Thanks for the write-up. The company does look deeply undervalued on paper. My concern is that management controls all the voting rights and has shown little interest in looking after minority shareholders throughout its operating history.
Without any realistic path to unlocking the value of the underlying assets, the investment case essentially relies on finding someone willing to buy the stock at a higher price, rather than on the business itself delivering returns to shareholders.
Alessandro, I completely agree with you. The shareholder structure is what keeps most people away here. Management has full control through the Class B stock, and historically they haven’t done much to look after minority holders. That’s the main trade-off here, you don’t get governance aligned with you, and you don’t get a clear catalyst that makes value realization predictable.
That said, I think there are still investors happy to buy dollars for $0.43 and wait for value to be realized, as long as there’s no cash burn. In my eyes, Winmill is a classic cigar butt. Nothing less, nothing more. It’s not a compounder with a moat or aligned management, but those companies rarely, if ever, trade anywhere near liquidation value.
The ones that do trade cheap are usually just “average businesses” at low P/Es, where long-term returns will be mediocre. A WNMLA-type cigar butt, on the other hand, gives you a balance sheet full of cash and securities, no operating burn, and potential 100%+ upside if any catalyst plays out.
That’s why I’m fine giving up good governance here in exchange for what I see as an asymmetric risk/reward. I know it’s not for everyone, but I’d rather park cash in these asset-rich setups, as long as I know there’s more than $2.00 of net cash behind each $1.00 I put in, until some truly great companies eventually come back down to interesting multiples.
I'm sold. Glad I can finally buy them now! Good write up. We think much alike!
I’m glad you liked it, and I totally think so too!
Nice find, Noel!
Thanks, Oliver!
Interesting read...thx for sharing. Proceeded to perform some DD of my own and stumbled upon this: https://law.justia.com/cases/delaware/court-of-chancery/2018/ca-s-3730-vcs-7048-vcs.html - doesn't prove anything but leaves me a little concerned on management's dedication to realizing value for shareholders.
Thanks for digging this out!
Thanks for the write-up. The company does look deeply undervalued on paper. My concern is that management controls all the voting rights and has shown little interest in looking after minority shareholders throughout its operating history.
Without any realistic path to unlocking the value of the underlying assets, the investment case essentially relies on finding someone willing to buy the stock at a higher price, rather than on the business itself delivering returns to shareholders.
Alessandro, I completely agree with you. The shareholder structure is what keeps most people away here. Management has full control through the Class B stock, and historically they haven’t done much to look after minority holders. That’s the main trade-off here, you don’t get governance aligned with you, and you don’t get a clear catalyst that makes value realization predictable.
That said, I think there are still investors happy to buy dollars for $0.43 and wait for value to be realized, as long as there’s no cash burn. In my eyes, Winmill is a classic cigar butt. Nothing less, nothing more. It’s not a compounder with a moat or aligned management, but those companies rarely, if ever, trade anywhere near liquidation value.
The ones that do trade cheap are usually just “average businesses” at low P/Es, where long-term returns will be mediocre. A WNMLA-type cigar butt, on the other hand, gives you a balance sheet full of cash and securities, no operating burn, and potential 100%+ upside if any catalyst plays out.
That’s why I’m fine giving up good governance here in exchange for what I see as an asymmetric risk/reward. I know it’s not for everyone, but I’d rather park cash in these asset-rich setups, as long as I know there’s more than $2.00 of net cash behind each $1.00 I put in, until some truly great companies eventually come back down to interesting multiples.
Gives plenty of time to accumulate a position tho ;)
I love Norbert Lou. A great investor. I recommend studying his investment thesis at VIC.
I'm so glad you mentioned Nate Tobik!
When I started in this world of value investing over 10 years ago, we exchanged a few emails about his deep value philosophy.
I still have my notes on what he looked for in net-nets!