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General Category => Investment Ideas => Topic started by: oddballstocks on April 18, 2012, 12:34:35 PM

Title: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on April 18, 2012, 12:34:35 PM
I did two posts detailing Hanover Foods a vertically integrated frozen food company located in Pennsylvania. 

The company is family owned and controlled and unlisted.  I figured I'd get that out there early so 98% of this message board can click away now.  If you're still reading here are some highlights:

The company went dark in 2004 paying shareholders $131/share for their A shares, at the time the A shares were trading in the same range they are now ($80/sh range), a considerable premium.  During the going private transaction a valuation was completed which pegged the fair market value of the A shares at $131 and the B shares at $138.  At the time of going dark the book value of Hanover Foods was $99/sh.  Fast forward to today:

Earned $16.24/sh in 2011 has a current P/E of 5
Grew book value from $137/sh in 2004 to $250/sh in 2011
Liquidation value of $99.39/sh
The company has an outstanding offer to buy employee owned shares purchased before 1988 at $150/sh.
$37.89/sh of cash from operations for a P/CF of 2.16
FCF of $23.79/sh for a P/FCF of 3.44
EV/EBIT of 4.45 and EV/FCF of 4.59

Using a range of values from earnings power, book value, and appraised value I came up with a IV range of $150-250 a share for Hanover Foods.  This is double or more than today's share price.

I go into more detail on the posts, but would be interested in this board's thoughts.  I have a position in the B shares.

Here are the two posts:
http://www.oddballstocks.com/2012/04/hanover-foods-part-1-story.html
http://www.oddballstocks.com/2012/04/hanover-foods-part-2-figures.html

Nate
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Kraven on April 18, 2012, 03:46:13 PM
Very interesting.  Thanks for posting it.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: nkp007 on March 01, 2013, 08:35:27 AM
Just bought some. Not really sure what to expect, but it's fundamentally very cheap and been around for a while. Obviously not a concentrated position because of lack of transparency...but would love to discuss with people who are also invested.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Hielko on March 01, 2013, 09:15:20 AM
Do you have the financials? Would like to take a look at this :)
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: nkp007 on March 01, 2013, 09:20:52 AM
Do you have the financials? Would like to take a look at this :)

Check out Oddball's part 2 post. It has the important numbers (except for depreciation!).

I don't have the financials yet.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Olmsted on March 01, 2013, 10:09:54 AM
Doesn't Nate run a website for unlisted financials?  I'm sure that Hanover is in there, and I'm sure there is a link to it on his blog.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: ScottHall on March 01, 2013, 05:49:57 PM
Just bought some. Not really sure what to expect, but it's fundamentally very cheap and been around for a while. Obviously not a concentrated position because of lack of transparency...but would love to discuss with people who are also invested.

I own this. The annual report isn't really very detailed so there's not a lot to talk about.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on March 01, 2013, 07:26:09 PM
My ears were burning, so I figured I'd respond.  Yes, I own it and like the company, and yes the financials appear on my unlistedstock.net site as well.

I'm in a generous mood tonight so I posted the 2012 annual report.  As ScottHall mentioned, not much additional information available beyond what I'd posted in the blog.

The interesting pieces of information with this company come from on the ground sources.  A friend of a friend talks to Michael Warehime occasionally and had some insight.  Apparently most of the shares coming onto the market are Michael's shares, he hates his brother and regularly donates his Hanover shares to a few local charities.  The local charities sell the shares for cash, that's the source of what we're seeing out there.

John Warehime has been acceptable at running the company, he's been a pretty decent capital allocator by purchasing up other brands and bolting them onto Hanover.  In the 2012 report there are signs the company is at work acquiring another company though a joint venture.

I've debated driving out to Hanover a few times just to check things out, if I get the chance I might.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: ScottHall on March 01, 2013, 10:56:18 PM
Anyone care to speculate what will happen to Hanover after John Warehime kicks the bucket?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Green King on March 02, 2013, 02:35:35 AM
Oddball thanks
Can i have some more please?:) I think I need at least 5 years to have an opinion.

Thanks

GK
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Hielko on March 02, 2013, 04:24:00 AM
Thanks Nate for the annual report. Just wondering: do they hold annual shareholder meetings?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on March 02, 2013, 07:32:44 AM
Oddball thanks
Can i have some more please?:) I think I need at least 5 years to have an opinion.

Thanks

GK

That's tough, I don't have five years.  I do have some data going back to 2007, they went dark in 2004.  But honestly you don't need that hole, the results are pretty linear, from 2004 forward to now they're pretty linear as well.  Sales have been growing at a steady pace, earnings, cash flow and book value as well. 

Without looking I seem to remember book value has grown at 8% over the past 10+ years, and buying at 30% of book value means they're compounding at 27% on your investment.  Not bad to take that and wait it out, so this is one of those things I don't mind holding and waiting for years.

They pay a $1 per year dividend.

As for what happens when John dies?  That's anyone's guess, but Michael doesn't have a big stake, all of the grandkids only own 3k shares each.  It wouldn't surprise me if the company is sold, none of the kids are in managing roles, the only way they can monetize their inheritance is to either kick out bigger dividends or to sell and take the cash. 
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Green King on March 02, 2013, 11:43:01 PM
Oddball thanks
Can i have some more please?:) I think I need at least 5 years to have an opinion.

Thanks

GK

That's tough, I don't have five years.  I do have some data going back to 2007, they went dark in 2004.  But honestly you don't need that hole, the results are pretty linear, from 2004 forward to now they're pretty linear as well.  Sales have been growing at a steady pace, earnings, cash flow and book value as well. 

Without looking I seem to remember book value has grown at 8% over the past 10+ years, and buying at 30% of book value means they're compounding at 27% on your investment.  Not bad to take that and wait it out, so this is one of those things I don't mind holding and waiting for years.

They pay a $1 per year dividend.

As for what happens when John dies?  That's anyone's guess, but Michael doesn't have a big stake, all of the grandkids only own 3k shares each.  It wouldn't surprise me if the company is sold, none of the kids are in managing roles, the only way they can monetize their inheritance is to either kick out bigger dividends or to sell and take the cash.

where did you get 30%? the annual report says 200 m in shareholder equity? But i trust your work are right but for me to buy anything i have to see it for myself. Do you have more than one year of annual report? I can't do anything with that big of a gap.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on March 04, 2013, 07:38:23 AM
Thanks for the very interesting idea! Not sure how I missed this when you posted it back in April. Please help me understand the capital structure though. Based on the annual report posted:
My understanding of the shares held by the ESOT are that they currently unallocated to individual employees, but are earmarked to meet the demand created by the 2005 Option Plan and the ESOP. Since they are unallocated, they are effectively held by the company and should be treated similar to treasury stock. What's a little more confusing is in some of their SEC filings, the company included the shares issued to the ESOT in their outstanding count - really not sure why they did this.

Additionally we have:
Per the treasury method, the options in the 2005 Option Plan are out of the money so no dilution. But these are pretty close to the money so might have a delta of a little less than 0.5 and hence very rough dilution of 63,022. Granted they will receive cash so effective dilution would be lower depending on what the stock price does.

Following this reasoning, I come to a diluted share count of around 786,800 (=349,453+850,572+1+10-147,453-340,119+63). But I was having trouble reconciling the share count numbers in their old SEC filings so part of my reasoning here is probably faulty or I'm missing something.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on March 04, 2013, 08:03:45 AM
Oddball thanks
Can i have some more please?:) I think I need at least 5 years to have an opinion.

Thanks

GK

That's tough, I don't have five years.  I do have some data going back to 2007, they went dark in 2004.  But honestly you don't need that hole, the results are pretty linear, from 2004 forward to now they're pretty linear as well.  Sales have been growing at a steady pace, earnings, cash flow and book value as well. 

Without looking I seem to remember book value has grown at 8% over the past 10+ years, and buying at 30% of book value means they're compounding at 27% on your investment.  Not bad to take that and wait it out, so this is one of those things I don't mind holding and waiting for years.

They pay a $1 per year dividend.

As for what happens when John dies?  That's anyone's guess, but Michael doesn't have a big stake, all of the grandkids only own 3k shares each.  It wouldn't surprise me if the company is sold, none of the kids are in managing roles, the only way they can monetize their inheritance is to either kick out bigger dividends or to sell and take the cash.

where did you get 30%? the annual report says 200 m in shareholder equity? But i trust your work are right but for me to buy anything i have to see it for myself. Do you have more than one year of annual report? I can't do anything with that big of a gap.

I just took the market cap of $78m divided by equity of $200m, so 39%. The stock is thin and I've seen trades recently in the low 90s which is closer to 30%. I guess the 30% of BV number stuck from when I purchased in the low 80s.

In terms of shares it is tricky. I've seen numbers from 730-780. The most solid number I've heard is closer to 730. This was confirmed by a friend of a friend who talked to the auditor.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Hielko on March 04, 2013, 10:26:33 AM
Quote
Per the treasury method, the options in the 2005 Option Plan are out of the money so no dilution. But these are pretty close to the money so might have a delta of a little less than 0.5 and hence very rough dilution of 63,022. Granted they will receive cash so effective dilution would be lower depending on what the stock price does.
I don't know when they expire, but looking at the delta as a way to figure out the dilution doesn't really work I think. What matters is the probability that they will expire in the money and how big the gap between the current price and intrinsic value is (if there is no gap dilution doesn't hurt).

Lets say that there is a 50% probability of the options getting in the money (reasonable for an at the money option). Lets say that intrinsic value is twice the current market price. If price goes to IV at some point in the future two options basically bought one free share. So i'd say that the expected dilution from the options is ~32,000 shares and less if the price stays below IV.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Olmsted on March 04, 2013, 02:55:10 PM
I would approach the share count vis-a-vis the employee stock options slightly differently for a small, illiquid company than I would for a mid-cap or something.  The key assumption for employee options on a larger company are that, upon expiration, the employee can choose to exercise options or to buy an equivalent number of shares on the open market at the prevailing price that day.  If they can buy shares cheaper than their option strike, options are worthless and they do not get executed, keeping share count the same.

For something like this, though, that assumption does not hold.  There is not unlimited liquidity at the last-trade-price.  The employee likely cannot buy as many shares on the market as he has options.  Therefore, an option - even if it is above the last price - has value and will be exercised as long as the employee feels the strike price is an attractive price for shares.  In this case, I would fully dilute any options that are even reasonably close to the current market price - maybe even any options under book value.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Packer16 on March 04, 2013, 03:56:03 PM
I think you understanding of the ESOT shares is not correct.  For an employee owned ownership plan, the plan buys the shares for the participants and holds them in trust.  They do not belong to the company but the individuals represented by the trust.  If there is a sale, the trust will get its pro-rata share of the proceeds and as a minority shareholder you will not share in the ESOT proceeds.  Thus you need to include these shares in your fully diluted calculation.

Packer
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on March 04, 2013, 05:32:55 PM
I think you understanding of the ESOT shares is not correct.  For an employee owned ownership plan, the plan buys the shares for the participants and holds them in trust.  They do not belong to the company but the individuals represented by the trust.  If there is a sale, the trust will get its pro-rata share of the proceeds and as a minority shareholder you will not share in the ESOT proceeds.  Thus you need to include these shares in your fully diluted calculation.

Packer

That's correct for a normal ESOP but these trust shares do not technically exist. They are voting only, no economic interest. If the company were to dissolve those shares get zero.

Google Hanover Warehime trust and you'll find a lot of court documentation surrounding this. Also Tim Erickson on this board is a good resource, or call the company. One of their filings in 2003 I think had an extended discourse on the shares.

What I know is the auditors have said in a sale the ESOT shares are not counted. But for a vote they absolutely count.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Packer16 on March 04, 2013, 07:06:10 PM
From what I see in the financials the reason why the shares are not counted in the financial statements is the ESOP is consolidated for financial reporting purposes but I could not find where these shares would have no value economically.  Typically, shares can be redeemed by participants at the latest determined valuation so I would think at a minimum participants would re-sell the company before the sale.  In addition, there are specific DOL regulations regulating ESOPs due to in part the tax benefits they are given.  It is hard for me to believe that the case where Hanover gets taken over and the shares receive nothing would be allowed as an ESOP because the contributions are tax deductible under the premise that the employees are getting a benefit not just a vote.  It may be set up this way but I think there would be some litigation around providing only a vote to the employees via the ESOP versus a economic interest.

Packer
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on March 04, 2013, 07:17:24 PM
Packer,

In all the reading I've done I've come to the conclusion that John Warehime is surfing as close to the boundary of the law as possible if not over the line.

Here is a cour document that sheds some light: http://caselaw.findlaw.com/pa-superior-court/1456446.html

The trust is very complicated, this investment would be simple if it weren't for the shares outstanding issue. I've heard of some investors just throwing up heir hands and using the 1m share figure, but I think it's more nuanced then that.

750k shares, 1m shares, either way this is still cheap. 
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Packer16 on March 04, 2013, 07:38:35 PM
The key issue you bring up is it is still cheap.  One issue given the history of litigation, how do think you will be treated in a take-over?  Has he ever tried to "take-under" the company?  It appears from the case that he feels the company is his fiefdom to do with as he pleases.  Have you found other instances of this or this just bad blood in the family?  Thanks for interesting idea.

Packer
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Packer16 on March 06, 2013, 04:03:41 AM
I talked to one of my partners about Hanover and he used to work on the audit.  He said the family is highly disfunctional and had a "Helmsley" complex in a blue-collar company.  One portion of the business that has done quite well is the Synder snack foods which was seperated from Hanover in one of the family feuds.  He also had done quite a few ESOPs and said it is quite common for the financial reporting to consolidate the ESOP trust so if you look at the financial statements it appears that the shares are not there but the economics of the situation are they are there and they will either get a payout upon sale or their pro-rata share of the merger consideration.  This situation may be unique but I would not rely on the financial reporting to provide you a clear view of what is going on with the shares.

Packer
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on March 06, 2013, 05:18:11 AM
I talked to one of my partners about Hanover and he used to work on the audit.  He said the family is highly disfunctional and had a "Helmsley" complex in a blue-collar company.  One portion of the business that has done quite well is the Synder snack foods which was seperated from Hanover in one of the family feuds.  He also had done quite a few ESOPs and said it is quite common for the financial reporting to consolidate the ESOP trust so if you look at the financial statements it appears that the shares are not there but the economics of the situation are they are there and they will either get a payout upon sale or their pro-rata share of the merger consideration.  This situation may be unique but I would not rely on the financial reporting to provide you a clear view of what is going on with the shares.

Packer
Does he know why clean opinions were given? Audit partner had a different view?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Packer16 on March 06, 2013, 06:41:14 AM
Clean opinions were given becasue that is what the GAAP rules are not what is economically happening in the allocation of potential proceeds.  This happens in certain areas other areas of accounting.

Packer
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on March 09, 2013, 10:37:43 AM
Packer,

In all the reading I've done I've come to the conclusion that John Warehime is surfing as close to the boundary of the law as possible if not over the line.

Here is a cour document that sheds some light: http://caselaw.findlaw.com/pa-superior-court/1456446.html

The trust is very complicated, this investment would be simple if it weren't for the shares outstanding issue. I've heard of some investors just throwing up heir hands and using the 1m share figure, but I think it's more nuanced then that.

750k shares, 1m shares, either way this is still cheap.
Still trying to get to the bottom of all his.

Are those court documents describing the same trust?  I thought the Trust was restated June 20, 2002 (http://www.sec.gov/Archives/edgar/data/853733/000089322002001108/w63509exv10wcc.txt (http://www.sec.gov/Archives/edgar/data/853733/000089322002001108/w63509exv10wcc.txt)). The court documents are talking about May 2001.

Based on my reading, I think I agree with you for the most part Nate. It seems to me the majority of the shares held by the ESOT exist to fund the 2005 Option Plan and to a lesser extent the ESOP. The shares issued to fund the Option Plan have voting rights but seem only to have an economic interest to the extent they are in the money (which currently they are not, barely). The shares held by the ESOP (17,730) are the same as any other shares outstanding.

The wording of the transaction part of the Trust Agreement is a little ambiguous. But taken together with the other statements, it seems the shares only receive distributions in the case the transaction price is above the strike price and the options are exercised. In this case though, the company also receives cash so the dilution is entirely a function of the transaction price.

In any case though, I purchased some shares so thanks again for the idea.

Some excerpts from the Trust Agreement:

“Under no circumstances shall cash dividends and other cash distributions allocated to the Option Plan Subaccount be paid to Option Plan Participants in their capacity as such.“

“Company Stock held in the Option Plan Subaccount (as herein defined) of the Trust shall be used exclusively for the purpose of satisfying the Company's obligations under Options (as herein defined) which are exercised by Option Plan Participants (as herein defined) as provided for in Article 3.” Where "Option Plan Participant" means any individual who holds an unexercised Option to purchase Company Stock granted pursuant to the Stock Option Plan.

“The Trust shall be irrevocable, except as provided in the following sentence. In the event of a transaction with an unaffiliated third party which involves a sale of all or substantially all of the assets or stock of the Company (including, but not limited to, a merger, consolidation, division or other transaction which involves a sale of all or substantially all of the assets or stock of the Company), the Trust shall thereupon be revocable by the Company and any Company Stock and/or other assets then remaining in the Trust shall be distributed as directed by the Company.”
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on September 09, 2013, 08:15:41 PM
Any news on HNFSA/HNFSB?  I have been shareholder for a while and have not received anything in the mail yet. I suppose the annual report for Y2013 is due too in Sept?

I have called "IR" a couple of times to get a message but never got a live person on the phone. Leaving a message did not yield anything. Frustrating company to deal with for sure.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on September 09, 2013, 08:37:29 PM
Any news on HNFSA/HNFSB?  I have been shareholder for a while and have not received anything in the mail yet. I suppose the annual report for Y2013 is due too in Sept?

I have called "IR" a couple of times to get a message but never got a live person on the phone. Leaving a message did not yield anything. Frustrating company to deal with for sure.

Received the latest quarterly report maybe a month ago in the mail, they skipped a quarter, but otherwise business as usual.  There was an inventory build, and some associated debt built with it.  Maybe it's related to the new frozen beans product they launched.

My broker sends me the information in the mail, forwarded from the company.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on September 10, 2013, 05:49:50 AM



My broker sends me the information in the mail, forwarded from the company.

Do they do this for all of your holdings?  That would be nice.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on September 10, 2013, 06:43:42 AM



My broker sends me the information in the mail, forwarded from the company.

Do they do this for all of your holdings?  That would be nice.

Yes, I use Fidelity and buried deep in the website there is a contact preferences page.  I instructed them to mail me all annual, quarterly reports, and proxies.  I also receive a monthly statement in the mail, but no trade confirmations.  I've had it setup like this for years, this is how I receive annual reports for most of my unlisted holdings.

As a side note I called Fidelity and talked to them about how they do mailings for the unlisted stuff.  They said they a company will contact them to get the number of shareholders to mail information to, they then send the annual reports to Fidelity and Fidelity distributes them.  In some cases the company sends one and Fidelity actually reproduces the entire annual report, I was told this is very common.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on September 10, 2013, 01:54:34 PM
Thanks.  The more I hear about fidelity the more I think about switching.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Kiltacular on September 10, 2013, 02:21:48 PM
Quote
Thanks.  The more I hear about fidelity the more I think about switching.

Fidelity is excellent.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on September 12, 2013, 10:05:02 PM

Yes, I use Fidelity and buried deep in the website there is a contact preferences page.  I instructed them to mail me all annual, quarterly reports, and proxies.  I also receive a monthly statement in the mail, but no trade confirmations.  I've had it setup like this for years, this is how I receive annual reports for most of my unlisted holdings.

As a side note I called Fidelity and talked to them about how they do mailings for the unlisted stuff.  They said they a company will contact them to get the number of shareholders to mail information to, they then send the annual reports to Fidelity and Fidelity distributes them.  In some cases the company sends one and Fidelity actually reproduces the entire annual report, I was told this is very common.

I hold my HNFSA shares in an Interactive Brokers account and so far have not received any shareholder communication.
Sometimes, I do get mailings directly from the companies I invested in , but that is not the case with HFNSA.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on September 14, 2013, 06:24:59 PM
I got interested in this and decided to look into it.  The company told me to buy a share and send in a copy of a brokerage statement showing I owned it and they would send a report.  Perhaps you could also switch the holding to your name and the transfer agent would mail reports to your house.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on September 18, 2013, 08:37:21 AM
I went ahead and bought a share of this so I could try to figure out what was going on with it.  I just spoke to IB and apparently there is no option to switch your holdings to your name.  So from what I can tell there is no way for me to get on the list to receive annual reports.   Is anyone else who uses IB having this problem?  Has anyone found a way around it?

Might be time for me to switch to fidelity.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on September 18, 2013, 08:49:35 AM
I went ahead and bought a share of this so I could try to figure out what was going on with it.  I just spoke to IB and apparently there is no option to switch your holdings to your name.  So from what I can tell there is no way for me to get on the list to receive annual reports.   Is anyone else who uses IB having this problem?  Has anyone found a way around it?

Might be time for me to switch to fidelity.

I have switched holdings into certificate form with Fidelity. They claim there is a fee but I've never paid it. The process is simple, you write them a letter of instruction and mail it. About 8-12 weeks later you receive a certificate with a very serious sounding letter saying don't lose the certificate.

Honestly certificates are a pain. I have one laying on my desk because I haven't had a chance to get to the safe deposit box recently. It's weird to have a piece of paper worth a few thousand just laying around in a stack of papers. I keep worrying a kid might get to it and destroy a few grand of capital.

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: fareastwarriors on September 18, 2013, 09:32:11 AM
What is the benefit of holding the phyisical certificate?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on September 18, 2013, 10:00:14 AM
What is the benefit of holding the phyisical certificate?

Some companies only give financials to record holders, not street holders.  In order to get financials one needs to actually own the stock, not have a contract with the brokerage that confers ownership.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on September 18, 2013, 06:06:34 PM
Can't you switch the thing into your name without having to hold a physical certificate?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on October 11, 2013, 06:36:26 AM
I got the 2013 annual report in the mail. Looks like quite a few changes.
Would be curious if Nate or others know much about Jeffrey.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: gg on October 11, 2013, 07:11:29 AM
Can someone please post the annual report if they have a digital copy?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: boilermaker75 on October 11, 2013, 07:24:23 AM
Can someone please post the annual report if they have a digital copy?

http://www.sec.gov/Archives/edgar/data/853733/000095011604002631/tenk.htm
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on October 11, 2013, 07:34:21 AM
Haven't received mine in the mail yet, will be anxiously watching the mailbox this afternoon.

The CEO appointment was a curveball, I didn't expect that.  What is very encouraging is the number of shares has been disclosed and the ESOT/ESOP wound down.  It seems things are being cleaned up, I wonder if this is in preparation of a future sale?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on October 11, 2013, 07:35:38 AM
Can someone please post the annual report if they have a digital copy?

http://www.sec.gov/Archives/edgar/data/853733/000095011604002631/tenk.htm

Uh, you realize you posted the annual report from 2004 right?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: boilermaker75 on October 11, 2013, 07:42:55 AM
Can someone please post the annual report if they have a digital copy?

http://www.sec.gov/Archives/edgar/data/853733/000095011604002631/tenk.htm

Uh, you realize you posted the annual report from 2004 right?

I do now, sorry.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on October 11, 2013, 09:06:06 AM
I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

There is no rule against doing this, is there?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on October 11, 2013, 09:45:41 AM
I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

There is no rule against doing this, is there?

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: boilermaker75 on October 11, 2013, 10:39:41 AM
I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

There is no rule against doing this, is there?

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.

So making these reports public is not a requirement for a public company? They can request the SEC not to make their filings public? TIA
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on October 11, 2013, 11:01:39 AM
I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

There is no rule against doing this, is there?

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.

So making these reports public is not a requirement for a public company? They can request the SEC not to make their filings public? TIA

Being public and filing with the SEC are two different things.  A company can be public and not file, there are certain thresholds that need to be crossed before a company is legally required to become a filing entity.  If they are a filing company then yes, they legally have to require annual reports and proxies.

If a company is able to get their shareholder count below 300 (now 1500 with the JOBS act) they are not required to file with the SEC.  Their shares might be traded on the OTC Market, and investors could be buying and selling daily, but the SEC filing burden is eliminated.  What companies decide to show shareholders is up to them once they are 'dark' (non-SEC filing).  There are certain legal requirements, like abiding by books and records requests, but many times they aren't legally required to file anything.

There are all sorts of dark companies, some like Conrad are great, they publish their quarterly reports and annual reports on their website and on OTCMarkets.  Then there are others like Walking Company Holdings that won't release anything but a tersely worded statement once a year, and finally companies like Avesis that require an NDA, which is total BS.  <steps onto soapbox> Avesis really pissed me off, as an insurance company their financials are available on the NAIC website as required by law.  They publish a proxy yearly that states their dividend and a few other puff facts.  I went back and forth with the CFO because I wanted to know about their debt and liability structure.  He said ALL financial information was private and he couldn't say a thing because competitors might take advantage.  My second quibble is this, I have extensive insurance experience, especially in understanding some of the pricing and claims payment process.  There is no way a competitor could gain an advantage by reading their summary financials.  Their summary financials and subscriber information is on the NAIC website, and pricing isn't exactly the most hidden item out there.  So I signed the NDA and the CFO answered the exact questions I asked.  Then I asked more related to those and he said he couldn't say anything else unless I signed another NDA that specifically incorporated those questions into the form.  I passed, the company is cheap, dirt cheap, but with slimeballs like that I wasn't interested in investing.  I own five or ten shares I think ($20 worth).  To top this all off, the NDA is illegal, under state law I have a legal right to view that information, I'm a part owner of the company, the NDA is unenforceable and a scare tactic.  I had my revenge, I wrote a post on them, never named them, but shared what I'd learned, I'm sure you can find it via Google.</soapbox>

Sorry for the wall of text, I have many other rants like this about POS dark companies that I've encountered.  There are some that are mouth watering cheap but management is so horrible, greedy, and self serving, that if encountered in person I would keep one hand on my wallet at all times for fear that they'd try to lunge for it at the first chance they had.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: boilermaker75 on October 11, 2013, 11:10:45 AM
oddballstocks,

Thank you very much,

boiler
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on October 11, 2013, 12:22:39 PM
Received my annual report in the mail today, much more verbose note than in the past.  I haven't had a time to read it fully, but this is encouraging. 

Someone mentioned the margin decline, could it be related to coupons?  My wife has been buying more Hanover products than in the past, and she buys what's cheapest with coupons.  They've been issuing a lot of coupons recently.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on October 12, 2013, 08:40:02 AM
Received my annual report in the mail today, much more verbose note than in the past.  I haven't had a time to read it fully, but this is encouraging. 

Someone mentioned the margin decline, could it be related to coupons?  My wife has been buying more Hanover products than in the past, and she buys what's cheapest with coupons.  They've been issuing a lot of coupons recently.
Seems to be mainly driven by a decrease in gross margins (from 13.4% to 11.6%). But there was also an increase in selling expenses from 3.9% of revenue to 4.1% (think these are the coupons). I'm not sure what's driving the increase in COGS.

They also terminated a post-retirement benefit plan for certain employees. This produced a $2.9mm (0.7% of revenue) benefit to operating profit due to the liability being released. I think this is encouraging from the standpoint of simplifying things. But also slightly discouraging because (a) the margins were still down a healthy amount despite this one time boost, and (b) seems a little bizarre to me (more in-fighting?).
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on October 17, 2013, 09:47:37 PM
I received my annual report as well from Interactive brokers. While pretax earnings are down ~20%, it is nice that they cleared up the confusion about the shares in the employee trust fund. So at least we now know how many shares are actually outstanding (~720k).
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: matjone on October 18, 2013, 08:13:19 AM
I didn't think Interactive Brokers would send reports to customers.  How did you get them to do that?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: nkp007 on October 18, 2013, 09:27:12 AM
I own one share and IB automatically mailed me a report.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on December 11, 2013, 06:16:11 PM

Can someone post a scanned copy of the 2013 report (oddballstocks?), I am not a shareholder but would like to be.....

thanks in advance
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on December 11, 2013, 07:16:22 PM

Can someone post a scanned copy of the 2013 report (oddballstocks?), I am not a shareholder but would like to be.....

thanks in advance

Hi, I'm typically not in the business of scanning these things and sending them out.  I have paper copies of all my reports, sounds weird I know, but I prefer to read a paper copy.  I don't have a way to easily scan it, maybe someone else can help?

With many of these stocks you will never receive anything electronic, but register for paper statements with the broker and you'll be shocked at what stuff is sent to you in the mail.  I'm convinced 90% of investors never receive this stuff because they sign up for electronic statements.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on December 11, 2013, 09:13:10 PM

But how did you post the copy of the 2012 annual report?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Hielko on December 12, 2013, 05:32:03 AM
With many of these stocks you will never receive anything electronic, but register for paper statements with the broker and you'll be shocked at what stuff is sent to you in the mail.  I'm convinced 90% of investors never receive this stuff because they sign up for electronic statements.
I have signed up for electronic statements with IB (no point in receiving a paper copy when it takes weeks after it's released online), but they do send paper annual reports for stocks like this. Don't think I'm missing anything.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on December 12, 2013, 06:51:36 AM
With respect to the 2012 annual report, a friend sent it to me, he received it from a friend of his.  Maybe the friend of a friend has IB like Hielko said.

I wonder about the electronic vs paper statements.  I routinely get letters from these small companies, I wonder if electronic shareholders are getting those as well.  It seems common for many of these dark companies to send a simple one page letter explaining what happened over the past quarter and then include a few figures on the back, or at the bottom.  I haven't received one of these from Hanover, but have plenty of other ones in my files.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Kraven on December 12, 2013, 03:40:23 PM
With many of these stocks you will never receive anything electronic, but register for paper statements with the broker and you'll be shocked at what stuff is sent to you in the mail.  I'm convinced 90% of investors never receive this stuff because they sign up for electronic statements.
I have signed up for electronic statements with IB (no point in receiving a paper copy when it takes weeks after it's released online), but they do send paper annual reports for stocks like this. Don't think I'm missing anything.

I have found that I receive some interesting things in the mail that I would not have received if I was only signed up for electronic statements. Today I got a holiday card from a company I own.  I haven't seen that before.  Of course it doesn't matter in the grand scheme of things, but it was interesting nonetheless.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on December 13, 2013, 05:48:21 PM
Attached is a PDF of Hanover Foods 2013 annual report:
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 14, 2013, 09:15:31 AM
Thanks very much for posting the 2013 report.

I'm sure this is an easy question, but can someone explain the treatment of the ESOP share repurchase on the cash flow statement? I see it as a source of cash in notes payable. Is it not also a use of cash?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on December 14, 2013, 11:07:50 AM
I assume you're referring to the repurchase from the ESOT and not the 61 shares repurchased from the ESOP beneficiaries.

My understanding is that the ESOT transaction has zero impact to any of the statements because the financials of the trust are consolidated with those of Hanover.

Are you looking at the "Proceeds on notes payable and long-term debt" line item? I believe this is unrelated to the ESOT transaction.

Appreciate it if someone corrects me if my interpretation is incorrect.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 14, 2013, 11:33:01 AM
Right, I'm talking about the 340k Class B shares repurchased from the Trust.

The notes indicate that they issued a promissory note for $37 million to purchase these shares. There seems to be a corresponding increase in notes payable on the balance sheet and cash-flow statement, so I assumed that was it.

Another newbie questions on this one: they only break out depreciation and amortization expense on the cash flow statement. Which line item would it be buried in on the earnings statement? Is it common not to break it out?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on December 15, 2013, 10:16:53 AM
Attached is a PDF of Hanover Foods 2013 annual report:

THANK YOU! may god bless you with many prosperous children!
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 18, 2013, 07:06:51 AM
Not that a deal is necessarily in the future for Hanover, but In case anyone is interested, a recent summary of M&A activity in the food and beverage sector can be found here:

http://www.harriswilliams.com/sites/default/files/industry_reports/foodbeverage_industry_update_5.28.13.pdf

Looks like average deal these days is around 11x EV/EBITDA. Even if you take the trough multiple of 8x in 2010/2011, that would mean almost a double in Hanover’s shares, and the stock would still be below book value.

Also, this probably means nothing, but the new CFO (hat tip to a commentator on Oddball stocks for noticing the change) was CFO at Keystone foods for this deal, although he had just been promoted to the position:

http://online.wsj.com/news/articles/SB10001424052748704009804575308580852562558
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: deadspace on December 18, 2013, 12:28:28 PM
While a sale of the company would be the most immediate route to unlock value - I wonder about the incentives of the owner operators.

Does anyone have a breakdown of how much stock the family actually owns now.  Just rying to understand if there is an incentive for them to seek out a sale in the near future?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on December 18, 2013, 12:36:59 PM
While a sale of the company would be the most immediate route to unlock value - I wonder about the incentives of the owner operators.

Does anyone have a breakdown of how much stock the family actually owns now.  Just rying to understand if there is an incentive for them to seek out a sale in the near future?

Um...hmmm...not exactly sure where to start here.  The simplest answer is this, no one knows the family's ownership currently, but all indications are that it's much less than 50%.

Incentives...this is the interesting one.  How familiar are you with Hanover?  The incentive I see is this.  John is getting old, his son is in the CEO role now.  The trust has been wound down and John is no longer in control.  What that means is that his brother and sister who both fought extensively with him in and out of court for control now can take a shot at it again.  There are also the three kids John has who can vie for control, or Michael's two kids, or Sally's two kids, all shareholders, all who seemingly hate each other. 

The dictator loosen up his grip on power, now you have nine heirs all battling for control, none of them own controlling positions, none are going to band together.  You also have outside shareholders with influence now if they wake up.

Read through that again and think about possible outcomes, they cleaned up the capital structure, have a CFO with M&A experience, what do you think the likely path is?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: deadspace on December 18, 2013, 12:46:03 PM
Thanks for the quick response   I hear what you are saying.
I just wasnt sure whether the ownership at the level of the 3rd and 4th genertaions now represents just a few thousand dollars or many millions - the incentive to get a deal done would be much greater if this reperesents  a large source of capital for the stakeholders

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 18, 2013, 12:55:46 PM
Last ownership info I could find was a 10k before they went dark in 2004. At least at that time, it looks like the various Warehime's held almost all the class B shares that were not in the employee trust. See p 27:

http://www.sec.gov/Archives/edgar/data/853733/000095011604002943/tenka.htm
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on December 18, 2013, 01:06:58 PM
mbrock,

The devil is in the details.  John himself owns about 10%.  The Warehime trusts are the issue, they're held for the benefit of the grandchildren if I remember correctly.  Michael has sold many of his shares, I have no idea is Sally still owns hers.

There is not one large holder, this is split up in many 5% positions held by people who all loath and disagree with each other. 

One point on the trusts, the beneficiaries are all the grandkids for one, and I believe the siblings for the other.  The only way anyone can tap into those is via a liquidity event.

Nate
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 18, 2013, 01:46:51 PM
Nate,

Good to know that they are not a united group and that individually they should still a sizable financial stake in what happens. Bodes well...

While I have you, do you find the rising inventory levels at all concerning? It's ticked up as a percent of sales from about 23% to 29% in the last three years. Also, was the jump in notes payable to fund the stock repurchase? If so, any idea why the repurchase amount doesn't show up on the cash flow statement as use of cash?

Thanks

MB
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on December 19, 2013, 10:53:38 PM
Generically, the jump in notes payable is due to the 32mm used in operations/working capital and investment combined (note the incorrect sign of CFO in the AR).

The repurchase did not show up show up in the cash flow statement because because no cash changed hands (inside or outside the consolidated entity).
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 20, 2013, 07:24:58 AM
I'm so confused. Note 4 in the report specifies that the shares in the trust were purchased using 37 million in proceeds from a Promissory Note. This doesn't need to be accounted for in the financial statements? It seems to me to be an actual liability since the Trust is for the employees and not the company.

Apologies if I am missing something basic here.

Thanks

MB
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on December 20, 2013, 08:52:54 AM
The language is a little confusing in the report, but I'll lay out my reasoning below. Keep in mind also that the Trust's financials are consolidated with Hanover's, so inter-company transactions are eliminated.

It says Hanover "purchased, for its Treasury, from the Trust all 340,180 shares of Class B Common Stock owned by the Trust, for $110 per share and issued a Promissory Note for $37mm, representing the full purchase price."

My translation of this language is: Hanover receives the shares, the Trust receives a promissory note (not cash).

It goes on to say, "All proceeds of the note are to be used by the Trust to fund and/or to facilitate the operations of Designated Employee Benefit Plans maintained or to which there is an obligation to contribute for the benefit of employees of the Company or any of its subsidiaries (regardless of tier) who continue after the date of the Note to remain beneficiaries of the Trust...".  It also says "During fiscal year 2001, the Company established a Trust to fund future stock-related and other obligations of the Company's compensation and benefit plans..."

My translation of this language is: the proceeds of the promissory note received from Hanover by the Trust will be used by the Trust to pay employee benefits earned in the future. So instead of having shares to satisfy benefits, now the Trust will instead receive cash directly. And similar to how the shares should not have been included in the share count as part of the Trust, the note is not really a liability because the benefits have not been earned yet. My understanding is that calling it a liability would be like saying next year's employee compensation should be a liability on the balance sheet.

I believe the only change is that those shares will no longer have voting rights.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 20, 2013, 10:46:33 AM
Ah, "benefits earned in the future" makes sense and seems to be the key to what I was missing. Thanks for the explanation!
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 27, 2013, 07:44:23 AM
No date on this, but perhaps an explanation of the jump in inventory and also PPE on the 2013 10k...

http://www.conewago.com/industrial/cold-storage/hanover-foods-corporation-centre-hall-pa/
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on December 27, 2013, 08:35:00 AM
Nice catch.  What'd you guys think of the latest quarter financials?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on December 28, 2013, 10:12:07 AM
Nice catch.  What'd you guys think of the latest quarter financials?

hi, can someone post it here or summarize the quarterly?

I just bought my shares but with schwab they say the reports do not go through them. I must contact hanover directly.

thanks in advance

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on December 29, 2013, 07:18:48 AM
Bummer, I thought I would be getting the report in the mail, but I use Schwab too. Seems like if Fidelity can forward the reports, Schwab should be able to as well.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on December 29, 2013, 08:59:55 AM
Results were pretty weak.
Any thoughts on why the effective tax rate was so high?

Has anyone tried to get a hold of the shareholder register?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on December 29, 2013, 09:18:02 AM
Bummer, I thought I would be getting the report in the mail, but I use Schwab too. Seems like if Fidelity can forward the reports, Schwab should be able to as well.

Ok well if Fidelity forwards then I will simply transfer my shares over to my fidelity account......

what a hassle
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on January 11, 2014, 09:43:48 PM
Results were pretty weak.
  • Diluted NCAV still $130/share
  • Earnings of $922m on $1.8mm of EBT and $97.3mm of sales
  • Inventories continued to build (by $5.7mm)
  • CFO of $1.5mm versus -$10.5mm in same quarter of prior year
  • Capex moderated to $2.3mm versus $3.4mm in same quarter of the prior year
  • Administrative expenses decreased quite a bit ($4.7mm versus $5.4mm)
Any thoughts on why the effective tax rate was so high?

Has anyone tried to get a hold of the shareholder register?

THIS IS A PLEA: can someone plz post a image of the 1 or 2 pages of the quarterly?

I filled out a form on the hanover website, so far they have ignored my request for the quarterly.

thanks in advance....
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on March 11, 2014, 07:45:04 AM
I retract my earlier comment about Schwab as I received the 10Q for the second quarter last night. Anyone else get it? I haven't had much time to look it over, but the six month numbers looks to be somewhat weak year over year, but an improvement over Q1 (I don't have the Q1 and the Q2 shows six-month numbers, so I am backing out Wknecht's numbers above). They are still building inventory agressively. I'll try to post some numbers later today or tomorrow.

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on March 11, 2014, 01:22:42 PM
I retract my earlier comment about Schwab as I received the 10Q for the second quarter last night. Anyone else get it? I haven't had much time to look it over, but the six month numbers looks to be somewhat weak year over year, but an improvement over Q1 (I don't have the Q1 and the Q2 shows six-month numbers, so I am backing out Wknecht's numbers above). They are still building inventory agressively. I'll try to post some numbers later today or tomorrow.

I got it too. schwab came through for me.... here it is in case others didn't get it

seems like the company is doing fine, I don't have the Q1 number but I think that's what dragged down H1, but still the company earned 5+M, for a company with a market cap as low as it is I like it
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on March 11, 2014, 01:46:28 PM
Yeah, they spent $15m on inventory in Q2. Real drag over the past two years seems to have been PPE spending, which looks to have come down a lot. They spent $12m in 2012; $20m in 2013; and only $3m for the first half 2014. Cash flow should improve if there was a single construction project that's now finished.

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on March 20, 2014, 07:30:51 AM
Some news that's slow to reach us non insiders? The ask on the A's is $176 and the B's is 240. Would have chalked it up to illiquidity if it weren't the same on both classes.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on March 21, 2014, 08:20:31 AM
Some news that's slow to reach us non insiders? The ask on the A's is $176 and the B's is 240. Would have chalked it up to illiquidity if it weren't the same on both classes.

There's nothing going in.  I got in touch with the person who's offering the share at $176, there's nothing to read into it.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on March 21, 2014, 09:51:20 AM
Some news that's slow to reach us non insiders? The ask on the A's is $176 and the B's is 240. Would have chalked it up to illiquidity if it weren't the same on both classes.

There's nothing going in.  I got in touch with the person who's offering the share at $176, there's nothing to read into it.
Interesting. Both the fact that the bid/ask is really that wide without some information asymmetry, and the fact that you were able to find the person offering the shares.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on April 16, 2014, 01:03:05 PM
Not an exact mirror for Hanover, but a good sign that the real value here is much higher than the current EV:

http://online.wsj.com/news/articles/SB10001424052702304626304579505583184543714?mg=reno64-wsj
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on April 16, 2014, 01:12:13 PM
Some news that's slow to reach us non insiders? The ask on the A's is $176 and the B's is 240. Would have chalked it up to illiquidity if it weren't the same on both classes.

There's nothing going in.  I got in touch with the person who's offering the share at $176, there's nothing to read into it.

Oddballstocks, please enlighten us! how do you get in touch with the bidder?

thanks
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on May 12, 2014, 05:49:00 PM
Seems that M&A activity is heating up. Pinnacle owns the Green Giant line of frozen vegetables:
http://dealbook.nytimes.com/2014/05/12/pinnacle-foods-to-be-sold-to-hillshire-brands-for-4-3-billion/?_php=true&_type=blogs&_r=0
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on May 12, 2014, 09:26:36 PM
Some news that's slow to reach us non insiders? The ask on the A's is $176 and the B's is 240. Would have chalked it up to illiquidity if it weren't the same on both classes.

There's nothing going in.  I got in touch with the person who's offering the share at $176, there's nothing to read into it.

Oddballstocks, please enlighten us! how do you get in touch with the bidder?

thanks

As they say, it's not what you know it's who you know.  Since writing about Hanover I've come to learn who some major holders are, and who the investors are who know the most about the company. 

The key is building up a network of other investors.  I talk to a lot of people, either my first line network, or a second level networked person is usually connected to most anything I'm interested in.  Then it's just a matter of sending an email or picking up the phone.  I prefer email, but I've found out much more over the phone.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: HH2010 on May 24, 2014, 08:45:01 AM
Any idea why the stock rallied so much this week?  Particularly the class B shares yesterday (16+ pct).  I am away from home so haven't checked  if the latest quarterly came in the mail, but I suspect it's something more than just a good quarter.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on May 24, 2014, 12:38:15 PM
Earnings came out, but they weren't good. Sales were down a few %, but more importantly earnings were down to ~6.5M$ for the March quarter (down from 10.2M$ last year). ON the positive side, the balance sheet looks better because inventory was reduced.

It's still a cheap stock based on book value and to a somewhat lesser extend earnings, but the business does not seem to go anywhere and that is putting things kindly.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on May 24, 2014, 03:53:12 PM
Earnings came out, but they weren't good. Sales were down a few %, but more importantly earnings were down to ~6.5M$ for the March quarter (down from 10.2M$ last year). ON the positive side, the balance sheet looks better because inventory was reduced.

It's still a cheap stock based on book value and to a somewhat lesser extend earnings, but the business does not seem to go anywhere and that is putting things kindly.
When did you receive the report?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on May 24, 2014, 04:25:55 PM
Earnings came out, but they weren't good. Sales were down a few %, but more importantly earnings were down to ~6.5M$ for the March quarter (down from 10.2M$ last year). ON the positive side, the balance sheet looks better because inventory was reduced.

It's still a cheap stock based on book value and to a somewhat lesser extend earnings, but the business does not seem to go anywhere and that is putting things kindly.
When did you receive the report?

I received it 5/21 via email (scanned paper docs) from Interactive brokers.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on May 29, 2014, 08:20:37 AM
Just curious, for those of you who get paper Qs forwarded through your broker (the electronic IB service seems much more convenient!) anyone get the most recent Q yet?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on May 29, 2014, 08:28:25 AM
Just curious, for those of you who get paper Qs forwarded through your broker (the electronic IB service seems much more convenient!) anyone get the most recent Q yet?

Nope, not yet.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on May 29, 2014, 03:56:34 PM
Maybe that works for you guys:
https://www.proxydocs.com/0/000/776/544/hanover_foods_corp._fs.pdf (https://www.proxydocs.com/0/000/776/544/hanover_foods_corp._fs.pdf)
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on May 29, 2014, 05:23:25 PM

thanks!
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wknecht on May 29, 2014, 05:44:53 PM
Just curious, for those of you who get paper Qs forwarded through your broker (the electronic IB service seems much more convenient!) anyone get the most recent Q yet?
I have my shares in a Scottrade account and got the report in the mail today.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on May 29, 2014, 06:42:51 PM
Just curious, for those of you who get paper Qs forwarded through your broker (the electronic IB service seems much more convenient!) anyone get the most recent Q yet?
I have my shares in a Scottrade account and got the report in the mail today.

seems really unfair that investors get the quarterly at different times based who they have as a broker...... but then again they are a pretty dark company....
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on May 30, 2014, 07:20:12 AM
Thanks, Spekulatius!

Wow, margins were awful for the latest quarter. Gross margin was 9% and operating margin was 0.6%. A key point of the investment thesis here seems to be that a bigger, or more efficient, company would be able to improve on these. That makes sense for SG&A, but is the same usually true for COGS? What if issue is with demand and pricing power for Hanover’s products?

For some comparison, the frozen foods division of Inventure Foods (SNAK) and the Birds Eye division of Pinnacle have gross margins of around 17-18%
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on May 30, 2014, 07:39:59 PM
Yes, Hanover Foods is in a very competitive business. I compare them to SENEA (canned food etc)  which has gross margins of ~10% (a little more in a food year and less in a bad one) and very lumpy earnings. SENEA also trades below tangible book.

Economies of scale in these business appear somewhat elusive.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: deadspace on June 01, 2014, 02:03:31 PM
Yes, Hanover Foods is in a very competitive business. I compare them to SENEA (canned food etc)  which has gross margins of ~10% (a little more in a food year and less in a bad one) and very lumpy earnings. SENEA also trades below tangible book.

Economies of scale in these business appear somewhat elusive.

At least in the last few quarters gross margins at Hanover have been better than SENEA - and given where SENEA trades in valuation to book it would suggest the Hanover likely could sell for book value.  I suspect SG&A at Hanover would improve under a new owner.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: writser on June 15, 2014, 04:51:36 AM
Very minor issue - does anybody know how the class C preferred can be converted? Class A & B preferred can be converted into class A stock based on book value per common share divided by par value. Probably the same thing holds for class C but it would be possible this is some class of super-stock ..

Assuming all preferreds and warrants are converted / exercised I get ~ 836k shares outstanding and the company would receive ~$13m for the warrants (110k with strike $120). In that case NCAV would be ~118m or $141 / share and tangible book value ~208m or $249 / share (excluding 'other assets', anybody has a clue what those are?). Seems cheapish if earnings converge back to historical levels.

Thanks to those who share the quarterlies and annuals here.

edited small mistake.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: writser on June 16, 2014, 04:17:00 AM
Never mind, I found it. Should do some more hard work myself before bailing out and asking for help next time :) . Annual report 2004:
Quote
Under the Amended and Restated Articles, each of the shares of Series C Convertible Preferred Stock is convertible into one share of Class A Common Stock

Better terms than the A & B class convertibles. I made a small sheet during the weekend to summarize the financials. Maybe of interest to some of you - feel free to point out horrible errors. Diluted shares outstanding are a bit of a hack - too lazy to make a detailed estimate for the impact of warrants & convertibles and it doesn't affect the valuation that much.

https://docs.google.com/spreadsheet/ccc?key=0AsN_SuwzKmC7dEZnNWxiV01vd1l0bW96QWl2RlFvVEE&usp=drive_web#gid=8

Basically what I see is a company trading at 50% tangible book and earning / compounding by 8% anually. It's trading slightly below NCAV but I'm not really impressed by that given that most of the current assets are required for running the business, e.g. no excess cash as with, for example, Solitron. Possible catalysts:

1. Margins have been sliding downwards for a decade. Can they reach old levels again?
2.  Return of capital to shareholders, preferably by buybacks below book.
3. A takeover at or around book would obviously be nice!

I have no clue whether #1 is possible. #2 hasn't been happening and I don't see it happening soon, so the way I see it you can basically park your money here for a 'decentish' return while waiting for a takeover or a random serendipitous event. Not 100% convinced yet.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on June 16, 2014, 07:23:22 AM
Never mind, I found it. Should do some more hard work myself before bailing out and asking for help next time :) . Annual report 2004:
Quote
Under the Amended and Restated Articles, each of the shares of Series C Convertible Preferred Stock is convertible into one share of Class A Common Stock

Better terms than the A & B class convertibles. I made a small sheet during the weekend to summarize the financials. Maybe of interest to some of you - feel free to point out horrible errors. Diluted shares outstanding are a bit of a hack - too lazy to make a detailed estimate for the impact of warrants & convertibles and it doesn't affect the valuation that much.

https://docs.google.com/spreadsheet/ccc?key=0AsN_SuwzKmC7dEZnNWxiV01vd1l0bW96QWl2RlFvVEE&usp=drive_web#gid=8

Basically what I see is a company trading at 50% tangible book and earning / compounding by 8% anually. It's trading slightly below NCAV but I'm not really impressed by that given that most of the current assets are required for running the business, e.g. no excess cash as with, for example, Solitron. Possible catalysts:

1. Margins have been sliding downwards for a decade. Can they reach old levels again?
2.  Return of capital to shareholders, preferably by buybacks below book.
3. A takeover at or around book would obviously be nice!

I have no clue whether #1 is possible. #2 hasn't been happening and I don't see it happening soon, so the way I see it you can basically park your money here for a 'decentish' return while waiting for a takeover or a random serendipitous event. Not 100% convinced yet.

I think you've accurately summed up why the stock is at 50% of book.  Most investors don't want to wait or don't believe it'll ever be sold.

The company does pay a tiny dividend, but it's not an appropriate return of capital to shareholders.  A much more significant event was the wind-down of the Warehime Trust, that's extremely significant.  Along with that the appointment of the next generation to management positions.  Each generation is more dispersed. 

It started with Alan the patriarch, then John, Michael and Sally.  They each have two or three children who all have ownership interests or stand to inherit large interests.  They each have kids, at some point the kids want the big pay-day. 

Why do you think they finally published the shares outstanding and cleaned up the trust?  It wasn't out of the goodness of their heart.  For years management was staunchly opposed to outside shareholders even knowing this information.  Why the change of heart?

Yes, this is all speculation, no different than SNYX in some regards.  Except here's a company at 50% of BV and growing at 8%.  I don't mind sitting on this one.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Tim Eriksen on June 16, 2014, 09:58:17 AM

I think you've accurately summed up why the stock is at 50% of book.  Most investors don't want to wait or don't believe it'll ever be sold.

The company does pay a tiny dividend, but it's not an appropriate return of capital to shareholders.  A much more significant event was the wind-down of the Warehime Trust, that's extremely significant.  Along with that the appointment of the next generation to management positions.  Each generation is more dispersed. 

It started with Alan the patriarch, then John, Michael and Sally.  They each have two or three children who all have ownership interests or stand to inherit large interests.  They each have kids, at some point the kids want the big pay-day. 

Why do you think they finally published the shares outstanding and cleaned up the trust?  It wasn't out of the goodness of their heart.  For years management was staunchly opposed to outside shareholders even knowing this information.  Why the change of heart?

Yes, this is all speculation, no different than SNYX in some regards.  Except here's a company at 50% of BV and growing at 8%.  I don't mind sitting on this one.

The big question is "Will John's kids continue to run the company like their father?"  If so, then shareholders will see little.  Historically he seemed to have no problem screwing his siblings over.   Michael's kids are likely doing well as their father is a much better manager/owner in my opinion - Snyder's of Hanover has grown revenues much faster than Hanover Foods over the last 20 years.  Since Snyder's was a spin off from Hanover Foods, I would assume the other children own shares of Snyder's as well.     
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on January 09, 2015, 08:13:25 AM
Any news on Hanover, stock got hammered on high volume today.....
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on January 09, 2015, 08:31:51 AM
Any news on Hanover, stock got hammered on high volume today.....

Nothing that I know, interesting that it's the A shares that are being sold.  I see nothing on B 106/175 with 100 shares at the ask.

But the A's are really moving, $161k traded today so far on 1,598 shares.  I'm seeing a 98/104 2x2 on the quote.

Similar volume on 12/23, 11/14, and 10/31.  Amazingly there has been a lot of volume on this recently SMAVG is 359.

Now time to scrounge up some cash..
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on January 09, 2015, 09:12:10 AM
Any news on Hanover, stock got hammered on high volume today.....

Nothing that I know, interesting that it's the A shares that are being sold.  I see nothing on B 106/175 with 100 shares at the ask.

But the A's are really moving, $161k traded today so far on 1,598 shares.  I'm seeing a 98/104 2x2 on the quote.

Similar volume on 12/23, 11/14, and 10/31.  Amazingly there has been a lot of volume on this recently SMAVG is 359.

Now time to scrounge up some cash..

oddball you sure they haven't announced earnings? They are due for Q1, I'd wait for that before pulling the trigger....

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on January 09, 2015, 12:33:54 PM
Any news on Hanover, stock got hammered on high volume today.....

Nothing that I know, interesting that it's the A shares that are being sold.  I see nothing on B 106/175 with 100 shares at the ask.

But the A's are really moving, $161k traded today so far on 1,598 shares.  I'm seeing a 98/104 2x2 on the quote.

Similar volume on 12/23, 11/14, and 10/31.  Amazingly there has been a lot of volume on this recently SMAVG is 359.

Now time to scrounge up some cash..

oddball you sure they haven't announced earnings? They are due for Q1, I'd wait for that before pulling the trigger....

Looks like the volume was phantom volume, I had an order in there, nothing filled.  It was a good one as well, nothing...

I haven't received the Q1 results yet, but maybe they're out, I'm not sure.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on January 09, 2015, 12:36:09 PM
One other thing, this is a bit of a secret but I'll let it out.  I've made a LOT of money on days like today for small dark companies.  Often volume will show up out of nowhere and there will be no news.  It's usually a panic seller, or an estate or something similar.  On a number of different occasions I've backed up the truck and purchased as much as I could.  In each case the price has bounced back to where it was quickly.  In one case I doubled my money in a few days.

This isn't a one-off occurrence, it happens regularly.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Picasso on January 09, 2015, 01:17:29 PM
One other thing, this is a bit of a secret but I'll let it out.  I've made a LOT of money on days like today for small dark companies.  Often volume will show up out of nowhere and there will be no news.  It's usually a panic seller, or an estate or something similar.  On a number of different occasions I've backed up the truck and purchased as much as I could.  In each case the price has bounced back to where it was quickly.  In one case I doubled my money in a few days.

This isn't a one-off occurrence, it happens regularly.

How do you track large movements across all your stocks?  Do you set alerts such as high volume versus averages or percentage swings?  I don't watch the intraday movements across my holdings and I miss a lot of these swings because I felt my time is better spent digging into other investments. 

It seems like the illiquidity is your biggest friend here.  The downside of course is the wide bid/ask spread even as the price is dropping or quickly rising.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on January 09, 2015, 07:46:20 PM
One other thing, this is a bit of a secret but I'll let it out.  I've made a LOT of money on days like today for small dark companies.  Often volume will show up out of nowhere and there will be no news.  It's usually a panic seller, or an estate or something similar.  On a number of different occasions I've backed up the truck and purchased as much as I could.  In each case the price has bounced back to where it was quickly.  In one case I doubled my money in a few days.

This isn't a one-off occurrence, it happens regularly.

How do you track large movements across all your stocks?  Do you set alerts such as high volume versus averages or percentage swings?  I don't watch the intraday movements across my holdings and I miss a lot of these swings because I felt my time is better spent digging into other investments. 

It seems like the illiquidity is your biggest friend here.  The downside of course is the wide bid/ask spread even as the price is dropping or quickly rising.

Ironically I'm very low tech with keeping track of my portfolio.  I log into Fidelity, sort by % change and scan to see if anything's moved by more than a few percentage points.  I used to do this daily, it'd take maybe 10s.  I wouldn't look at any prices, just a quick scan to see if something's moving. 

I probably check every other day now.

On a big volume day the spread usually tightens, and if someone is truly desperate to sell they'll hit your bid.  There are more shares to sell than buyers which is why the price falls so much.  What often happens is this.  Say a stock is at $20, there's a bid for 100 shares at $19.98, another 100 shares at $19.95, then 100 at $19 and 100 more at $17.  So someone comes along and wants to sell 500 shares, it's going to drop to $17 right away, and that last 100 will go to whomever is lucky enough to place almost any bid.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: raaandy on January 09, 2015, 10:11:15 PM

On a big volume day the spread usually tightens, and if someone is truly desperate to sell they'll hit your bid.  There are more shares to sell than buyers which is why the price falls so much.  What often happens is this.  Say a stock is at $20, there's a bid for 100 shares at $19.98, another 100 shares at $19.95, then 100 at $19 and 100 more at $17.  So someone comes along and wants to sell 500 shares, it's going to drop to $17 right away, and that last 100 will go to whomever is lucky enough to place almost any bid.

In a non-panic-selloff kind of situation, how would you approach accumulating a position in this kind of illiquid stock?  Would you just bid passively over the course of days/weeks/months until someone hit your bid, or just immediately lift reasonable-looking offers?
thanks in advance.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on April 14, 2015, 09:13:25 PM

Anybody got the Q1 results?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on May 27, 2015, 07:05:36 AM
Reposting radomep's question: anyone got Q1 yet?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on May 27, 2015, 06:33:38 PM
Reposting radomep's question: anyone got Q1 yet?
Yes here it is:
https://www.proxydocs.com/0/000/888/926/hanover_foods_corp_05142015.pdf (https://www.proxydocs.com/0/000/888/926/hanover_foods_corp_05142015.pdf)
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on May 27, 2015, 10:49:01 PM
thanks!
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: deadspace on May 27, 2015, 11:27:11 PM
thanks!

That's an impressive inventory build up
Anyone see an explanation for this ?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: orthopa on May 28, 2015, 07:01:01 PM
was going to post a new thread but thankfully found this one. Have some reading to do now.  ;D
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: orthopa on May 30, 2015, 01:37:25 PM
Read though a lot of stuff last night. Like what I see. No doubt there i value here. Is the thought just to sit and wait for the kids/grand kids to want to monetize their holdings?

Im going to start putting some bids in this week.

Just have bad visions of sitting on this for years as while the family works out their issues.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on January 26, 2016, 09:07:49 AM
I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

There is no rule against doing this, is there?

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.

So making these reports public is not a requirement for a public company? They can request the SEC not to make their filings public? TIA

Being public and filing with the SEC are two different things.  A company can be public and not file, there are certain thresholds that need to be crossed before a company is legally required to become a filing entity.  If they are a filing company then yes, they legally have to require annual reports and proxies.

If a company is able to get their shareholder count below 300 (now 1500 with the JOBS act) they are not required to file with the SEC.  Their shares might be traded on the OTC Market, and investors could be buying and selling daily, but the SEC filing burden is eliminated.  What companies decide to show shareholders is up to them once they are 'dark' (non-SEC filing).  There are certain legal requirements, like abiding by books and records requests, but many times they aren't legally required to file anything.

There are all sorts of dark companies, some like Conrad are great, they publish their quarterly reports and annual reports on their website and on OTCMarkets.  Then there are others like Walking Company Holdings that won't release anything but a tersely worded statement once a year, and finally companies like Avesis that require an NDA, which is total BS.  <steps onto soapbox> Avesis really pissed me off, as an insurance company their financials are available on the NAIC website as required by law.  They publish a proxy yearly that states their dividend and a few other puff facts.  I went back and forth with the CFO because I wanted to know about their debt and liability structure.  He said ALL financial information was private and he couldn't say a thing because competitors might take advantage.  My second quibble is this, I have extensive insurance experience, especially in understanding some of the pricing and claims payment process.  There is no way a competitor could gain an advantage by reading their summary financials.  Their summary financials and subscriber information is on the NAIC website, and pricing isn't exactly the most hidden item out there.  So I signed the NDA and the CFO answered the exact questions I asked.  Then I asked more related to those and he said he couldn't say anything else unless I signed another NDA that specifically incorporated those questions into the form.  I passed, the company is cheap, dirt cheap, but with slimeballs like that I wasn't interested in investing.  I own five or ten shares I think ($20 worth).  To top this all off, the NDA is illegal, under state law I have a legal right to view that information, I'm a part owner of the company, the NDA is unenforceable and a scare tactic.  I had my revenge, I wrote a post on them, never named them, but shared what I'd learned, I'm sure you can find it via Google.</soapbox>

Sorry for the wall of text, I have many other rants like this about POS dark companies that I've encountered.  There are some that are mouth watering cheap but management is so horrible, greedy, and self serving, that if encountered in person I would keep one hand on my wallet at all times for fear that they'd try to lunge for it at the first chance they had.

Slightly off-topic: I read through this topic because I'm interested in investing and came across this rant. It seems like Avesis was trying to hide extreme undervaluation as after a takeover offer the company is now trading more than 20 times higher than at the time off Nate's rant. A shame that you gave up on those slimeballs.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on January 26, 2016, 10:05:04 AM
Extreme undervaluation is right. I purchased a few dollars worth to become a shareholder and it's worth $160 or so now. It's a shame.

I've seen this twice, Randall Bearings and Avesis. If a company is trading for 1x earnings or less I will be buying at least $1k worth from now on. Both have gone up 10-20x.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on February 20, 2016, 10:10:28 AM
Q2 report http://www.proxydocs.com/0/000/973/434/hanover_cfs.pdf
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on February 20, 2016, 11:02:45 AM
Extreme undervaluation is right. I purchased a few dollars worth to become a shareholder and it's worth $160 or so now. It's a shame.

I've seen this twice, Randall Bearings and Avesis. If a company is trading for 1x earnings or less I will be buying at least $1k worth from now on. Both have gone up 10-20x.

oddballstocks, how the heck did you find these companies? I know I know read your blog..... but can you just tell me specifically regarding these two?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on February 20, 2016, 11:03:38 AM
Q2 report http://www.proxydocs.com/0/000/973/434/hanover_cfs.pdf

thanks, just realized as I am no longer a shareholder I cannot get these anymore, I will depend on you guys from now on.

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on February 20, 2016, 11:21:38 AM
Q2 report http://www.proxydocs.com/0/000/973/434/hanover_cfs.pdf

thanks, just realized as I am no longer a shareholder I cannot get these anymore, I will depend on you guys from now on.

No problem. Why did you sell your shares?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: randomep on February 21, 2016, 08:32:11 AM
Q2 report http://www.proxydocs.com/0/000/973/434/hanover_cfs.pdf

thanks, just realized as I am no longer a shareholder I cannot get these anymore, I will depend on you guys from now on.

No problem. Why did you sell your shares?

I bought at $120, sold at $95.  I was attracted to the Price/Book = 1/3 ratio. But the ROE is just getting worse and worse, now at 2-3%.  What I look for now is:

PE < 10
price / book < 1
growing earnings
management that gives a sh*t about shareholders

The management doesn't seem to care that they aren't running the company well. If they did they would fire themselves and hire outsiders.  I have other holding that match my criteria better. Who knows maybe I'll go back to it if it hits 60-70.....

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on February 21, 2016, 08:58:05 AM
I still own shares. I sold a few at around $120 and bought back some at ~$85. It remains to be seen if the value will ever be realized. We did have the changes in the trust, which were a positive, but I agree that a different management is needed to get more value from the existing business.
At least the results are stable and not deteriorating, so I continue to hold.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on February 21, 2016, 11:07:03 AM
Q2 report http://www.proxydocs.com/0/000/973/434/hanover_cfs.pdf

thanks, just realized as I am no longer a shareholder I cannot get these anymore, I will depend on you guys from now on.

No problem. Why did you sell your shares?

I bought at $120, sold at $95.  I was attracted to the Price/Book = 1/3 ratio. But the ROE is just getting worse and worse, now at 2-3%.  What I look for now is:

PE < 10
price / book < 1
growing earnings
management that gives a sh*t about shareholders

The management doesn't seem to care that they aren't running the company well. If they did they would fire themselves and hire outsiders.  I have other holding that match my criteria better. Who knows maybe I'll go back to it if it hits 60-70.....

My buy price actually is at 85. Because of the shareholder unfriendliness I limit the relative size of the investment in my portfolio. It just look so cheap ...
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Tim Eriksen on February 21, 2016, 03:05:54 PM
Extreme undervaluation is right. I purchased a few dollars worth to become a shareholder and it's worth $160 or so now. It's a shame.

I've seen this twice, Randall Bearings and Avesis. If a company is trading for 1x earnings or less I will be buying at least $1k worth from now on. Both have gone up 10-20x.

oddballstocks, how the heck did you find these companies? I know I know read your blog..... but can you just tell me specifically regarding these two?

I know Hanover and Randall Bearings are both stocks that were profiled in Walker's Manual, which profiled quality unlisted stocks.  They don't publish anymore, so the most recent is the 2002-2003 edition. 
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on March 22, 2016, 02:35:27 AM
I can't find the annual report 2014 from june 2015 (the last annual report). Could someone please share it here?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on May 11, 2016, 11:31:33 AM
Q3:

http://www.proxydocs.com/0/001/010/120/hanover_foods_cfs.pdf
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: notorious546 on May 13, 2016, 05:43:37 PM
Extreme undervaluation is right. I purchased a few dollars worth to become a shareholder and it's worth $160 or so now. It's a shame.

I've seen this twice, Randall Bearings and Avesis. If a company is trading for 1x earnings or less I will be buying at least $1k worth from now on. Both have gone up 10-20x.

oddballstocks, how the heck did you find these companies? I know I know read your blog..... but can you just tell me specifically regarding these two?

I know Hanover and Randall Bearings are both stocks that were profiled in Walker's Manual, which profiled quality unlisted stocks.  They don't publish anymore, so the most recent is the 2002-2003 edition.

Is there a new or competing publication on unlisted stocks now?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on October 06, 2016, 11:26:19 AM
Annual report out:

http://www.proxydocs.com/0/001/058/733/hanover_foods_ar.pdf
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: oddballstocks on October 06, 2016, 11:52:56 AM
Extreme undervaluation is right. I purchased a few dollars worth to become a shareholder and it's worth $160 or so now. It's a shame.

I've seen this twice, Randall Bearings and Avesis. If a company is trading for 1x earnings or less I will be buying at least $1k worth from now on. Both have gone up 10-20x.

oddballstocks, how the heck did you find these companies? I know I know read your blog..... but can you just tell me specifically regarding these two?

I know Hanover and Randall Bearings are both stocks that were profiled in Walker's Manual, which profiled quality unlisted stocks.  They don't publish anymore, so the most recent is the 2002-2003 edition.

Is there a new or competing publication on unlisted stocks now?

There is nothing.  I attempted to build a digital form myself in 2012 when there were more of these stocks.  Here's why it doesn't make sense:

1) Information is hard to get.  You need to spend hours sometimes working to get an annual report.  Then working again each year to continue to receive data.
2) Financial data needs to be normalized and keyed into a system manually.  Time consuming
3) The market for this is VERY small.  Everyone wants it if it's free as a curiosity, but no one wants to pay.

Put those things together and it's really hard to make money.  Walkers didn't really make Eisenberg or Berger much.  I believe both jammed libraries with copies as a way to boost circulation and revenue.  Worked in the 90s, but not now.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on October 07, 2016, 01:42:10 AM
Annual report out:

http://www.proxydocs.com/0/001/058/733/hanover_foods_ar.pdf

Same old same old. Grew book value 3.74% and retired ~2k class B shares.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: muscleman on October 07, 2016, 08:42:09 AM
How would you compare this name with National Beef under LUK?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on October 07, 2016, 06:14:25 PM
How would you compare this name with National Beef under LUK?

A closer comp would be Senea. National Beef is quite different and their earnings are more volatile. I think I feel more excitement watching the grass grow in my backyard than owning the stock.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: snow pea on December 23, 2016, 06:33:34 AM
Q1 report attached.  I don't know if there's anyone here following that doesn't already have it, but I know that before I started a position I was grateful to those who posted them.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Ulrich on January 03, 2017, 02:43:45 PM
I have a question to the long term holders. Why do you think that anybody would pay the book value in the far future for this business? The machines and property of the company give u a very low return on equity,so why would someone pay the stated book value with this low return?

I like to invest in insurers or banks with stable.balance sheets because investment grade bonds etc. Are worth book in a liquidation case.but I see not that an other party would pay really the stated book value for hanover foods machines and propert with this low returns.

The low returns could be a moat(same maybe with universal corp),because the low returns on new machines let no new players entry the market.but is it not mor reasonable to value hanover with price earnings,price cashflow and dividends as participation of the minor shareholders?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: deadspace on January 03, 2017, 03:09:34 PM
I have a question to the long term holders. Why do you think that anybody would pay the book value in the far future for this business? The machines and property of the company give u a very low return on equity,so why would someone pay the stated book value with this low return?

I like to invest in insurers or banks with stable.balance sheets because investment grade bonds etc. Are worth book in a liquidation case.but I see not that an other party would pay really the stated book value for hanover foods machines and propert with this low returns.

The low returns could be a moat(same maybe with universal corp),because the low returns on new machines let no new players entry the market.but is it not mor reasonable to value hanover with price earnings,price cashflow and dividends as participation of the minor shareholders?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on March 12, 2017, 09:03:49 AM
Did anyone receive their Q2 report? Did they just skip it this year?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on March 13, 2017, 03:13:04 AM
Did anyone receive their Q2 report? Did they just skip it this year?

I didn't get anything. What date were you expecting it? (no time to check this minute). If it's far overdue I'll complain ...
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on March 13, 2017, 10:37:12 AM
Last year it came in mid-Feb and the quarter ended November 30. Not sure if that means it's technically late or not...
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on March 14, 2017, 07:11:59 AM
I send an email about it.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on March 15, 2017, 10:00:19 AM
The 6 month financial report will be send within the next 7 days.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on March 29, 2017, 02:18:52 PM
Just got the Q2 report:

http://www.proxydocs.com/0/001/119/730/hanover_foods_corp_2nd_quarter_cfs.pdf

Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: wachtwoord on March 29, 2017, 03:26:15 PM
Just got the Q2 report:

http://www.proxydocs.com/0/001/119/730/hanover_foods_corp_2nd_quarter_cfs.pdf

Me too, just after I contacted the company again. Looked at it briefly for now. Same old same old.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on March 29, 2017, 04:06:08 PM
Just got the Q2 report:

http://www.proxydocs.com/0/001/119/730/hanover_foods_corp_2nd_quarter_cfs.pdf

Me too, just after I contacted the company again. Looked at it briefly for now. Same old same old.

Here is what bothers me most about HNFSA, ever since I purchased the stock: When will the employee who is creating the photocopies, straighten out the pages before making the copies?

I guess we are lucky that we don't see remnants of the employees breakfast or lunch on the pages, but still.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: notorious546 on March 29, 2017, 05:56:05 PM
Just got the Q2 report:

http://www.proxydocs.com/0/001/119/730/hanover_foods_corp_2nd_quarter_cfs.pdf

Me too, just after I contacted the company again. Looked at it briefly for now. Same old same old.

Here is what bothers me most about HNFSA, ever since I purchased the stock: When will the employee who is creating the photocopies, straighten out the pages before making the copies?

I guess we are lucky that we don't see remnants of the employees breakfast or lunch on the pages, but still.

haha where are the footnotes and other schedules?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: mbrock77 on June 01, 2017, 11:07:11 AM
I guess Q3 is going to be late as well? (last year they sent it in early May)

Who is the contact there for investor relational questions?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: snow pea on June 20, 2017, 12:55:18 PM
https://www.proxydocs.com/0/001/156/528/hanover_foods_corp_61417.pdf
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: writser on October 25, 2017, 11:33:27 AM
http://www.creditbubblestocks.com/2017/10/hanover-foods-corp-2017-annual-report.html

Quote
The expected cash cost of the supplemental pensions for FY 2018 is $1.18 million. If I'm understanding this correctly, it means there were one or more top employees, now retired, who were making just shy of $2 million in salary and bonuses during their final three years, on average. That seems like a TON of money for a company earning only $5.3 million average cash flow and 2.2% ROE!

Until we find a better hypothesis, my guess will be that profits and ROE are being siphoned off by overpaid management.

Further evidence in support of this: the company owns (in its Sunwise Co. subsidiary) a 1999 Cessna Citation (Model 560XL) business jet that they keep at York Airport in Pennsylvania. According to one data source I have seen, this plane gets flown all the time - apparently 200 flights YTD in 2017 and 275 flights in 2016. I'm not sure whether that's all Hanover & executives flying or if they lease it out, but at normal hourly costs for a business jet this is quite an expensive way of visiting Rogers, AR for WalMart meetings. A diligent analyst might ask the company why the plane has been photographed in San Diego in February and at the Ohio State U airport on the same Saturday as a football game.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: fishwithwings on December 26, 2017, 08:01:57 AM
Anyone have the latest financials?  Thanks in advanced!
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on April 29, 2018, 07:14:48 AM
Amongst the dead money stocks, I own, this is like an Egyptian Mummy. Owning this seems like owning a mummy and hope that it comes alive.

What are the thoughts? I am not adverse to waiting, but is there a reasonable case, where this stock creates a return on investment for minority owners? The management gets their inflated salaries, the company jets and the pensions but the owners will have to do with $1 in annual dividends for how long?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Hielko on April 29, 2018, 09:51:53 AM
I guess it all depends on timing. If the status quo is maintained forever I doubt this investment will work out. But possible at some point in time the majority owners might decide that selling the business is their best option. I don't know exactly what a strategic acquirer could pay for this business, but wouldn't be the first time that some sleepy OTC stocks get sold for a huge premium. If things change between now and the next 5 years you will probably do great. If it's in 10 years.. i don't know. If it's in 20, 30 or 50... probably not.
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on April 29, 2018, 04:39:04 PM
I struggle to even come up with a potential buyer for this low margin business that will not get better. The only public peer is SENEA, which actually has much better governance and results over the last decade, yet trades at 0.6x book (or 0.5x book with LIFFo reserve).

Best case scenario for shareholder is liquidation but how likely is that?
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Spekulatius on November 18, 2019, 05:40:55 PM
In case anyone is interested:
 https://www.proxydocs.com/0/001/420/589/hanover_foods_corp_1st_qr_11182019.pdf (https://www.proxydocs.com/0/001/420/589/hanover_foods_corp_1st_qr_11182019.pdf)
Title: Re: HNFSA/HNFSB - Hanover Foods
Post by: Stuart D on November 18, 2019, 11:15:53 PM
In case anyone is interested:
 https://www.proxydocs.com/0/001/420/589/hanover_foods_corp_1st_qr_11182019.pdf (https://www.proxydocs.com/0/001/420/589/hanover_foods_corp_1st_qr_11182019.pdf)

^Thanks for posting.