Description:
Tandy Leather Factory (TLF) is a retailer specializing in leather and leather craft products. Established in 1919 the company operates 102 retail stores. Tandy has gone through hell since the end of 2019, months after hiring CEO Janet Car. After Carr began, financial statement irregularities were discovered, and a restatement was required. The CFO, Tina Castillo, was forced to leave over reporting errors. Then in 2020, Covid shut down all stores, and unable to restate financials, the company was delisted from NASDAQ, forced to purchase/implement an ERP system to prevent future inventory errors and comply with SEC investigations. Further, SEC fines, failed searches for a replacement CFO, and the new CFO quits. Implementing a new ERP system and finding forensic accountants to assist in restatement proved costly and nearly impossible during Covid. Jeff Gramm was the steady hand as chairman and 34% owner. Gramm handled the new hire of CEO Carr, share buybacks and large blocks purchased as the stock dropped and was delisted, resisted expansion/closing of unprofitable stores, and implemented c-suite compensation using stock with financial profitability goals instead of salary.
I use historical financial activity over the past +5 years to uncover high performing management teams that focus on driving a higher ROIC. This approach led me to purchase an overweighed position in Tandy Leather Factory (TLF) when trouble hit. The CEO is Janet Carr, but Chairman and largest shareholder Jefferson Gramm drives management capital allocation. My quantitative approach unknowingly led to me investing and profiting from several companies (RBCN, LUB, IVFH, SGU) owned by Jeff (Bandera Partners) at materially lower prices than Bandera. It was a coincidence as I let management's historical activity concerning capital structure changes, profitability, and productivity influence my investment decision on a historical and parimutuel bet. I've been lucky with my investments owned by Jeff (Bandera Partners).
I wrote up TLF on my free blog, and SA published it for free with my permission. Jeff, who I don't know, DM'd me saying it was an excellent article, "Tandy Leather's Delisting Creates An Extreme Value Opportunity." https://seekingalpha.com/article/4389642-tandy-leathers-delisting-creates-extreme-value-opportunity
My reason for mentioning this is his willingness to speak with investors, including the CEO. A TLF Twitter investing group was formed. TLF management has been generous in working with the group and answering questions, including Zoom calls. One of the Twitter TLF investing group members had to leave as he now serves on the board with a 10% stake (Eric Speron) (First Foundation Advisors).
Financial statistics support management’s positive review. Since 2014 management has allocated 14.35M on share repurchases, generated 18.78M in free cash flow, and reduced the share count from 10.20M to 8.30M. Long term debt is zero, excluding lease obligations. The board resisted using their Houston location with a 20M tax assessed value with no mortgage to expand/empire build. The current EV of TLF is 37.M.
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Company Name: OPTEC International,...
Title: Ceo
Helpful
0
Not Helpful
0
1.0
Review Details
Management Name: Roger Pawson
Average Rating:1.0
Internal Capital Allocation Rating:1
Cost Cutting Rating:1
Financial Engineering Rating:1
Business Quality Rating: 1
Investors Communication Rating:1
Governance Rating:1
Description:
Roger Pawson CEO of
@optecfuelintl
$Opti Convicted Felon in 1992 for "Theft By Receiving". Served 45 Days in Jail. Decades later learned how to steal smarter off Investors Backs on Penny Stock Tickers. SEC only looks are Criminal History for past TEN Years.
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Company Name: Kaspien
Title: CEO
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0
Not Helpful
0
4.3
Review Details
Management Name: Kunal Chopra
Average Rating:4.3
Internal Capital Allocation Rating:5
Cost Cutting Rating:5
Financial Engineering Rating:5
Business Quality Rating: 4
Investors Communication Rating:3
Governance Rating:4
Description:
I'm going to preface this with the fact that I rarely look at CEOs unless I have a reason to.
In the late 2010s I invested in a company called Trans World Entertainment. The company was effectively a CD & DVD retailer that was obviously well past its prime. They had recently purchased a company called eTailz, though, an Amazon reseller & service company that had been a startup darling in Washington State. The overall company, though, was devouring cash and it would not be long until it was in Chapter 11.
Enter Chopra. Any change in management, I figured, would be a good move. As it turned out, Chopra seemed like an up and coming star manager, having turned around businesses before and sparking growth in others. I figured that he might just be skilled enough to rescue Trans World.
It took a year but Chopra was able to keep the firm from bankruptcy, in part by closing stores. While it definitely seemed like the firm would file, it was soon producing cash and on the upswing. The firm had become a profitable company.
At the end, Chopra changed around the business description, describing it as a SaaS business - it did have some software - but a deep dive into the 10Ks showed that software only accounted for a couple percent of the business. This made me somewhat skeptical about the business going forward and Chopra as a straightshooting manager so I sold my shares.
Overall, Chopra was a very competent manager who was able to do good things for Trans World, but seemed to lack the straightforward and honest disposition characteristic of great managers.
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Company Name: Recipe Unlimited
Title: CEO
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0
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3.8
Review Details
Management Name: Frank Hennessey
Average Rating:3.8
Internal Capital Allocation Rating:5
Cost Cutting Rating:2
Financial Engineering Rating:4
Business Quality Rating: 4
Investors Communication Rating:4
Governance Rating:4
Description:
Interacted with him at prior endeavors. He understands capital allocation well, and is intimately involved in the franchise operations of his businesses. He understands that franchisors are effectively extensions of the underlying franchisees and he has to make the franchisees have a positive experience (and return) in order to do well.
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Company Name: Ichigo Group Holding...
Title: CEO
Helpful
0
Not Helpful
0
4.3
Review Details
Management Name: Scott Callon
Average Rating:4.3
Internal Capital Allocation Rating:5
Cost Cutting Rating:2
Financial Engineering Rating:5
Business Quality Rating: 5
Investors Communication Rating:4
Governance Rating:5
Description:
I was impressed interacting with Scott. I have found a lot of investors turned operational execs have a hard time. He really understood high ROIC projects. Ultimately he was patient and seized on great opportunities. At the right price, I would eagerly invest alongside him again.
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Company Name: MindMed
Title: Board Member
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0
Not Helpful
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2.5
Review Details
Management Name: David Gryska
Average Rating:2.5
Internal Capital Allocation Rating:4
Cost Cutting Rating:1
Financial Engineering Rating:4
Business Quality Rating: 4
Investors Communication Rating:1
Governance Rating:1
Description:
This individual seems to be a board member for hire amidst situations where the company wants to bring in someone friendly when faced with shareholder opposition. This happened most recently with MindMed but also recently with Forte Biosciences. Thus, he rates very low on governance but he does seem to have a decent track record (most recently Seagen).
