Author Topic: PKE - Park Aerospace  (Read 3544 times)

Gamecock-YT

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Re: PKE - Park Aerospace
« Reply #10 on: September 26, 2020, 08:47:22 AM »
A thing, which nags me a bit, is M&A. These guys are clearly very disciplined, but at the same time they've never actually done a deal and integrated a an acquisition (from what I could quickly find). Considering what seems like a somewhat special culture, that's not necessarily gonna be easy.

But perhaps more puzzling: Raging Capital are winding down and offloading their stake in Park (seems to be halfway through). Unless they buy something extremely distressed, isn't that the most obvious M&A for them to do - IE retire some of their own shares?

This has been my biggest hang up on buying. When I was doing some work on PKE I didn't get a good feeling for how they would look at capital allocation decisions. They have a bunch of niche product lines and speak about always wanting to get in the action, no matter how small the project is. The CEO seems interested in buying a company with the cash they have but never really gave any details on what specifically they are looking for, just that the had engaged their investment bankers and they were advising holding off until companies got into more distress. There was a question on buybacks but the CEO was signaling they'd consider it if the price dropped in the mid single digits....

With the excess cash sitting on the balance sheet, this just looks too ripe for a private equity group or Transdigm coming in and levering it up. The engine covers seems to be the product that's going to butter the bread of the company going forward. My guess is the price will continue to languish with the share overhang. Maybe good time to buy is when they start buying back shares given how conservative they seem to be.


« Last Edit: September 26, 2020, 08:49:21 AM by Gamecock-YT »


kab60

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Re: PKE - Park Aerospace
« Reply #11 on: September 26, 2020, 11:37:28 AM »
I think they've been pretty clear that they target something niche (he doesn't want to get into high profile programs like f35 due to political risks). And I like the discipline in that he seems to constantly turn down investment bankers (they mus hate such a cheap skate). They've also shown they very much think of shareholders and have returned a ton of cash, so it's not a big concern of mine, I just thought buybacks is so obvious their weak response is puzzling. But perhaps they have some targets in their crosshair. So I think we're in good company - worst case they buy a dud or return the cash. But if they get a good deal, fireworks could explode down the line (agree it is an obvious LBO candidate, but that is not a bad spot to be in though I doubt that is a route they'll go).

whistlerbumps

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Re: PKE - Park Aerospace
« Reply #12 on: November 11, 2020, 08:57:25 AM »
I agree M&A is a critical issue here.  The hope is that their partners push something distressed to them that is a good fit.  Brian is certainly patient so the risk to me is more that the cash sits around and they miss the chance rather than they overpay for an asset.  We will see though.