SFC - Schaffer Corporation

[galumay]

I dont think there is any chance of debt! Its got a very healthy balance sheet, the sleeper is the huge property portfolio, which is edging closer to having the value unlocked. Its carried on the books at about $100m, if it gets developed as now seems likely that number will be much bigger.

If you read back through the history of the company its now a very different animal and the way the founder/management team have managed that turnaround is enlightening.

Of course, black swan events are always possible, and yes small free float means liquidity is low, but my style and process means I am often invested in very illiquid, tightly held businesses.

 

[galumay]

I'll sell half of mine at 17.30 when price nears there. Save your change.

I will keep my eyes out for them!

 

[galumay]

Well SFC busted thru $17 with its HF report today. I will need to look out for peter2's stake if it keeps going north! Nothing really surprising in the HY, I suspect there is simply increasing interest in the investment assets of SFC.

(i have only skimmed thru the results so far.)

 

[peter2]

@galumay I didn't forget this one.
Bought some at 11 and 10.50 and think I'll just hold on to them for a while.

 

[galumay]

LOL! I am still keeping an eye out for when you sell half! I think you got in very cheap, if you are patient the value locked up in the land assets will reward you well!

 

[Dona Ferentes]

@galumay I didn't forget this one.

when @galumay posted about EMB, this is the one I thought of!!

 

[peter2]

if you are patient

This is the important attribute of a long term investor that I'm not so good with. Didn't place the sell order at 17.30, then didn't get another chance due to the "corona" selloff of 2020. I hate holding something that loses 40% of it's value. In this case I was unable to sell as the available volumes were too low with only a few hundred shares on the bid most of the time.

Price is finally leaping higher, on low volume, as usual. If price gets back to 17, well, there's no point selling as it may go higher.

 

[galumay]

I somehow suspect you are not cut out to be a long term investor, @peter2 !!

I imagine it would be like me trying to short term trade! (A disaster.)

 

[galumay]

SFC's FY results out today, good result in the circumstances, COVID has had a negative impact on the auto leather business, but what money they made they invested in the share market and did well there! Its almost like a family office this company, between the operating business, share portfolio and property assets its an all weather business.

 

[Clansman]

SFC's FY results out today, good result in the circumstances, COVID has had a negative impact on the auto leather business, but what money they made they invested in the share market and did well there! Its almost like a family office this company, between the operating business, share portfolio and property assets its an all weather business.

Let us take an educated guess. You need it to go up another $3 to break even so you've decided it's "a good result in the circumstances"?
Objectively it's actually another illiquid lobster pot.

 

[galumay]

Having had a more detailed read of the AR its a good picture of the skill and acumen of management in this business, given the serious impact of COVID on the leather business the fact they were able to increase profit substantially and increase the dividend by 15% while still paying out less than 50%, shows how they were nimble in controlling costs which dropped quite a bit, and also creating opportunity in the investment portfolio.

The real sleeper continues to be the land bank, when they unlock that value it will be a big impact on the value of the business. As it stands the investments in shares and property is basically equal to the market cap of the business so you get the rest for nothing.

Of course the illiquidity would put off many investors, but its an attraction for me as a long term, value focussed, micro cap investor.

 

[Clansman]

Having had a more detailed read of the AR its a good picture of the skill and acumen of management in this business, given the serious impact of COVID on the leather business the fact they were able to increase profit substantially and increase the dividend by 15% while still paying out less than 50%, shows how they were nimble in controlling costs which dropped quite a bit, and also creating opportunity in the investment portfolio.

The real sleeper continues to be the land bank, when they unlock that value it will be a big impact on the value of the business. As it stands the investments in shares and property is basically equal to the market cap of the business so you get the rest for nothing.

Of course the illiquidity would put off many investors, but its an attraction for me as a long term, value focussed, micro cap investor.

Even if it's lost $3 in value since you bought it....?
If never getting out is your goal, then you would be better served buying shares in the Hotel California. By the way that "land bank that is the real sleeper" is the same land bank it had + $3 ago.

 

[barney]

Unusual for a $200 mill Co to have no sellers

 

[galumay]

@barney there is not much free float though, very tightly held by the top 20.

 

[peter2]

Can't let this new all time high go without recognition. Now where did I put that 10 year chart? Heck, lets look at the 20 yr monthly chart.

 

[galumay]

Have you still got a few, Peter? I was surprised to see it has hit $18, been a good addition to my portfolio!

 

[peter2]

Is anyone surprised to see that even in low volume traded stocks like SFC, that the behaviour of the participants (buyers/sellers) as a group are the same as seen in high volume stocks.

I noticed in the monthly chart of SFC posted above that both pull-backs or retracements in the last two rallies touched and reversed in the 50 - 62% pull back zones of the prior move up.

Yes I've still go the few that I started with. Didn't sell before the covid selloff, but also didn't buy more in the Covid dip. I did look at the time but there was only a few hundred offered.

Projections: Not that it really matters to long term investors like us (). Price looks likely to get to $20 soon and then crawl it's way higher to $24-25 where it may find some resistance.

It wouldn't surprise me if the family did something with the real estate. They aren't going to live forever and I'm unaware if the property will stay with the family or the business.

 

[peter2]

SFC seems to have been very lucky with an investment in SM8. Their 2.4M investment has turned into 16M.
SM8 has morphed into HFG. I'm intrigued by their investment in a completely different area (monitoring buoys, marine tech for energy, resource sector). There must be a story there.

 

[Dona Ferentes]

SFC seems to have been very lucky with an investment in SM8. Their 2.4M investment has turned into 16M.
SM8 has morphed into HFG. There must be a story there.

or HTG ...

HTG - Harvest Technology Group

Shark Mitigation Systems is a company that was incorporated in Western Australia to research and commercialise technologies that mitigate the increasing occurrence of shark attacks globally. SMS, in collaboration with the University of Western Australia’s Oceans Institute and School of Animal...

www.aussiestockforums.com

 

[galumay]

There must be a story there.

Indeed. I spoke to management about the business investments and questioned the wisdom of using retained earnings for rather small investments in odd little totally unrelated businesses. They basically blew me off and said they were very comfortable with where they were investing and if i didn't like it I probably should reconsider being a shareholder!

Their confidence seems rewarded given the revaluation of their equity portfolio!

I think of them as my LIC, REIT that makes leather seats and concrete plinths.