Author Topic: VULC - Vulcan International  (Read 19949 times)

oddballstocks

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VULC - Vulcan International
« on: May 02, 2018, 01:06:58 PM »
This is a name I've followed for years.  It's as dark as they get.  I've been on a few email chains with information going back and forth, but this is probably the biggest information dump out there for Vulcan. 

Enjoy!

http://www.oddballstocks.com/2018/05/vulcan-still-plenty-of-value-to-be-found.html
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Jurgis

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Re: VULC - Vulcan International
« Reply #1 on: May 02, 2018, 01:38:18 PM »
Nice writeup.

Although you probably should not have disclosed the source of the info publicly. Sources are to be treasured. 8) I'd suggest to edit it out, but it's your blog and your call.  8)
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oddballstocks

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Re: VULC - Vulcan International
« Reply #2 on: May 03, 2018, 04:35:46 AM »
Nice writeup.

Although you probably should not have disclosed the source of the info publicly. Sources are to be treasured. 8) I'd suggest to edit it out, but it's your blog and your call.  8)

I called it out on purpose. The Chairman is very litigious, and he needs to know his siblings have broken rank.

In some ways the post was written to him. Maybe I will edit and say family member.

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mbrock77

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Re: VULC - Vulcan International
« Reply #3 on: May 03, 2018, 06:00:25 AM »
Hi Nate, thanks so much for sharing these documents.

Question: don't you need to back out deferred income taxes on those securities from any NAV calculation?

wabuffo

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Re: VULC - Vulcan International
« Reply #4 on: May 05, 2018, 06:25:53 AM »
Nate on your blog, you rhetorically asked...
Quote
It's also worth considering why Vulcan isn't considered an investment company, and regulated as such considering the majority of their value is public stock investments. 

I'm sure you know this, but, Vulcan wouldn't likely be considered an investment company for the same reason that Munger's Daily Journal isn't.  Vulcan is probably shielded by the same case that protects Munger -- National Presto Industries vs the SEC.  This case, in turn, relied on a long-past precedent from the 30's based on Tonopah Mining (a Ben Graham investment, IIRC...) that used five criteria to identify operating companies vs investment companies. 

The key factor is that as long as the CEO and Board can prove that most of their time is spent running an operating company (even if it loses money), then the Company is not an investment company from a regulatory standpoint.

Here's Munger's response to the SEC when the SEC came sniffing around DJCO for exactly the same question in 2013.
https://www.sec.gov/Archives/edgar/data/783412/000143774913003140/filename1.htm

Cheers,
wabuffo

Okonomen

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Re: VULC - Vulcan International
« Reply #5 on: May 06, 2018, 11:59:20 AM »
is the value only in their stock market holdings? That value can quickly decline though... And mgmgt seem extremely unfriendly towards minority shareholders. And if these investments were to ever become real value to an investor, i.e. paid out, a big tax bill would be the result?

Scunny Bunny

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Re: VULC - Vulcan International
« Reply #6 on: August 15, 2018, 09:38:37 PM »
This is an excellent article on VULC telling you explicitly how to get an annual report IF you are a holder, plus the history and a little about some of the personalities. Updating the table of holdings suggest portfolio is now ~$163million https://seekingalpha.com/article/4185059-vulcan-international-epitome-dark-company

Grafter

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Re: VULC - Vulcan International
« Reply #7 on: October 13, 2018, 10:55:46 AM »
It looks like the company is set to dissolve, per their recent press release:  https://www.otcmarkets.com/stock/VULC/news/FOR-IMMEDIATE-RELEASE?id=206645

Though I'm uncertain what liabilities and any change of control/golden parachute type provisions there may be that would reduce the value that shareholders receive.

bianji108

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Re: VULC - Vulcan International
« Reply #8 on: October 13, 2018, 03:14:27 PM »
PNC has dropped quite a lot lately..probably affects the liquidation value a lot. Is every sale of securities subject to the corporate tax? Is there any tax-efficient way?

writser

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Re: VULC - Vulcan International
« Reply #9 on: February 14, 2019, 10:55:22 AM »
I own a decent position in this name, thanks to the excellent work of Nate Tobik and Jan Svenda. As stated above, the company is liquidating. There's a bit of guesswork involved. The majority of their net worth is in their stock portfolio. What is the composition of the stock portfolio? Have they liquidated it already or not? No one knows. If one takes the holdings from Nate's assessment and plugs in recent stock prices the portfolio should be worth around $150m now. And, to quote Jan Svenda quoting Nate Tobik:

Quote
According to Nate, other VULC’s shareholders have confirmed that this is a relatively accurate assessment. One can support this assertion by looking at the income statement or cash flow which did not show any realization of the positions in either 2016 or 2015. Thus, management is unlikely to trade frequently.

So I think it's a reasonable assumption that the portfolio is still more or less the same. There's a capital gains tax liability. If I understand the 2017 tax changes correctly that liability should now be smaller, around $30m - $40m. So the net value of the old stock portfolio is ~$125 per share. On top of that you have a significant real estate portfolio for free (worth ~$25 / share - again I'd refer you to the Jan Svenda article. I'm a bit more conservative about the value of their forest acreage). Even if you assume that distributions would be tax-inefficient dividends (over which I have to pay 15% withholding taxes) and that they liquidated their portfolio during the december panic it seems hard to lose a lot of money here.

So, what do we have here? A super dark company with an unknown stock portfolio that will liquidate in an unknown time frame and will distribute proceeds to shareholders in an unknown way while paying an unknown amount of taxes. Usually the market dislikes uncertainty. In this case that's reflected in a last price of $123 while the company could easily be worth $150. The company states in the press release that they have to liquidate within three years but that they intend to liquidate all corporate assets, and distribute all available proceeds to the stockholders, as far in advance of the expiration of the three-year winding-up period as possible. With the majority of their assets being to very liquid stocks I wouldn't be surprised if they pay out a significant distribution this year.

Though again, this is a dark stock - no proxy, no estimates, no investor relations: anything can happen. Maybe they are fully invested in bitcoins and pot stocks now. A negative surprise is certainly possible but at current prices I like the odds.

I'm lazy and I like situations like this. Not much to calculate, no filings to follow, no future to predict. Nate and Jan have done the hard work. Look at the one financial statement, read a blog post or two. Decide whether you think the assumptions about the stock portfolio are reasonable or not and whether you can live with the uncertainty. Have a quick glance at the real estate and forest land. That's about it.
« Last Edit: February 14, 2019, 11:24:43 AM by writser »
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