I’m writing this on 1/27/2012, after having just read this article over at oddball stocks on Cibl. As soon as I read it, I realized it was a unique opportunity and immediately did some research. The stock was just as undervalued as the article made it out to be, and I put in a limit order for shares. Thus, if you’re reading this, either my order was filled and I’m now happy to share the idea, or the stock has run way away from me. Either way, know that I wrote this (potentially long ago) in January, not recently. ***Update- my order wasn’t filled. Sad.****
The crux of the idea is basically this: page 9 of the MDA from their most recent quarter (ended 9/2011) includes this line: “The Company has received, and is reviewing an expression of interest in certain of its remaining telecommunications properties at values in excess of the current trading price for CIBL stock. There can be no assurance that this expression of interest will result in a transaction of any sort, and the Company cannot predict the outcome, timing or any other element of this matter. However, it is possible that the result could be financially significant for the Company.”
In addition to those wireless divisions, the company also owns interests in two TV stations, as well as a couple of various other assets. Because almost all of the value is concentrated in the TV stations and wireless stations, for the purpose of this article we can ignore the other assets (though they certainly have some value!).
I don’t have much more to add to oddballstocks report, so I’m going to refer you back to his article for valuation and everything. However, I want to point out two things that he didn’t mention.
First, oddball mentions the investment in Solix, but says he doesn’t have any idea how much of the company it is. It’s a small investment, so it really doesn’t matter, but they own 1.36% per page 7 of their annual report under the “cost method” disclosure. I pointed this out to him, and he said he would be correcting it or adding a comment, so you may already know this.
However, the second point is much more valuable, and I haven’t seen this discussed anywhere. CIBL owns 20% of WHBF, and this is a potentially extremely valuable asset. Oddball estimates their value to CIBL at $8-14m. I think it’s actually just a bit lower because WHBF has pretty decent leverage (~$9m), which would reduce the proceeds to CIBL by ~$1.5-2m. However, CIBL also discloses this in note 4 (on page 10) of their annual report: “Upon the sale of the station, CIBL shall be entitled to an additional 5% of the sale proceeds.”
Given that the division (using oddballs estimates) is worth between $40-70m in total EV, that’s HUGE. That’s an extra $2-3.5m (minimum) in proceeds for a stock with a $15m market cap!
All that discussed, I really like the catalyst for the company. Gabelli controls the company, and seems determined to return all cash to shareholders through dividends and share buybacks. The most likely course for the company seems to be slowly selling all their divisions and returning the cash to shareholders. That’s a pretty solid catalyst, and for something this undervalued represents a great deal.
I’m going to stop here and again refer you to the excellent oddballstocks article linked at the top. I honestly just wanted to add some interesting tidbits I found, but the oddball article literally covers everything else.
Disclosure: hopefully long CIBL. Could add shares at any time
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