Northern Bear Share Discussion Threads

[aimwinner] 26/7/2023 16:18

zangdook

"I'm quite aware he's likely to stay on the board. I'm not "hoping that someone will replace him" and haven't suggested I am;"

I am not so sure!
This obviously requires the following to vote against for it to have any chance of Jeff being voted of, but it could be close, and the PI could hold the marginal votes that make a difference.
The numbers as I see them look like this, from the news and website.
NBD 3,564,000
Steve Roberts 813,300

Jeff Barysnik 4,736,717
Difference 359417 or about 2% of the company.
How do we make this happen?

[zangdook] 26/7/2023 14:11

I'm quite aware he's likely to stay on the board. I'm not "hoping that someone will replace him" and haven't suggested I am; the vote is for or against, not a choice of one candidate or another. My vote is against.

[aimwinner] 26/7/2023 13:49

How can a man who is 5 times zones away with no plc or construction industry experience be the best choice for Chairman. I am sure there are many far better qualified men and women in the Northeast of England.
I feel he has added nothing over the past 2 years so will be voting against at the AGM and urge others to do the same.

[patsc100] 26/7/2023 13:22

I agree with you. My point is that I don’t see any better alternative and second, if I wouldn’t have the confidence in Jeff and it’s very likely that he will stay BoD, I would just sell and move on instead of hoping that someone will replace him not even having a single clue who this should or could be.

Further, as I mentioned, it’s already a big contribution that someone is overseeing all capital spend.

[zangdook] 26/7/2023 13:10

Your view seems to be based on nothing but confidence in Baryshnik. Perhaps you know him from elsewhere; my view is based on his involvement with NTBR and nothing else. Can you point to anything he's done here that justifies such confidence?

I'm not selling because the company is undervalued and I expect that may change, to some extent, in the medium term. If your argument is that anyone who doesn't like a particular director should sell their interest in the company instead of voting, then every director would always get 100%. That's not really in line with my understanding of the stock market.

[patsc100] 26/7/2023 12:56

Let this be alone the fact that they won’t burn capital by overpaying for bad acquisitions as Jeff is overseen that process.

Not trying to offend you but If you’re not happy, why aren’t you selling?

It’s very unlikely that there will be someone else than Jeff for the foreseeable time.

[zangdook] 26/7/2023 10:43

How has he changed capital allocation, apart from not paying a dividend last year and presumably allocating it to sit in the bank account?

[patsc100] 26/7/2023 10:40

lol. Dude, who else do you want as a BOD? The guys from before that have absolutely zero understanding of capital allocation or someone, who's interest are aligned with yours?

Propose a better BOD and I even think that Jeff would step down on this own. If there's no better alternative, there's zero reason to vote against him.

[zangdook] 26/7/2023 09:41

I've just had the AGM voting link from IG. I voted against Baryshnik as director because I can't see that he offers anything to the company or to me. The only effect I've seen of his chairmanship is that I didn't get a dividend last year because he was dithering about whether to change the dividend policy.

I don't know whether the cessation of posting company news items on the website is his doing, but it seems very likely.

[this_is_me] 20/7/2023 14:54

Up around 25% in 10 days.

[royaloak] 20/7/2023 14:27

MM's chasing this now, paying well over the odds in quantity.

[royaloak] 18/7/2023 16:24

Think MM's re-adjusting their positions, actual quotes for 5000:

Bid 56.89 Offer 64

[zangdook] 18/7/2023 10:51

Yes, but the proposal here seems to be to pay, in effect, a final and post-final dividend, so I don't see that it's a cash flow problem.

Anyway, I've said all I have to say about that, sorry to keep repeating.

[knigel] 18/7/2023 10:46

Sorry, but a good ratio of companies pay both an interim and final dividend - usually I presume for cash flow reasons.

[exbroker] 18/7/2023 10:19

Zangdook
I agree Jeff seems to have changed nothing since he took control of the board.
His and his fellow Canadian MBA`s have shown their inexperience in PLC matters with the botched dividend announcements, seems to have just been an exercise in trying to get the share price up. Also when you are potentially at the start of a housing market and maybe construction slow down you don’t go shouting that all is still good for you, there is only downside from that statement .Any slowdown would be a hit to the share price from here, let’s hope Jeff is correct and all stays good

[zangdook] 18/7/2023 10:05

I didn't see any change in capital allocation. As far as I could see the changes since JB installed himself as chairman were a very long internal consultation process during which the dividend was suspended, and which resulted in no visible changes to capital allocation, dividend policy, corporate strategy or anything else. Well, one change, we only get half the dividend and have to wait the best part of a year to get the rest of it. Also they stopped updating the news page on the website early last year and with it the email list.

The impression I get of JB is one of utter uselessness. AFAICS he doesn't appear to have any ideas but tried to change things anyway and got nowhere. His one idea is to hold back half the dividend, which makes as much sense as suspending it while he dithered.

[patsc100] 18/7/2023 09:49

Where do you see any cross selling opportunities between the business units? Which business unit will use forklifts?

Besides that, buying forklifts is definitely not a good use of capital for internal purposes and for risk matters. Roofing businesses don't consume capex. Check the companies house data on the Alcor business unit. After capex the business earns no money. Further, more cash on the balance sheet will add to the stability of the business.

In addition to that, I have to admit that I made a mistake in my thought process.

All earnings should be distributed via dividends. The multiple has to expand before any reinvestment into m&a should be made. This would be the best way forward to increase Shareholder Value - or expand the share price.

It takes much longer than I initially expected, but what we see is that there are changes happening.

a) Change in management
b) Change in capital allocation
c) Sell-Side-Report
d) Jeff as the BOD

Yes, I wish this would not take that long, but sometimes it's not that easy. Let's see, I am confident that we will see more communication with the market after all the things have settled.

[zangdook] 18/7/2023 02:27

also...how can you have "further" improvements in shareholder communication when the improvements to date consist of ceasing to use the email list to keep holders aware of what's going on and...that's it.

[this_is_me] 17/7/2023 20:54

I don't agree with your suggestions. your reference to A! forklift truks is out of date. The Alcor business supplies forklifts which other parts of NTBR use. Selling it would increase costs, shutting it down when it has real expansion prospects is just plain daft.

Having a number of related business means cross selling is possible and if one has some difficulties it won't bankrupt the whole company.

[patsc100] 17/7/2023 15:26

Update on #NTBR - Northern Bear from my side.

Disclosure: I own shares

I have been closely monitoring the activities of NTBR for a significant period, and it appears that Jeff is implementing the necessary measures to drive positive changes within the organization.

I am of the opinion that his efforts will yield further improvements, and I do not anticipate him to acquire the business.

This likely explains why he is maintaining ownership below the 30% threshold. While I agree with some shareholders that shareholder communication could be improved, I am confident that we will witness further improvements in the medium term.

The research report on NTBR was an initial positive step in effectively communicating the undervaluation to the market.

Presently, the valuation of this business is significantly underestimated, with a trading multiple of 5x profit and no debt, coupled with an additional 1.5x profit (equating to 3.2 million) in cash. In the interest of maintaining a margin of safety, I assume that all the cash will be required to fund working capital requirements.

There remain untapped opportunities to enhance shareholder value, and I would like to propose a value creation plan going forward.

One of the most crucial sections of the annual report is the "Strategy & Dividend" segment, wherein the board communicates its intention to deploy capital for organic growth (although the specifics are unclear) and acquisitions, while also returning a portion of capital via dividends.

An issue we continue to encounter pertains to capital allocation. A1, due to its high capital intensity and lack of alignment with the construction-related group, is deemed a subpar business.

Over the past 12 months, NTBR has invested 1.4 million pounds in capital expenditures. In the A1 companies house report, I see capital expenditures of 1.47m.

Having analyzed similar construction-related enterprises, I believe that approximately >200,000 pounds would be the maximum amount required to fund the capex requirment of the construction businesses.

In my view, NTBR should take the following steps:

a) Dispose of the A1 forklift rental business, either through liquidation and asset sale or by finding an interested acquirer. This would decrease the company's capital intensity, mitigate risk, and enhance overall quality.

Some napkin math - be cautious this is definitely wrong and misses the depreciation expenses and tax shield:

It will reduce the operating profit by 240K, but also free up ca. ca 800k in cash-flow - after removing cash-inflow of 700k.

b) Considering the current valuation, the optimal capital allocation approach would involve share buybacks. Unfortunately, Jeff cannot exceed the 30% ownership threshold, as doing so would necessitate a bid for the entire company.

Nevertheless, NTBR could employ the proceeds to repurchase 15% of its shares without Jeff surpassing the 30% mark. Implementing a Dutch tender offer would be highly advantageous. This represents the most effective use of capital at this time, superior to dividends or reinvestments in the A1 business unit. While this would reduce the free float, it would actually enhance liquidity as legacy shareholders would have the opportunity to divest their shares, likely at a slight premium.

c) The second-best option, following the repurchase of 15% of shares, would involve utilizing the capital to acquire complementary businesses and pursue a roll-up strategy. Multiples for roofing businesses and other construction-related enterprises typically range from 4-5x EBITDA, translating to returns of 15%-20% on invested capital. Given NTBR's current size, a more conservative approach would be advisable, targeting acquisitions at 3-4x EBITDA to maintain high returns.

NTBR generated 2.1 million in the last twelve months. If they could reinvest that capital at a 20% rate, we would witness an earnings increase of 400,000 within a year. Although this would preclude receiving a dividend, it would be acceptable, as I am unable to reinvest my capital at such high rates. Consequently, we would possess ownership in a business trading at 5x earnings, experiencing earnings growth of 20% or more.

d) further, I would like to see divestments of the non speciality construction businesses - Arcas. This is a low margin business mitigating some high construction related project risks.

I am following this business further, but so far satisfied with the development. It's slow but it is progressing.

It's a low % of my portfolio as of now, but I might add a few shares.

[royaloak] 17/7/2023 14:44

I like to look at the PE ratio as well, they seem cheap to me, I will add if I can pick some up in the auctions.

[aimwinner] 17/7/2023 13:35

zankdook

When is a dividend not a dividend, when it`s a Baryshnik!!

I agree with you it is confusing, this is the type of dividend payment pattern I get from some of my US holdings, maybe Jeff has forgotten which side of the Atlantic the company is on!
I feel sorry for those who bought in on the promise of 5p only to now have to wait 9 months for 40% of it.

[tiswas] 17/7/2023 13:16

I have been told

Dividend every 6 months. After the FY (plus special dividend) and after the HY.

Still not sure I am any the wiser but I think it is saying we are to receive the dividend 12 months in arrears?

[george1964] 17/7/2023 12:28

Hybridan further assumes "a dividend of 5.5p for FY24 and 6p for FY25".