gabelli.  I think Gabelli and the family reducing their stake is better for the long term because it will improve the liquidity and the bid/ask spread of the company.   Yes, there is no catalyst.  But when you have a NAV that's 90-100% higher than the current price, good things happen.  The same thing happened to HHC.   


cubsfan

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Re: GRIF - Griffin Industrial Realty
« Reply #21 on: August 27, 2019, 12:33:48 PM »
I'm loving this GRIF thesis - just sit back and wait. Thanks for all the commentary.

Gregmal

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Re: GRIF - Griffin Industrial Realty
« Reply #22 on: August 27, 2019, 12:40:00 PM »
Yea Ive been guilty of that on a few names.

Here, I've been lazy in certain aspects relating to diligence. I know a bit about Gabelli and his organizational structure. The SMA structure I find is a gift and a curse.

With so much of the stock, are you aware of any sort of strategy here for him? Ive seen him go a bit of an activist route a few times. Ive also seen him many times go on TV and just talk his book. I think either have the ability to be productive with this since exposure for a company like this always helps. Additionally, Ive seen Gabelli do absolutely nothing with higher % ownership positions. Ive also seen his son get kicked out of H&F Club screaming "do you know who I am?" lol.

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #23 on: August 27, 2019, 12:43:27 PM »
One thing that I would suggest people do is maybe buy some Prologis puts at $70 and just roll them.  The Jan 2020 $70 puts are only $1.15 with Prologis trading at $82.   There is no need to hedge GRIF if it's a small position.  But if you want to sleep a little better at night, I think the Prologis $70 puts are a very good CDS type hedge in case we experience a 2008/2009 scenario.  We shorted some Prologis as well as a sector hedge.  But those are costing me way more than just buying the puts.   

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #24 on: August 27, 2019, 01:05:51 PM »
Yea Ive been guilty of that on a few names.

Here, I've been lazy in certain aspects relating to diligence. I know a bit about Gabelli and his organizational structure. The SMA structure I find is a gift and a curse.

With so much of the stock, are you aware of any sort of strategy here for him? Ive seen him go a bit of an activist route a few times. Ive also seen him many times go on TV and just talk his book. I think either have the ability to be productive with this since exposure for a company like this always helps. Additionally, Ive seen Gabelli do absolutely nothing with higher % ownership positions. Ive also seen his son get kicked out of H&F Club screaming "do you know who I am?" lol.

For a really small company, Mario Gabelli surprisingly knew GRIF quite well.  In the past, he has asked the company for more share buybacks mostly.  This is tough to do as the float is 20%.  This is all public.  He also sends his lieutenants to the meeting each year.  There is no full all-out David Winters style battle.   I view that as a big positive as I thought the CTO/Winters Battle Royale to be too distractive.  Despite Gabelli selling due to the forced SMA dynamics, I think they actually want to own more.  Just my understanding of their view on price vs valuation.  One of the better dynamic here is that if someone goes activist, just the sale of the warehouse will likely net the company close to $375-400mm (including the Charlotte, NC newbuild).   This would equates to roughly $49-$55 per share and shareholders will still own the office building, land parcels in CT, and some misc development parcels.  Will they sell if approached?  I think so.  Management team has said multiple times that they run the company for public shareholders.   A sale of the warehouse portfolio will be way simpler than the sale of CTO 2-3 years ago when it was a huge mix of loans, land parcels, a portfolio of single tenant buildings, etc.           



Gregmal

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Re: GRIF - Griffin Industrial Realty
« Reply #25 on: August 27, 2019, 01:22:14 PM »
Thanks for the background. If there is one thing I think Ive noticed consistently with some of these(especially in hind site) it is that it is important to have at least one easy to value asset making up a big chunk of the value relative to market cap. This definitely checks that box which puts things in play for a catalyst. I wish there was a little less ownership concentration, but as with FRP... if you have guys who are value creators instead of kingdom builders, it doesn't matter.

Spekulatius

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Re: GRIF - Griffin Industrial Realty
« Reply #26 on: August 27, 2019, 02:59:27 PM »
I like Gabelli’s involvement since he is smart like a fox and has a tremendous eye for value. I almost always find a value angle in his holdings, even if it isn’t apparently on first sight.

With the low liquidity of this stock, how did he manage to acquire such a large position? FWIW, I have a few hundred shares only, but I am super stingy and bought only when it hit ~$34 recently. I also owned some during the Q4 meltdown but sold for a quick gain. Quite frankly, I was hoping for some deeper selloff into the $30 range  ::).
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BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #27 on: August 27, 2019, 06:01:30 PM »
Thanks for the background. If there is one thing I think Ive noticed consistently with some of these(especially in hind site) it is that it is important to have at least one easy to value asset making up a big chunk of the value relative to market cap. This definitely checks that box which puts things in play for a catalyst. I wish there was a little less ownership concentration, but as with FRP... if you have guys who are value creators instead of kingdom builders, it doesn't matter.

Totally agreed with what you're saying.  I woulds say that with FRP Holding, it was very difficult to put a finger on the value because you have warehouse, Multi-family, and the rock pits.  Once they develop one of the multi-family, it was very obvious what it was worth because the bank financing provided you with value.  It helped with the sale of the warehouse which was $36 a share, a big chunk of the cost basis in the low $30.  I think these guys are in NYC in September, I should go meet up with them again.   

On the value creation, the GRIF guys all come from real estate and PE backgrounds.  Take a look at the director list starting on pg 5 of the proxy.  It's actually not a bad list of credentials.  Management teams told me that since the company is family owned, they tend to underwrite investments on an absolute return basis rather than in comparison to WACC as a big public REIT would.  By looking at some of their investment, they are typically targeting 15-20% levered IRRs.  With the public REITs, they can get a bit overboard with the acquisitions late in the cycle.     

https://www.sec.gov/Archives/edgar/data/1037390/000155837019002892/def14a.htm

David R. Bechtel (a) (c)

Principal of Barrow Street Holdings LLC since September 2012; founder and managing member of Outpost Capital Management LLC since 2001; and founder and manager of GP Management LLC since January 2011.

Edgar M. Cullman, Jr. (3)
Managing member of Culbro LLC, a private equity investment firm, since 2005; President and Chief Executive Officer of General Cigar Holdings from 1996 through April 2005.

Jonathan P. May (a) (b) (c)

Founder and co-managing partner of Floresta Ventures, LLC since March 2016; Executive Director of Natural Capital Partners (formerly known as The CarbonNeutral Company), a private company that is a leading provider of carbon reduction programs for corporations, since September 2015; Chief Operating Officer and Chief Financial Officer and a Director of The CarbonNeutral Company from 2008 through September 2015; Founder and Managing Director of Catalytic Capital, LLC from 2004 to 2008

Amy Rose Silverman

President and Chief Executive Officer of Rose Associates, a real estate and property management firm, since December 2017; Co-President of Rose Associates since 2008.


Ms. Rose is a recognized expert on residential real estate in New York City, is a frequent speaker in premier professional conferences and participates as a guest lecturer at The NYU Schack Institute of Real Estate and Columbia Business School.   Ms. Rose’s significant experience in design, construction, leasing and management of premier high-rise and mixed-use residential buildings provides a unique perspective to the Board.

Albert H. Small, Jr. (b) (c)

Presently active in the development and management of several commercial and office developments in Washington D.C.; President of WCI Communities Mid‑Atlantic Division from March 2005 through March 2008; President of Renaissance Housing Corporation from 1984 through March 2005.

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #28 on: August 27, 2019, 06:02:52 PM »
Thanks for the background. If there is one thing I think Ive noticed consistently with some of these(especially in hind site) it is that it is important to have at least one easy to value asset making up a big chunk of the value relative to market cap. This definitely checks that box which puts things in play for a catalyst. I wish there was a little less ownership concentration, but as with FRP... if you have guys who are value creators instead of kingdom builders, it doesn't matter.

Totally agreed with what you're saying.  I woulds say that with FRP Holding, it was very difficult to put a finger on the value because you have warehouse, Multi-family, and the rock pits.  Once they develop one of the multi-family, it was very obvious what it was worth because the bank financing provided you with value.  It helped with the sale of the warehouse which was $36 a share, a big chunk of the cost basis in the low $30.  I think these guys are in NYC in September, I should go meet up with them again.   

On the value creation, the GRIF guys all come from real estate and PE backgrounds.  Take a look at the director list starting on pg 5 of the proxy.  It's actually not a bad list of credentials.  Management teams told me that since the company is family owned, they tend to underwrite investments on an absolute return basis rather than in comparison to WACC as a big public REIT would.  By looking at some of their investment, they are typically targeting 15-20% levered IRRs.  With the public REITs, they can get a bit overboard with the acquisitions late in the cycle.     

https://www.sec.gov/Archives/edgar/data/1037390/000155837019002892/def14a.htm

David R. Bechtel (a) (c)

Principal of Barrow Street Holdings LLC since September 2012; founder and managing member of Outpost Capital Management LLC since 2001; and founder and manager of GP Management LLC since January 2011.

Edgar M. Cullman, Jr. (3)
Managing member of Culbro LLC, a private equity investment firm, since 2005; President and Chief Executive Officer of General Cigar Holdings from 1996 through April 2005.

Jonathan P. May (a) (b) (c)

Founder and co-managing partner of Floresta Ventures, LLC since March 2016; Executive Director of Natural Capital Partners (formerly known as The CarbonNeutral Company), a private company that is a leading provider of carbon reduction programs for corporations, since September 2015; Chief Operating Officer and Chief Financial Officer and a Director of The CarbonNeutral Company from 2008 through September 2015; Founder and Managing Director of Catalytic Capital, LLC from 2004 to 2008

Amy Rose Silverman

President and Chief Executive Officer of Rose Associates, a real estate and property management firm, since December 2017; Co-President of Rose Associates since 2008.


Ms. Rose is a recognized expert on residential real estate in New York City, is a frequent speaker in premier professional conferences and participates as a guest lecturer at The NYU Schack Institute of Real Estate and Columbia Business School.   Ms. Rose’s significant experience in design, construction, leasing and management of premier high-rise and mixed-use residential buildings provides a unique perspective to the Board.

Albert H. Small, Jr. (b) (c)

Presently active in the development and management of several commercial and office developments in Washington D.C.; President of WCI Communities Mid‑Atlantic Division from March 2005 through March 2008; President of Renaissance Housing Corporation from 1984 through March 2005.

Here's Michael Gamzon's bio.  He's not some entrenched CEO who has an obligation to his family.  He comes from a IB/PE background.   

President/CEO
Griffin Industrial Realty Inc
01/2016–PRESENT
President/COO
Griffin Industrial Realty Inc
05/2015–01/2016
President/COO
Griffin Land & Nurseries Inc
05/2012–05/2015
Exec VP/COO
Griffin Land & Nurseries Inc
09/2010–05/2012
Vice President
Griffin Land & Nurseries Inc
01/2008–08/2010
Investment Analyst
Alson Capital Partners LLC
04/2005–01/2008
Investment Analyst
Cobalt Capital Management Inc
03/2002–03/2005
Donaldson Lufkin & Jenrette
FORMER
Analyst:Business
Pepsico Inc
FORMER
Principal
Scp Private Equity Partners LP
FORMER

BG2008

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Re: GRIF - Griffin Industrial Realty
« Reply #29 on: August 27, 2019, 06:17:39 PM »
I like Gabelli’s involvement since he is smart like a fox and has a tremendous eye for value. I almost always find a value angle in his holdings, even if it isn’t apparently on first sight.

With the low liquidity of this stock, how did he manage to acquire such a large position? FWIW, I have a few hundred shares only, but I am super stingy and bought only when it hit ~$34 recently. I also owned some during the Q4 meltdown but sold for a quick gain. Quite frankly, I was hoping for some deeper selloff into the $30 range  ::).

Gabelli owns these shares from 1997 when GRIF was a spinoff from Culbro which is general cigars I believe.  I think Gabelli owned 28% of Culbro and winded up with GRIF as a result of the spinoff. 

Even in 1998, Gabelli owned a 28.8% stake.   After the recession they increased their stake to the 30%-34% range.   

Fun proxy statement from 1997

https://www.sec.gov/Archives/edgar/data/1037390/0001047469-98-012018.txt

Most of the shares (from 27% to 33%) were purchased around $30 I would think looking at the charts in the 2011 to 2014 time frame.  But the company is worth significantly more today.

2014   
1,730,812           
32.7   

2013
1,666,541           
31.7   

2012
1,659,430
31.8   

2011
1,599,456           
30.8