Years ago, an assistant to Charles M. Gillman reached out to set up a call. I took it, as one does. Within a few minutes, it became clear our objectives didn’t overlap.

Gillman hunts for undervalued companies with an existing unhappy shareholder base. When he finds the perfect target, he takes a position and capitalizes on discontent, securing board seats, influence, and control.

Unfortunately, as merely a small-time investor who writes about stocks, I was of little use: I had no shares to deliver, no relationships to broker, no proxy to swing. The call was cordial; I think we both knew before it ended that it was beside the point.

I mention it because of what it reveals about his 13D on TransAct Technologies (NASDAQ: TACT). Chuck Gillman doesn’t pick his targets at random.

Share Value Never Sleeps

TransAct Technologies: Background

Recent Spate of Shareholder Activism

On July 16, Poplar Point Capital Management, run by Jad Fakhry, converted a passive 13G into a Schedule 13D. It holds 15.22%, three times Gillman’s 5.1%, and is easily the largest position on the book. In the 13D, Poplar Point first revealed its plans to press the board on strategic alternatives for the casino and gaming printer business, as well as segmented reporting and board composition.

Twenty-six days later, on Aug. 11, the board announced a formal strategic review of casino and gaming with BofA Securities attached. So the story, as reported, that a board decided to sell its printer business and an activist objected, has it backward. The board had a large shareholder and did what that shareholder asked within a month.

When Gillman went public two weeks later, demanding the review be pointed at BOHA! Instead, he was arguing with an investor three times his size who’d arrived first and already gotten what he asked for. With TACT stock, Gillman found pre-existing discontent, and a whole lot more:

Two businesses here with nothing to do with each other:

• EPIC thermal printers for ticket-in, ticket-out (TITO) slot machines

• BOHA!, a restaurant back-of-house platform

• Alongside two operating businesses, a $19.4 million cash position, relatively large compared to TACT’s $52.6 million market cap

The Cash Cow Has a History

A few years back, the gaming business was firing on all cylinders, mostly due to concerns about possible shortages. By spring 2022, management was reporting record demand and more than $13 million in booked orders because a chip shortage had customers queuing up to buy printers before someone else did.

The 10-K concedes that 2023 held up partly because the principal competitor couldn’t deliver at all. Unfortunately, not too long after this, stockpiling screeched to a halt. Casino revenue fell to $5.7 million in Q1 2024, down 64%, implying roughly $16 million in the March 2023 quarter alone. Consolidated sales dropped to $43.4 million in 2024 from $72.6 million.

So the $15.7 million everyone’s annualizing is a business that clawed back to half-bubble peak, built on a chip shortage and a rival’s misfortune. Neither is coming back. With Light & Wonder alone at 9% of sales, two or three customers pausing can halve this segment. It’s happened twice in three years.

Two Concerning Numbers from Recent Results

First, first-half adjusted EBITDA was $1.906 million against full-year guidance, raised on Aug. 11, of $1.5 to $2.0 million. Do that arithmetic, and the second half lands between negative $400 thousand and break-even.

Second, share-based comp ran $966 thousand in the half, so the adjusted EBITDA figure is essentially the whole figure with stock comp added back. GAAP operating income was $717 thousand, and Q2 alone lost $54 thousand, against G&A of $12.4 million a year on $56 million of revenue. These financials underscore that this business is either operating with a bloated overhead structure or that it needs to be within a larger corporate apparatus.

That said, the fact that G&A weighs on the bottom line helps to mask the true underlying value of TACT’s two operating businesses to strategic acquirers. Even as shares have zoomed from under $3.50 per share to between $5 and $5.25 per share since May, there may be enough left on the bone for investors buying in today.

What makes Gillman’s Game Plan the Stronger Approach

If the board pursues Poplar Point’s restructuring plan by selling the gaming business, focusing on the faster-growing BOHA!, TransAct could end up sitting on a large cash position, but at the same will remain stuck with much of the company’s heavy corporate overhead, without Epic’s gross margins covering the bulk of it.

Hence, there’s more logic to Gillman’s game plan. So, how much could be unlocked, long-term, by selling both segments in the most logical, orderly fashion?

TACT’s potential underlying value

Gaming

TransAct doesn’t disclose segment profitability. That’s exactly the disclosure Poplar Point asked for, as it would undoubtedly reveal TACT’s bloated corporate overhead.

Take $31 million of annualized casino revenue near a 50% gross margin, less $4 to $5 million of direct segment expense, and contribution lands between $9 and $11 million before corporate allocation. Check it against the consolidated numbers: if printers throw off $10 million and the company still reports $1.75 million, the overhead is eating nearly all of it.

That said, I wouldn’t assume that a buyer could quickly increase this segment’s EBITDA to $10 million. Conservatively, a buyer could strip out at least $2 million in annual expenses simply by stripping out CEO compensation, board costs, and public company audit, legal, and listing fees.

A strategic buyer could strip the whole duplicate corporate function, finance, HR, and IT included, and perhaps hit closer to the $10 million figure. Somewhere in the middle, call it $4 million to $6 million in potential cost synergies.

So, who are some natural buyers for TransAct’s gaming business? JCM Global first comes to mind. JCM Global, which bought the FutureLogic printer line, also has the deepest synergies. However, JCM Global may not necessarily want to pony up a high multiple for this business.

JCM’s parent, Japan Cash Machine Co. Ltd., trades at an EV/EBITDA ratio of just 2.4x. Arguably, maybe we should be buying this business, and not TACT stock! Consider this, even if a JCM acquisition of EPIC could lead to $10 million in incremental EBITDA, at most, this “natural acquirer” may only be willing to pay $30 million to $50 million for the business.

Another potential buyer could be the private equity firm Salt Creek Capital. Late last year, Salt Creek acquired Nanoptix, another gaming thermal printer company. By purchasing this segment, Salt Creek could create a gaming hardware roll-up, perhaps moving into adjacent areas like signage, bill validators, data platforms.

Alternatively, perhaps TransAct could sell off BOHA!, using the proceeds to become a roll-up vehicle itself.

BOHA!

The instinct is to reach for the restaurant software deals. In 2024 PAR Technology (NYSE: PAR) paid $190 million for Stuzo and $206 million for TASK Group, and told investors the pair carried better than $80 million of recurring revenue and better than $20 million of adjusted EBITDA. Five times recurring revenue, for profitable software.

BOHA! won’t get five times because BOHA! is still largely a printing business with software on top of it. It sells label printers and temperature probes, then sells the labels those printers consume. The tell sits in TransAct’s own release: software revenue grew 47% last quarter, while total recurring revenue grew 13%. Those two only spread that far if software is a small part.

So the right comp is the label printing trade. Zebra Technologies (NASDAQ: ZBRA), the best operator in it, earns 22% adjusted EBITDA margins and trades near three times revenue. TransAct itself trades at two-thirds of one times revenue and earns nothing. BOHA! belongs between them — units growing 33%, but losing money, which puts a buyer at one and a half to two times the segment’s $20 million of revenue.

Call it $28 to $38 million.

The bidders spread wide. PAR pays the most — serial acquirer, plus food safety and task management fit neatly beside Data Central and Delaget in the back-office stack it’s been assembling, though $32 million may sit beneath the size where PAR bothers.

Crunchtime is a different proposition, since it already owns Zenput, doing much the same job; it’d be buying the customer list and retiring the product, which is the low end of the range. Zebra fits on label-and-enterprise logic.

Then there’s Avery Dennison (NYSE: AVY), which wrote the software in the first place. Label pull-through across 21,790 connected units is real money to a company that sells labels. But note what they actually did: in 2025, they licensed the source code to TransAct outright for $2.55 million rather than keep the business. A company that just handed you the code isn’t obviously itching to buy it back.

The Other Two Pieces

POS automation sells the Ithaca 9000 thermal printer, which the 10-K says goes primarily to McDonald’s and, to a much lesser extent, other quick-service restaurants. Revenue was $2.2 million in 2025, down 34% from $3.4 million, which management puts down to competitive pressure on both volume and price. They guide 2026 flat. One customer, shrinking, in a category where McDonald’s keeps moving receipts onto screens. I’m assigning it zero. If somebody pays for it, that’s upside.

TransAct Services Group is the better business. It sells consumables, spare parts and service against an installed base of more than 4 million printers and terminals shipped since 1996, through a direct sales force and the company’s own supply storefront. Recurring, high margin, no capital required. If TransAct broke out segment profits, I’d expect TSG to be the best line on the page.

It just doesn’t sell on its own. That revenue comes off the installed bases of the other two segments, so whoever buys the casino printers takes the casino service stream with them. I’ve split it roughly three to one toward casino, where the older and larger installed base sits, and folded it into those two values rather than carrying it separately.

Estimating that this segment, if independent, would generate around $1.2 million in annual EBITDA, multiply that by a conservative 5x multiple, and apply it, pro-rata, 75%, or $4.5 million, to the gaming business, and $1.5 million to BOHA!

Putting It All Together

Valuing the casino and gaming business at $34.5 million to $54.5 million, BOHA! between $29.5 million and $39.5 million, then adding in net cash of around $13.2 million, we get a net value of between $7.50 and $10.42 per share.

Hence, the potential upside with TACT, if strategic alternatives are pursued in the most logical way, could range between 45% and 100%.

Risks and Concerns to Consider

Activists pushing for a sale is not a new frontier for TransAct. The Roth Capital process to sell part or all of the company in June 2024 was suspended in May 2025 due to macroeconomic uncertainty. Why should the second attempt fare better?

Yes, the first was run with printers 60% below 2023 revenue, and BOHA! still on licensed code. The situation has changed. Buyers can now acquire Epic as a turnaround asset and BOHA! as an unprofitable but high-potential growth bolt-on. That said, the past lack of success in selling this company does underscore potential downside risk, if this recent flurry of activist activity amounts to little actionable change. Shares will likely pull back to the low single-digits.

Also, a word on the ink, and the long-term risk that slot machines eventually go cashless. So far, efforts to implement cashless slot technology haven’t received much buy-in from players. Some casinos, like Resorts Las Vegas, even started out with cashless machines, only to revert to the traditional TITO method in response to customer feedback.

That said, a friend who plays slots professionally tells me that some in the advantage-play scene now handle TITO tickets with nitrile gloves, convinced they’re poison. The health claims go beyond the evidence, though the mechanism is real enough — thermal paper uses a bisphenol developer that transfers to skin, and the EU has banned BPA in receipts at levels above 0.02% since 2020. Note where that argument lands. The cure is to abolish paper and put the money on a card, which is what the cashless crowd has promised for a decade. The glove wearers and the casino industry suits want the same thing, for unrelated reasons.

The Bottom Line

I don’t own TACT and am considering buying it. Putting together this analysis gives me greater confidence that Gillman could prevail, pursuing a clear, viable path to unlocking TACT’s underlying value.

Better yet, the whole bull case may not necessarily hinge on finding buyers for both segments. Perhaps the template is Pitney Bowes (NYSE: PBI), a stock that I have held for quite some time.

At Pitney Bowes, Hestia Capital ran a proxy fight in 2023, arguing that a cash-burning growth segment and bloated corporate costs were burying a perfectly sound legacy business. Global Ecommerce posted roughly negative $38 million of EBIT in a single quarter, while SendTech and Presort threw off cash. Four directors were voted out that May. The chief executive and the chair followed. In August 2024, the company announced its exit from Global Ecommerce, and the shares roughly tripled off the lows.

Worth noting that Hestia was the third-largest holder, not the first. It won by assembling a coalition, which is the answer to anyone who thinks 5.1% isn’t enough to matter.

TransAct rhymes. A printing business is generating $10 million in contribution margin. A food service platform consuming cash. And $12 million of corporate overhead is swallowing the difference, which is how a company with a $10 million cash cow reports $1.75 million of adjusted EBITDA.

Sell BOHA! for $33 million, cut the overhead, and what remains earns $9 to $10 million on about $35 million of revenue. Five times that, plus the proceeds, plus the $13 million left after debt and leases, gets you to roughly $9 a share against $5.19 today, with the high case closer to $10.50. My sum of the parts arrives at the same place from a different direction.

And the raw material for a coalition is already on the register. Per the 2026 proxy, against 10,276,279 shares outstanding, Poplar Point now holds 15.22%, 325 Capital 10.02%, Silverberg Bernstein 5.88%, B. Riley 5.84%, and Richard E. Fearon, Jr. 5.12%. Add Gillman’s 5.1% and six holders control roughly 47% of this company. And 325 Capital is the fund that forced changes here in 2022, taking two board seats, a declassified board, and a split chairman’s role.

Now the other side of it. Every dollar of that upside assumes somebody forces a transaction, and this board has already run one process and quietly suspended it in May 2025. Nothing obliges it to finish this one. Strip out the deal, and you own a company earning $1.75 million of adjusted EBITDA, most of it stock compensation added back, with a printer segment that has halved twice in three years and a competitor replacing its printers on casino floors. Poplar Point bought in at $3.73 in May, four months ago. Gillman paid around $4.70. The market cap was $36 million in February. If the reviews go nowhere and the destocking cycle turns again, low single digits is where this goes, and shareholders will wait years for another shot.

DISCLOSURE: As of publication, the author (Thomas Niel) held no position in TACT, but may enter one at any time following publication of this article. The author also holds a position in PBI.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from TACT or any other entity for writing this article. I have no business relationship with TACT or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading TACT stock. Do your own due diligence, and caveat emptor.

Share Value Never Sleeps

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What’s a fleet of offshore support vessels actually worth? That’s the issue at hand with this stock: a company with an enterprise value of around $530 million, compared with ships that could be worth as much as $1 billion.

Years of high debt and cash burn drove this gap, once even larger than before. At least, before an activist started rattling the gates. In a matter of weeks, this activist has successfully compelled management to evaluate strategic alternatives, including a sale of the company.

The company I’m talking about, of course, is SEACOR Marine Holdings (NYSE: SMHI), whose shares jumped 23% on the strategic alternatives news, and have soared by about 44% since the activist, Jorey Chernett, first entered the scene.

While investors who bought the stock at lower prices are sitting on solid gains, the question now is whether there’s further upside. While the liquidation value of SEACOR Marine ranges widely, even a low-ball estimate suggests high upside for this deep-value investment that has since morphed into an event-driven trade.

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Background

Spun off from SEACOR Holdings in 2017, SEACOR Marine has languished as a public company in the nine years since its debut. The stock debuted at $20 per share in 2017. Just prior to recent activist activity, it traded as low as $5.55 per share.

SEACOR’s lackluster stock price performance is in line with the poor performance of its underlying business. Consistently unprofitable, SEACOR has, over time, reduced the size of its fleet; what was once 81 vessels just five years ago stood at just 44 by the end of 2025.

What remains is decent hardware: platform supply vessels and fast support vessels that carry cargo and crew to offshore installations, plus a shrinking liftboat business, spread across three regions. Africa and Europe are the strongest of the three. The Americas is inconsistent. The Middle East and Asia have posted a direct vessel loss in four of the past five quarters.

Making matters worse is SEACOR’s highly leveraged balance sheet, with $321.6 million in outstanding debt against $55.4 million in cash. Even if the company were to experience a significant boost in demand for its vessels, the resulting increase in cash flow would likely go largely toward debt service.

Recent Results

On July 29, SEACOR released earnings for the preceding quarter. During the quarter, the company reported $54.6 million in revenue, down 10% from a year ago but up 23% sequentially, thanks to higher average day rates and utilization.

Net income came in at $3.3 million (13 cents per share), a major improvement from the $15.8 million net loss reported during Q1 2026. However, vessel sales, not operating results, drove this swing to a profit. Outside of a $31.3 million gain on vessel sales, operating losses would have been around $15 million, in line with the prior quarter.

However, this is promising news regarding the potential gains from SEACOR liquidating its fleet. Last quarter, five vessels sold for $44.7 million, against a book value of around $13 million. In other words, they sold for over three times the book. This asset sale underscores the argument made by activist investor Jorey Chernett, in his June 22, 2026 letter to SEACOR’s board of directors.

In the letter, Chernett, who, through his Pointilist Family Office, is the company’s largest shareholder, with a 7.2% stake, argued for the company to pursue a “disciplined, sequential strategy to unlock value for shareholders,” including:

• Aggressive cuts to corporate overhead

• An immediate sale or relocation of its Middle East liftboats

• Utilize cash proceeds from cost-cutting and asset sales to pare down the company’s high debt.

• Pursue a sale of its “desirable” fleet of Platform Supply and Fast Support Vessels. Per Chernett, “Preserving these segments together ensures maximum leverage with strategic suitors, who can acquire the core fleet for either cash or stock of the acquirer.”

As hinted earlier, SEACOR Marine, in response to Chernett’s activist push, announced on earnings day that the board has started evaluating “potential strategic alternatives,” including a sale of the company and/or its assets.

Taking both Chernett’s bull case and SEACOR strategic alternatives plan into account, let’s take a closer look at valuation and determine whether there is significant underlying value, or if Chernett’s estimate is highly aggressive.

Valuation

Currently, SEACOR Marine has a market cap of around $264.3 million. Adding in debt ($321.6 million) and backing out cash ($55.4 million), the company’s enterprise value is approximately $530.5 million. Compared to book value, the stock appears fairly-priced.

However, compared to the potential underlying value of its fleet, shares remain arguably undervalued, but to what extent is the question.

Using benchmarks from Clarksons Research, the activist came up with a $1 billion estimate for the value of SEACOR Marine’s fleet, broken down as follows:

• Platform Supply Vessel (PSV) Fleet: Valued at $500.00 million to $550.00 million (inclusive of the two high-specification newbuilds currently under construction).

• Fast Support Vessel (FSV) Fleet: Valued at $240.00 million to $280.00 million.

• Liftboat (L/B) Fleet: Valued between $110.00 million and $150.00 million.

At $1 billion for the fleet, SEACOR Marine’s net value comes out to around $731.1 million, or around $27 per share, nearly three times the current stock price. That figure also gives full credit for the two high-specification newbuilds while deducting nothing for the capex still owed on them. However, there are a few caveats suggesting that $27 per share is an aggressive figure, as well as that the market has heavily discounted SEACOR’s value for reasons beyond its chronic unprofitability.

As Seeking Alpha contributor Henrik Alex noted in his recent write-up on SMHI stock, of 20 FSVs, 15 PSVs, and 3 liftboats, 8 are located in the Middle East. Taking this and other factors into account, he presented a discounted valuation of SMHI’s fleet, valuing the company at around $18 per share.

Still, $18 is up near Chernett’s conservative “at least $20 per share” argument laid out in his letter to the board. All of these figures also correspond well with the recent asset sales, completed at 2x-3x multiples to reported book value for the vessels.

Even if one were to make a more conservative estimate of the value of SEACOR Marine’s fleet, for example, by applying a discount for selling to a single buyer rather than piecemeal, this would still likely result in a mid-teens figure. Not too shabby, for a stock trading for $9 per share.

Catalysts

With the strategic review now underway, the next major development will be the sale of some or all of the company’s vessels. There is a strong chance that SEACOR Marine makes headway in “seeking strategic alternatives.” With day rates at elevated levels and given recent success in selling vessels, SEACOR appears well-positioned to continue liquidating its fleet.

In the quarters ahead, management could begin to heed Chernett’s other recommendations, including cost-reduction measures. Improved operating results could help bridge the valuation gap. So too would any sort of positive development related to the Strait of Hormuz crisis.

Risks

In the months ahead, if SEACOR Marine’s “strategic review” fails to result in asset sales and/or a full-on sale of the company, shares could make a hard landing back to prior price levels. Not only that, there’s a risk that the company will continue to slowly sell off its fleet, with much of the proceeds eaten up by its operating losses.

While perhaps a “no-brainer” deep value investment in the mid-single digits, at nearly $10 per share, much of SEACOR Marine’s “margin of safety” is now gone. Investors buying today must be highly confident in the more aggressive sales forecasts.

Bottom Line

SEACOR Marine’s second quarter looked better on the surface than it did underneath. Revenue and earnings topped expectations, and the $20,227 average day rate marked a multi-year high. But roughly $31 million of the quarter’s profit came from selling five vessels, not from running them. Strip that out, and you’re left with vessel-level margins at multi-year lows and $13.2 million burned from operations. That is not a business fixing itself.

What changed is the board. After sustained pressure from large shareholders, management has retained advisors and opened a review that could end in a sale, a merger, or a piecemeal disposal of the fleet. That is the whole reason to own SMHI here. The largest shareholder pegs net asset value north of $20 per share. Even a conservative haircut for the eight vessels stuck in the Middle East and the two liftboats sitting in maintenance leaves plenty of daylight above a share price still under $10. FSVs and PSVs are fungible assets, and day rates in most regions remain firm, so buyers should show up.

Still, this is an event-driven trade, not an investment in an operating business, and it should be sized that way. A whole-company sale likely comes at a discount to NAV given the Middle East exposure. A breakup fetches more but takes several quarters, and the cash burn keeps eating into whatever premium the process generates. If the review ends without a transaction, there’s not much of a floor. Investors comfortable with that setup can buy. Everyone else should wait for evidence the process is actually producing bids.

Share Value Never Sleeps

DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from SMHI or any other entity for writing this article. I have no business relationship with SMHI, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading SMHI stock. Do your own due diligence, and caveat emptor.

In my initial write-up on Seer (Nasdaq: SEER), I summed up the whole situation with a pithy headline: A Dollar of Cash for Sixty Cents. With a large cash hoard relative to its market cap, an aggressive activist at the gates, and a founder/CEO willing to take the company private at an arguably fire-sale price, the setup appeared uncertain but potentially juicy.

Unfortunately, the most favorable outcome has not materialized. July 28 brought a pivotal event for Seer: its annual board election. All seven company nominees were re-elected; none of the Radoff-JEC nominees won.

However, the question now is whether investors buying in at rock-bottom prices can still see upside here, or whether this is yet another special situation that winds up a portfolio buster.

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Reading the Tea Leaves of the Shareholder Vote

Based on the final certified voting results filed on Form 8-K July 31, 2026, it’s clear that while shareholders are not too keen on present management, they are not too keen on the dissidents either.

That is, the three directors targeted by the Radoff-JEC dissidents received a large percentage of shares withheld: 56% for Terrance McGuire, 55% for Dipchand Nishar, and 43% for founder, Chairman and CEO Omid Farokhzad. However, they still won, as under the plurality voting system used for the director election, the seven candidates receiving the most “for” votes get elected. Withheld votes have zero impact.

Then again, don’t dismiss those numbers entirely. Seer’s board has been declassified since 2023, so all seven directors stand again next year. If this drags into 2027 unresolved, McGuire and Nishar start from a bad place.

A similar dynamic played out with another proposal on the ballot regarding ratification of Seer’s “poison pill,” ostensibly designed to preserve roughly $262 million in net operating loss (NOL) carryforwards and related tax assets. Out of 43.6 million votes cast, 19.9 million supported ratification, 14.6 million voted against it, and 9.1 million abstained. As this vote required majority approval of shares present and entitled to vote, not simply a plurality, the 9.1 million abstentions functioned as no votes, and ratification failed. Worth noting: among shareholders who actually took a side, ratification received 58% support.

The pill will presumably now expire on Feb. 25, 2027. However, since the board implemented a limited-duration plan in the first place, why won’t they simply implement another one when this one lapses? They probably can. Whether they will is another question entirely. Re-adopting a rights plan that shareholders just declined to bless, with a majority already withheld from three directors, is the kind of move that invites a lawsuit.

Meanwhile, the failed ratification opens the door for the Radoff-JEC group, which already owns approximately 7.7% of the outstanding shares, to buy more, or for an outsider to begin accumulating a position. Whether either happens is unclear. For now, the “situation” remains a bidding war between the insider and outsider camps.

Two New Bids, as the Ice Cube Keeps Melting

The day of the meeting, Radoff-JEC came back with a fourth proposal: $2.55 per share in cash, plus a contingent value right equal to 85% of net proceeds from future licensing, sales, or asset disposals, including the roughly 20% PrognomiQ stake.

One day later, Farokhzad revised his own bid. He did not raise the cash. It’s still $2.45, now a dime below the activist. What he did instead was dress up the CVRs: a revenue CVR worth up to $0.33, a sale CVR worth up to $4.91, both running out to 2033.

Yet while this suggests Farokhzad is offering up to $7.69 per share against Radoff-JEC’s $2.55, in my view, the structure eats the number three separate ways.

First, the cap. Under an 85%-of-net-proceeds CVR, buyer and seller want the same thing: the highest possible price for the assets. Under a capped CVR, that alignment reverses once the cap comes into view. Above $4.91, every incremental dollar belongs to the buyer. Farokhzad would be negotiating the sale of assets he owns, on behalf of holders whose upside he has already limited.

Second, the clock. Radoff-JEC aims to pay out within six to 12 months of closing. Farokhzad’s CVRs run to 2033. That seven-year gap does real damage: $4.91 discounted at 10% is worth roughly $2.52 today, and that assumes it pays in full, on a timetable set by someone under no obligation to hurry.

Third, the CVRs are explicitly non-tradeable. A tradeable CVR gives you an exit and, more importantly, a price. A non-tradeable one is a seven-year IOU you can’t sell, can’t mark, and can’t escape, issued by the man who decides whether it ever pays.

In short, call it $2.45 and a lottery ticket, where the buyer sets the drawing date, keeps everything above the jackpot, and won’t let you sell the ticket.

Valuation

Seer trades around $2.20. As of March 31, 2026, the company held around $220 million in cash, short-term investments, and long-term investments, or roughly $4.00 per share against approximately 55 million shares outstanding. Assuming quarterly burn of $12 to $14 million, consistent with recent run rates, that’s likely down to around $3.60 to $3.65 per share today.

Note that this is gross cash and investments; Seer carries operating lease obligations against it, though Radoff-JEC’s April proposal was conditioned on at least $215 million of net cash at closing, suggesting a modest haircut.

At $2.20 against $3.70, you’re still buying a dollar for about 59 cents. In theory, the original thesis holds.

The problem is the exit. Farokhzad’s $2.45 works out to 66 cents per dollar; Radoff-JEC’s $2.55, roughly 69 cents per dollar. Neither bid closes the discount. They simply hand you a smaller one, in cash. That’s an 11% to 16% spread, plus a CVR whose value depends entirely on who wins. Ho-hum merger arbitrage, in other words, not the fat pitch the gap to net cash implies.

Keep in mind that the gap between what an acquirer pays and what they could realize by liquidating or restructuring Seer privately keeps shrinking with every quarter of operating losses.

Risks

The obvious one: no deal. Both proposals remain non-binding, and this board has already told four separate bidders no. If the Special Committee stalls out and the arbs head for the exits, the speculative froth comes out of this stock in a hurry.

Then there’s the CVR itself. Don’t get me wrong, some payout is probably better than none. But if Farokhzad prevails, you are handing your upside to a non-tradeable instrument controlled by a CEO with seven years to think about it.

The Bottom Line

Radoff-JEC’s offer doesn’t expire until Aug. 10. Q2 results hit the street on Aug. 11. If management has further tempered cash burn, net cash comes in above forecast, and both sides gain room to raise.

Seer is no longer simply “a dollar of cash for sixty cents.” It is a claim on a shrinking pool of cash, with the timing and method of realization controlled by a board that shareholders failed to replace. At $2.20, there may still be value, but it is now a governance-and-deal bet rather than a clean net-cash bargain.

Share Value Never Sleeps

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DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from SEER or any other entity for writing this article. I have no business relationship with SEER, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading SEER stock. Do your own due diligence, and caveat emptor.

Cineverse (NASDAQ: CNVS) is known for horror content. It owns Bloody Disgusting, runs the SCREAMBOX streaming service, and distributed Terrifier 3, the biggest unrated release in U.S. box office history.

That is not the story anymore. The company is buying its way into advertising technology and media services, and a shift toward recurring revenue could smooth out results that have been anything but. It could also drive a major re-rating. There is a live precedent from earlier this year, and I will get to it.

Share Value Never Sleeps

From Projectors to Programmatic

Until 2023, Cineverse was Cinedigm, a company that leased digital projectors to cinemas before moving into film distribution and streaming. It rolled up fandom brands along the way, with Bloody Disgusting as the centerpiece in October 2021, and today sits on a library of 70,000 films, TV programs, and podcasts, plus a portfolio of ad-supported (AVOD) and free ad-supported TV (FAST) channels.

Then came Terrifier 3, made for roughly $2 million and grossing over $90 million worldwide. The stock ripped, then gave it all back once the franchise lapped.

The Numbers Behind the Turn

Fiscal 2026 was a step back in the headline figures. Revenue fell to $65.7 million from $78.2 million; the company swung to a $9.2 million net loss from a $3.2 million profit; and adjusted EBITDA came in at negative $3.4 million, down from positive $13.9 million a year earlier.

The fourth quarter went the other way. Revenue jumped 67% to $26.0 million, driven by IndiCue, a connected-TV ad-tech firm acquired in February for $40 million. Cineverse bought Giant Worldwide, a media-services business serving studios and streamers, in the same quarter.

The fiscal 2026 10-K breaks down what the deals did in half a quarter of ownership. IndiCue booked $7.9 million, and Giant added $3.7 million. Annualize both, and you get roughly $90 million of run-rate revenue from the acquisitions alone. Hold the legacy segments flat at about $54 million, and the math points to $144 million.

Management is guiding to $115 million to $120 million with $10 million to $20 million of adjusted EBITDA and more than half of revenue from technology platforms. It has separately said the acquisitions should contribute more than $50 million, which gets you to $104 million. Guidance sits between the company’s own conservative framing and what the run rates imply.

The tension is obvious. The half-quarter figure implies a much bigger IndiCue than the roughly $38 million it was underwritten on. Either the business is outrunning its acquisition case or a partial period is being annualized too generously. I would also want to know whether IndiCue books revenue on a gross or net basis, because a 10% to 15% take rate on gross media spend is a very different business than the margin profile the bull case assumes.

Management is leaning in regardless, targeting roughly $10 million in cost savings, the first $2 million booked by March, and bringing back Sean McCabe as CFO.

Running the Numbers Three Ways

Cineverse had roughly 23.4 million shares outstanding as of June 19, 2026. Add 4.5 million from the IndiCue deal, and 6.5 million from the $13 million convertible note, which converts at $2.00 and should be treated as equity already, and the adjusted count is about 34.4 million.

That is a market cap of $82.6 million. Add $9.4 million of short-term debt and $3.6 million of preferred, back out $3.4 million of cash, and the enterprise value is roughly $92.2 million.

Hit the midpoint of EBITDA guidance at $15 million, apply the 7x to 10x other entertainment names trade at, and equity value runs $95.4 million to $140.4 million, or $2.77 to $4.08 per share against $2.40 today.

Run the low end, and it inverts. At $10 million and 7x, the stock is worth about $1.76. That is the honest range: roughly 25% downside to 70% upside on entertainment multiples.

The upside case is that the market stops using entertainment multiples.

The Entravision Precedent

Entravision (NYSE: EVC) was a Spanish-language broadcaster whose digital business got gutted in March 2024, when Meta terminated its authorized sales partner program. What the market missed was a different segment rebuilding underneath: Advertising Technology and Services, built around the Smadex programmatic platform and Adwake.

ATS revenue grew 66% in the second quarter of 2025, then 104%, then 123%, then 204%. Segment operating profit went from $5.2 million to $34.3 million. The legacy Media business shrank 20% in 2025 and swung to a loss.

The stock did nothing. EVC traded at $3.83 on May 4, 2026, near a 52-week low under $2. Then Q1 landed the next day: revenue of $197 million against a $121 million consensus and a swing to $0.13 per share from a $0.53 loss. Shares jumped more than 80% after hours and kept running. EVC now trades above $11 with a market cap over $1.1 billion, roughly 260% above where it sat at the end of March.

Three quarters of accelerating growth built the setup. One quarter of undeniable profitability triggered the move.

The differences matter. Smadex is mobile app-install programmatic, not connected TV, and Entravision is a $450 million revenue company with $68 million of cash against Cineverse’s $3.4 million. But even after tripling, EVC trades near 1.6x EV/sales versus ad-tech peers at 2x to 3x, with ATS running 22% segment operating margins. A mid-teens forward EBITDA multiple for Cineverse is a discount to a comparable that has already re-rated and is still not expensive.

At 15x on $15 million, Cineverse is worth roughly $6.26 per share.

What Could Go Right: The Case for a Re-Rating

Content revenue is lumpy and slate-dependent. Ad-tech revenue recurs and scales with impressions rather than production budgets. Every dollar that moves from the first bucket to the second changes the multiple, not just the earnings. If the run rates hold and the synergies land, the mix tilts while the fixed-cost base stays flat, which is what produces EBITDA inflection instead of just growth.

Seasonality helps. Management noted on the call that the first-quarter calendar is the weakest ad window and the back half is the strongest. Cineverse’s fiscal fourth quarter, the one that produced the $7.9 million IndiCue figure, is calendar Q1. Everyone is anchoring to a number pulled from the worst stretch of the year. The 2026 midterms add some CPM lift, though political dollars chase news and local inventory, so the benefit is indirect.

The slate is an accelerant now rather than the thesis. The Toxic Avenger, Silent Night, Deadly Night, Wolf Creek 3, and more Terrifier. A breakout feeds owned inventory running through owned ad infrastructure, so the upside gets captured twice.

Cineverse reports fiscal first-quarter results in mid-August, the first clean look at whether the engine keeps humming. Analyst targets sit in the $9 to $12 range against a $2.40 stock, though coverage on a company this size is thin enough that I would not lean on it.

The Cash Problem, and Four Other Reasons for Concern

The fiscal 2027 numbers require a big leap, and the harder half is the profit line. Adjusted EBITDA has to swing from negative $3.4 million to positive $10 million to $20 million in twelve months. That requires the acquisitions to be profitable at scale, the full synergy target to be delivered, and no integration drag. Revenue growth is the easier part to believe.

The balance sheet is more pressing. Cash was $3.4 million at year-end; the revolver is partly drawn; and operating cash flow was roughly negative $26 million in fiscal 2026 due to a working-capital swing as receivables built. Ad-tech receivables typically run 90 days, so faster growth consumes cash before it produces any. A company burning $26 million with $3.4 million on hand is not facing a financing risk. It faces a financing requirement, and additional equity is a near certainty.

Underneath the ad-tech narrative, this is still a hit-driven content company, and hits do not arrive on schedule. Concentration is another unknown: Entravision’s filings indicate a single advertiser accounts for 36% of revenue, and Cineverse has given investors little visibility into IndiCue’s demand base.

Then there is the record. This stock destroyed enormous value over two decades under the Cinedigm name, a CFO change mid-pivot does not help, and ad tech is brutally competitive against players many times Cineverse’s size.

The Bottom Line

Cineverse is not cheap for what it earned last year. It is cheap compared to what it might earn next year.

The base case does not require heroics, but it is not much of a reason to buy either. The reason to buy is what comes after: a company pulling more than half its revenue from technology platforms should eventually stop trading like a film distributor. The reason to pass is on the balance sheet.

Size it accordingly. Entravision went from under $4 to over $11 in three months, with a single quarter proving its ad-tech segment could carry the company. Cineverse is a smaller, far more leveraged version of that bet, and it faces its first real test in a matter of weeks. If IndiCue holds its run rate through a better seasonal window and the synergy number moves toward $10 million, the story is real. If receivables balloon and the company raises equity on the ramp, you find out fast, and you find out cheap.

I would rather be conservative with a name like this and end up wrong on the upside. But after two decades of value destruction, Cineverse has finally bought its way into recurring revenue and better margins. That earns a look. It has not yet earned the benefit of the doubt.

Share Value Never Sleeps

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DISCLOSURE: As of Publication, The author (Thomas Niel) held EVC.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from CNVS or any other entity for writing this article. I have no business relationship with CNVS, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading CNVS stock. Do your own due diligence, and caveat emptor.

Every so often, a stock shows up on the screen with arithmetic so lopsided you assume you’ve made an error. Seer (NASDAQ: SEER) is one of those. With Seer, you have a company with $219.5 million in cash and no debt, against a market cap of $126.5 million, implying a nearly $100 million negative valuation for the company’s business.

Not only that, you have heavy activist activity with this stock, with the activist making three rejected buyout bids. Then, just last week, you had the strangest twist yet. Seer’s Chairman and CEO came out with a take-private offer on the eve of a holiday weekend, offering a big premium over the closing price but lowballing compared to the cash on the balance sheet.

With insiders and outsiders chomping at the bit to buy, this situation warrants a closer look. Let’s explore Seer, its valuation discount, and whether it’s too late, or just in the nick of time, to enter a position.

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Background

Seer develops tools to decode the proteome. Seer’s Proteograph Product Suite pairs engineered nanoparticles, consumables, instruments, and software to let labs measure thousands of proteins at scale.

But while the science is genuinely novel, the commercial reality has been brutal. Seer went public in December 2020 in one of the frothier windows for pre-revenue life-science tools, listing at $19.00 a share on a multibillion-dollar valuation and minimal revenue. Since then, it’s incinerated shareholder value. SEER is down about 97% since the IPO, with cumulative losses exceeding $465 million. That is the tension at the heart of this situation: a company that raised a fortune, spent most of it building a platform the market won’t yet pay for, and now trades below the cash that’s left.

The players matter. On one side is founder, Chairman, and CEO Omid Farokhzad, whose pay is a lightning rod. According to the activist group, Farokhzad has collected nearly $37 million in compensation and sold more than $103 million in Seer stock since the IPO. On the other side is the Radoff-JEC Group — Houston investors Bradley Radoff and Michael Torok — who own about 7.7% and want the company sold or run for cash.

Recent Developments

The activist campaign escalated fast. Between April and May, the Radoff-JEC Group submitted three escalating all-cash proposals — starting at $2.25 per share, a 33% premium, in mid-April, followed by a revised bid on April 24, and a third at $2.40 per share, a 42% premium, on May 14.

The activists paired each bid with a contingent value right. The board rejected all three, in each case without engaging. The CVR is the sweetener worth understanding, as it entitles holders to 80% of the net proceeds from any future sale or disposition of Seer’s business and assets, including its PrognomiQ stake.

When the acquisition route stalled, Radoff-JEC pivoted to a governance fight and a compromise. On June 15, it offered to end the proxy contest in exchange for governance enhancements and a tender offer of 20 million shares at $2.50 per share. The board, which had requested suggestions in the first place, didn’t respond.

Then, on July 2, Farokhzad made his own unsolicited, non-binding proposal to take Seer private at $2.45 per share in cash plus two contingent value rights, with terms undisclosed pending an 8-K. The board formed a Special Committee of independent directors, with Perella Weinberg advising.

At first glance, the insider’s take-private offer appears reasonable, but read the numbers. At roughly $3.97 of net cash per share, $2.45 is still only about 62 cents on the dollar. It’s also barely above the activist’s offer.

But lowball or no lowball, this sets the stage for the next major event for Seer: the annual meeting on July 28. With settlement offers getting crickets, Radoff and JEC have continued with their proxy fight, going after three seats on Seer’s board.

Who Is Bradley Radoff?

Even if you only engage in the micro-cap space occasionally, you may already know that Radoff is no first-timer. The Houston-based investor has gone activist with numerous micro-cap companies for many years. Radoff is also not afraid to settle, willing to trade for a toehold of influence if the alternative is none at all.

Past Radoff campaigns include TETRA Technologies, Photon Control, VirnetX, Altisource Residential, Farmer Bros., and Enzo Biochem. Unfortunately, this wide swath of targets, including some activist situations that failed to play out as intended, including Farmer Bros., which I wrote about last year, has given management plenty of ammo to dismiss Radoff’s activist campaign.

Still, much suggests that SEER can be a campaign in which Radoff’s action proves profitable. Even if he negotiates a settlement, rather than gaining three board seats, this settlement could pave the way for an event that helps drive the stock higher.

Moreover, it’s a bit of an apples-to-oranges comparison to compare all of Radoff’s campaigns against each other. Take Farmer Bros., for example. Squeezed by soaring coffee prices, Farmer Bros. collapsed in price before being taken over at a fire-sale price earlier this year.

With Seer, on the other hand, there is already a clearer path to value realization. If Radoff can negotiate an upped takeover bid, or perhaps even a tender offer, with the company buying a smaller portion of overall shares but at a higher price, it could create a profitable situation in a short span of time, even for those entering the stock today.

Having said that, I concede that “a dollar for sixty cents,” while an accurate assessment of the latest bid for Seer, does neglect to mention this company’s high cash burn, something that makes time of the essence in terms of distributing cash and/or monetizing Seer’s high-potential yet currently unprofitable assets.

Valuation

This is where the situation earns its place on the screen. Seer ended Q1 2026 with $219.5 million in cash and investments and no meaningful debt. Against roughly 55.3 million shares, that’s about $3.97 per share of net cash. Both outside bids, at $2.40, and the CEO’s bid, at $2.45, come in at only about 62% of net cash.

The reason for the discount is the burn. Seer used roughly $15 million to $16 million of cash in the quarter against Q1 revenue of just $2.8 million, and management expects continued losses for the foreseeable future. Roughly $60 million a year of burn against about $220 million of cash implies a multi-year runway, but that’s also a little over $0.25 per share out the door each quarter.

The Key Catalyst

Everything funnels into the July 28 annual meeting, and the CEO’s July 2 bid only raises the stakes. Broadly, three things can happen from here, and two of them work in a shareholder’s favor.

The likeliest is some form of negotiated resolution. The Special Committee hands both sides a face-saving way out, and it could take several shapes: the board accepts a version of the $2.50 tender-and-governance package, Farokhzad is pushed to sweeten his terms, or the company is sold outright.

The second favorable path is the simplest of the three: the activist wins seats. Put independent directors in the room, and a real strategic review follows; a sale, a serious cut to cash burn, or a buyback at these prices would each go a long way toward closing the gap between the stock and the cash sitting behind it.

The outcome to worry about is a clean board sweep. At best, the company proceeds with the CEO’s $2.45 offer. At worst, SEER stays public, with management marching on toward its 2031 plan.

Risks

There’s much to the bear case with SEER. First, the $15 million in quarterly cash burn marks SEER’s key asset, its large cash position, as a melting ice cube.

Second, there’s the issue of the board, and its ability to influence decisions in a way less beneficial to outside shareholders. Seer’s board has rejected each of the activist’s three bids, and appears ready to analyze and perhaps endorse the CEO’s take-private offer.

Third, this is a thinly traded micro-cap with insiders heading for the exits. Institutions have been trimming, and both the CEO and CFO have been net sellers of the stock. Illiquidity cuts both ways, and Monday’s gap will have already compressed whatever spread existed between the price and any eventual deal value, so anyone arriving late is working with a thinner margin than the headline discount suggests.

The Bottom Line

Seer is a classic “cash-box with a catalyst.” You are, in effect, looking at a company whose own CEO just offered to buy it for less than its cash, alongside a determined, settlement-prone activist who has bid three times and is forcing the question at a July 28 vote. The margin of safety is unusually wide, and it has an expiration date attached to it, heightening its appeal to special situation investors.

That said, the moat around the discount is a burning fuse of cash, and the board has shown it will prioritize insider plans over the outsider’s bid. The trade works if the vote produces a settlement, board turnover, or a credible independent process in the coming months. Otherwise, SEER is likely to fall back to prior price levels, then on to even lower prices, if it stays independent.

In the meantime, the tape will tell you a lot. The first thing to watch is where the stock settles against the CEO’s $2.45: trade well below it, and the market is pricing in deal risk or reading the bid as a tactic, while a move toward or through that level says the Street smells a topping bid or a live auction.

Watch, too, for a Radoff-JEC response, which will almost surely cast the insider proposal as entrenchment days before the vote. Also, keep an eye out for the 8-K carrying the full letter, because the two CVRs’ terms were undisclosed at announcement, and they are what determine whether $2.45-plus-CVRs actually beats a straight $2.50 tender.

The last piece is the referees. ISS and Glass Lewis recommendations land ahead of July 28, and in a contest this close, a proxy adviser’s nod could be what makes the outcome later this month favorable to shareholders.

DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from SEER or any other entity for writing this article. I have no business relationship with SEER, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading SEER stock. Do your own due diligence, and caveat emptor.

Share Value Never Sleeps

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GEE Group Inc. (NYSE American: JOB) is a micro-cap stock you may have traded in and out of in recent years. A few years back, during the short-lived post-pandemic employment boom, this old-school staffing company was printing, achieving profitability for the first time in many years.

More recently, however, operating performance, and more importantly, the stock price, have experienced massive deterioration. Whether caused by inflation, slowing economic growth, or everyone’s favorite boogeyman, AI, demand for temporary labor is down significantly.

GEE Group has experienced a sharp drop in revenue and a return to heavy losses. Yet while the business itself may not look very attractive, a catalyst for change has emerged since the start of the year.

With an activist now at the gates, this cyclical microcap stock is evolving into a special situation. The question is whether it’s now too late to buy, or if the stock’s latest pullback provides one last opportunity to buy, before a needle-moving event takes shape.

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Background

GEE Group provides professional staffing and human resources solutions across the United States, with placement services concentrated in information technology, engineering, finance and accounting, and healthcare documentation (its Scribe Solutions medical scribe business). It operates under a portfolio of legacy brands, including Access Data Consulting, Accounting Now, Agile Resources, Paladin Consulting, Omni One, Staffing Now, SNI Financial, and SNI Technology, among others. The corporate lineage traces back to employment offices first established in 1893, with the modern name adopted in 2016.

The investment problem is the trajectory. Revenue peaked around $165 million in fiscal 2022 and has fallen sharply since: fiscal 2025 revenue was $96.5 million, and trailing-twelve-month revenue by March 2026 had slipped to about $88 million. The staffing industry has faced genuine cyclical headwinds, but JOB’s decline has outpaced its peers.

The stock has fallen roughly 58% over five years and around 95% over a decade. However, given this severe price decline, the company has a market cap close to its cash position. Against a $23m valuation, GEE has $20.3 million in cash on hand, with around $4 million in short and long-term lease liabilities.

Recent Developments

The activist pressure has escalated in stages through 2026. The catalyst is Star Equity Holdings (Nasdaq: STRR), a diversified holding company run by Jeffrey Eberwein, which holds about 5.4% of JOB (roughly 5.97 million shares) through its Star Equity Fund.

Before it became a holding company, Star Equity Holdings was known as Hudson Global. Star continues to own this namesake company, Hudson Talent Solutions, which like GEE is a staffing company.

The timeline matters. In January 2026, Star delivered an unsolicited indication of interest proposing a business combination. GEE Group’s board dismissed the early approach as vague, pointing out that Star itself is a thinly traded micro-cap with its own history of losses and a large accumulated deficit.

Under public pressure, however, the company engaged Roth Capital Partners as financial advisor in March 2026 to review unsolicited expressions of interest and evaluate strategic alternatives.

In late April 2026, Star Equity Fund publicly urged the board to renegotiate the employment agreements of CEO Derek Dewan, CFO Kim Thorpe, and COO Alex Stuckey, arguing that the severance and change-in-control provisions embedded in the 2023 contracts were excessive and would poison any clean sale process. The 2023 contracts could provide the three executives with at least $8 million in severance if a change in control occurs. That’s nearly 35% of the company’s market cap!

On May 6, 2026, Star formalized its bid: a stock-for-stock offer to acquire 100% of GEE Group for $0.30 per share, payable in Star’s 10% Series A Cumulative Perpetual Preferred Stock (Nasdaq: STRRP) valued at its $10 liquidation preference. That headline price represented roughly a 33% premium to JOB’s prior close near $0.225.

Finally, on June 3, 2026, Star opened a proxy front, nominating Rick Coleman, Star’s COO and a former staffing-company CEO with turnaround experience, for election to the board at the 2026 annual meeting, and recommending the removal of two incumbent directors, Peter Tanous and Thomas Vetrano, who sat on the compensation committee that approved the 2023 agreements. Star structured the campaign deliberately so that adding one director and removing two would not, by itself, trigger the change-in-control clauses it has been protesting. Separately, the board has seen turnover, with longtime director Bill Isaac retiring in March and another director, Darla Moore, resigning in June 2026.

Valuation: What Would a Strategic Buyer Pay?

In my view, GEE Group’s value is not in its cash or other assets, but in its potential to be integrated into a larger staffing organization. GEE Group’s recent EBITDA has hovered around breakeven, and prior to this, the company regularly reported negative EBITDA.

Yet while we can’t use traditional EV/EBITDA per se to value the company, we could argue that a buyer may be willing to pay up given the potential for cost and growth synergies. A strategic buyer could save millions by eliminating duplicate public-company overhead and back-office functions, and by folding the revenue base into an existing platform at higher margins.

A strategic acquirer already operating in IT, finance, or healthcare staffing could absorb roughly $85–95 million of GEE revenue, strip out several million dollars of annual public-company costs (audit, listing, executive compensation, legal), turning an acquisition into an accretive bolt-on. For such a buyer, paying a 50%-100% premium, say $0.30 to $0.40 per share, or roughly $33–44 million of equity value, can still be justified. Perhaps, an even higher purchase price could still pay off for such a buyer.

Considering EBITDA margins for competitors like Mastech and DLH Holdings, I believe that a strategic buyer could wring high single-digit margins from GEE’s network of staffing companies. Based on the company’s current annualized run rate, that’s around $7 million annually. Multiply that by a moderate multiple (5x), add back the $20 million, deduct the $4 million in lease liabilities, and you get around $51 million, or around 46 cents per share, more than double the current share price.

Even in this scenario, where a buyer is paying up for expected cost synergies, there’s still additional upside potential on the table, as an improved macro backdrop would likely drive at least a partial rebound in GEE Group’s top line.

In short, Star’s offer may at first seem generous, but it’s arguably a low-ball bid, paid in paper no less. If this offer prevails, this will not be a major victory for shareholders. However, if it ends up serving as a stalking horse bid, driving competing bidders something closer to 46 cents per share in cash? It could serve as a tremendous catalyst.

Catalysts

Alongside the potential for Star Equity’s activist activities to lead to a sale, there’s another potential catalyst that could have a significant impact on the JOB stock price. If the company continues to improve operating performance, it could drive another rally in shares.

Success with Star Equity’s proxy battle could also give shares a lift. Even if a sale isn’t imminent, the specter of management change and elimination of the change-in-control severance could elicit a positive response from investors.

Risks

The risks are substantial and specific. GEE’s board remains highly entrenched. The change-in-control provisions, which could cost shareholders substantially relative to GEE’s current valuation, remain a potential landmine. Then again, although these provisions are a big red flag for a potential buyer, who knows? Given how much upside could be carved out from operational improvements and cost synergies, a would-be buyer could pay this figure on top of a generous bid and still make the deal accretive.

Although downside risk may seem limited given the cash position, keep in mind that Star Equity’s activist activities have already led to elevated stock prices. If management and/or shareholders reject Star Equity’s deal, the immediate impact on GEE’s stock price could be substantial, as speculators and merger arbitrageurs move out.

Moreover, if not for the activist campaign/JOB’s improved “in play” prospect, I wouldn’t touch this stock with a 10-foot pole. If staffing demand further weakens, or if AI accelerates the disruption of the white-collar staffing market, GEE Group may struggle to avoid further revenue declines, let alone reach its early 2020s high-water mark.

If that occurs, GEE Group could end up burning through its cash cushions, changing the economics of a strategic acquisition entirely. It also goes without saying that, due to the relatively illiquid nature of this stock, it may prove difficult to build up a position without bidding JOB back up toward 25-30 cents per share.

Bottom Line

Don’t get me wrong: I’m not bringing you this idea today because I like Star Equity’s 30-cent-per-share all-paper offer. If anything, if Star Equity/Eberwein prevail with acquiring the company this way, that could be more of an endorsement to buy STRR common stock, as the success of integrating GEE Group into Hudson Staffing could produce significant value for STRR.

However, if Eberwein’s activism leads another publicly traded or privately held staffing company to make a cash bid for JOB, it could be a fantastic opportunity for those buying in today.

Even if Eberwein merely gains control of the board and eliminates the 2023 executive compensation agreement, this could also pave the way for an eventual sale of the company or for Star Equity to offer greater consideration (cash along with stock) to acquire GEE Group outright.

For investors comfortable with micro-cap illiquidity and a binary, event-driven outcome, JOB offers a defined-downside, catalyst-rich setup. For investors overall, there may be opportunity here, but keep in mind how easily this stock could fall another 50% in the blink of an eye.

DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from JOB or any other entity for writing this article. I have no business relationship with JOB, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading JOB stock. Do your own due diligence, and caveat emptor.

Share Value Never Sleeps

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Main Street investors likely haven’t heard of the stock we are going to talk about today, but if you’re deep in the microcap scene, chances are you’re aware of it. Not only that, assuming you’ve yet to buy, I would assume you have the same hesitation that I do: it’s too late in the cycle, should’ve caught this bad boy back in 2024, I ain’t holding the bag at $25 per share.

However, there’s a reason why this name may still be in the back of your mind. This OTC-listed stock, in an unsexy but thriving industry, screams value and could have additional runway if the situation plays out better than current expectations.

The stock I’m talking about, of course, is Conrad Industries (OTCMKTS: CNRD). The Morgan City, Louisiana-based company builds steel and aluminum barges, tugs, ferries, and Navy support vessels out of shipyards throughout the Gulf Coast

. What makes this microcap industrial stock interesting is its low valuation, its cash-rich balance sheet, and a recently lifted contract backlog.

Today, let’s take a closer look to see whether the ship has sailed with Conrad and whether now is the time to buy, sell, or merely hold off until shares fall to an even more compelling entry point.

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Background

Conrad Industries was founded in 1948 and has been a publicly traded, family-controlled company since the 1990s. Through its subsidiaries, it operates several Gulf Coast shipyards, including its flagship in Morgan City, two facilities in Amelia, Louisiana, and one in Orange, Texas. At these shipyards, Conrad designs, constructs, repairs, and converts a broad range of marine vessels for both commercial and government customers.

The product mix is deliberately diversified across the marine economy: large and small deck barges, single- and double-hull tank barges, inland push boats and towboats, harbor and offshore tugs, ferries, dredges, and lift boats, alongside a steady repair-and-conversion business and modular fabrication work. Management has more recently signaled a push into complementary industrial fabrication to broaden the revenue base beyond traditional shipbuilding.

The customer roster spans private barge operators and energy companies on the commercial side and government agencies — including the U.S. Navy and the U.S. Army Corps of Engineers — on the public side. That public/private split matters: it lets Conrad lean on stable government and infrastructure demand when the commercial cycle, historically tied to Gulf of Mexico energy activity, softens.

The other defining feature is the company’s capital discipline. Conrad has a long history of returning cash to shareholders — it paid special dividends of $2 per share in 2012 and 2013 and $1 per share in early 2015, ran a regular dividend in 2015–2016, and has steadily repurchased stock, shrinking the share count over the years to roughly five million today. A $2 million buyback authorization remains in place.

Recent Developments

Conrad’s 2025 results showed a business firing on all cylinders. For the full year ended December 31, 2025, the company reported net income of $19.9 million, or $3.96 per diluted share, up from $11.2 million and $2.24 a year earlier, respectively. Moreover, 2024’s figure included an $8 million one-time legal judgment, partially countered by a $2.1 million write-off related to that judgment. The underlying improvement is even more striking: stripping that out, normalized 2024 earnings were closer to $5 million, meaning operating profitability roughly quadrupled in a year. The fourth quarter alone delivered $4.7 million in net income ($0.94 per share), compared with essentially breakeven in the prior-year quarter.

Then came a more sober first quarter of 2026. Revenue fell on both a YoY and sequential basis, coming in at $69.4m, versus $80.4m during Q1 2025, and $72m during Q4 2025. Net income of $3.2 million, or $0.64 per share, down from $3.9 million and $0.77 in Q1 2025. YoY, EBITDA fell from $6.1 million. to $5.2 million. The backlog increased by $46.8 million, below the $67.3 million booked a year earlier. The market read it as a deceleration, and the stock slipped in response.

But the total backlog tells the most important story, and it cuts both ways. Conrad’s total backlog declined from $293.8 million at the end of 2024 to $213.9 million at the end of 2025, and to $199.6 million as of March 31, 2026 — a clear downtrend that reflects management’s own commentary about contract awards being delayed by steel tariffs, elevated material costs, labor constraints, and broader uncertainty. But since the quarter closed, Conrad has signed an additional $134.2 million in contracts, including a U.S. Navy YRBM (yard repair berthing and messing) vessel contract modification for additional units. That post-quarter signing materially rebuilds the order book and anchors the bull case in concrete terms rather than hope.

CEO Cecil Hernandez framed 2025 as a year of progress despite a tough environment, and struck a cautiously optimistic tone on 2026, pointing specifically to the expansion of government and infrastructure work, as well as the move into industrial fabrication.

Valuation

Figuring out CNRD’s share count can be confusing. Sites like OTCMarkets.com list Conrad’s share count at around 7 million, but this figure excludes repurchased shares held as treasury stock. The true share count is closer to 5 million.

Hence, Conrad Industries’ current market cap is around $125.4 million. Adding $1 million in short-term debt, and deducting Conrad’s $29.9 million cash position, we get an enterprise value of $96.5 million. Based on TTM EBITDA of $29.9 million, the company trades at just 3.2x TTM EBITDA.

Compare that to the valuation of Conrad’s closest public peer, Huntington Ingalls Industries (NYSE: HII). Huntington Ingalls trades for 13.1x TTM EBITDA and 14.4x forward EBITDA. Now, it makes sense that there is a material valuation gap between these companies. Besides Conrad being a considerably smaller company, it is also a less liquid stock; it’s also a controlled company, making it questionable whether it will ever get acquired by a strategic or financial buyer.

While a discount is warranted, there may be room for Conrad to re-rate based on the following catalysts.

Catalysts

Navy and government work

The post-quarter YRBM contract modification is the clearest near-term catalyst, and management has flagged continued expansion of government and infrastructure contracts. Government work is less cyclical than commercial barge demand, providing visibility into future revenue.

A broader shipbuilding tailwind

There is renewed national attention on rebuilding U.S. shipbuilding and maritime capacity, reinforced by the Jones Act demand for domestically built vessels. Conrad is a small but established beneficiary of any sustained push to build more ships at home.

Backlog rebuild

If the $134.2 million of post-quarter signings marks a turn from the recent backlog decline, the multiple could re-rate as investors regain confidence in forward revenue.

Capital returns

With net cash on the books, a buyback authorization in place, and a long history of special dividends, don’t rule out Conrad either resuming special dividends, and/or increasing the size of its share authorization program.

Industrial-fabrication diversification

As hinted earlier, Conrad is looking to diversify beyond shipbuilding. As CEO Cecil Hernandez noted in the Q4 2025 earnings press release, “We are selectively diversifying into complementary areas such as industrial fabrication, which we believe can provide incremental opportunities while leveraging our existing capabilities. Together with our core shipbuilding and repair operations, we believe these efforts will help position us to navigate uncertainty while continuing to strengthen our business.” Such efforts could also contribute to a market re-rating.

Risks

Lumpy, cyclical demand

Shipbuilding revenue arrives in large, uneven contracts, and commercial demand has historically tracked Gulf energy activity. Just a few years prior, the company was reporting net losses near or exceeding Conrad’s strong earnings in 2025. Given the high fixed costs of operating shipyards, even a moderate demand slump can do serious damage to profitability.

Backlog trend

Before the recent Navy signing, the backlog had been falling for more than a year. If new awards do not keep pace with completions, revenue and earnings could decline.

Cost and labor pressure

Steel tariffs, elevated material costs, and skilled-labor constraints squeeze margins in a business with limited pricing flexibility on fixed-price contracts.

Customer and contract concentration

Reliance on a handful of large commercial and government contracts means the timing or loss of any one can swing results.

Governance and liquidity

Conrad is family-run, trades over-the-counter with thin volume and limited disclosure, and carries minimal analyst coverage. Although the Conrad family doesn’t hold majority ownership/voting control, it may still be difficult for an activist investor to gain traction.

The Conrad family’s negative control of the company may also limit the chances CNRD is involved in a “take private” transaction, at least at this time. I can see a scenario in which this company goes private during the lower points of the economic cycle, but not now, when earnings and the stock price are at multi-year highs.

Cyclicality of the recent earnings peak

2025 may represent a strong point in the cycle; a value buyer should not extrapolate $3.96 of EPS indefinitely. Even if factors like the Navy contract help mitigate the extent of earnings declines this year, as seen from historic financials, even a moderate softening of demand can have a material impact on the bottom line.

Conclusion

For months, Conrad Industries’ shares have seemingly hit a ceiling at around $25 per share. It’s likely that investors active in this stock anticipate a slowdown and are waiting for weakness before buying.

Yet while the stock could encounter some volatility, especially if a greater-than-average number of investors decide to sell, on the flip side, there may be a path for CNRD to gain further, perhaps even to the point where it eclipses its ~$ 40-per-share high-water mark set in the mid-2010s.

While fair to say that the ship here has mostly sailed, there may still be an opportunity for a second bite of the apple.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from CNRD or any other entity for writing this article. I have no business relationship with CNRD, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading CNRD stock. Do your own due diligence, and caveat emptor.

While Wall Street chases the latest AI darlings, a sub-20-cent MedTech stock is sitting on a balance sheet that makes it one of the more compelling deep-value plays in the small-cap universe right now. The thesis isn’t complicated. The question is whether the market ever wakes up to it.

It operates in the shadows of the healthcare industry, generates real revenue, and just completed a meaningful divestiture. Better yet, the company’s cash on hand exceeds its entire market cap. Here’s why this under-the-radar name deserves a closer look.

When I first wrote about Vaso (OTCMKTS: VASO) last summer, the stock was trading around 11 cents following the collapse of its SPAC merger with Achari Ventures. Even then, the setup was interesting: cash exceeding market cap, a profitable professional sales segment, and the potential for a re-rating if management ever got serious about cleaning up its bloated IT division. Since that write-up, the stock has climbed to around 18 cents. And even after the late-2025 rally, there’s still a credible case for further upside.

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The Two Developments That Changed Everything

GE HealthCare Contract Renewal

In December 2025, Vaso announced that VasoHealthcare had signed an amendment to its sales representation agreement with GE HealthCare (NASDAQ: GEHC), extending the deal through December 31, 2030. This is the fifth extension of a partnership that dates back to May 2010. The renewal eliminates what was, by far, the most existential near-term risk to the company’s core earnings engine — and it provides a long, visible runway for the professional sales segment to keep compounding deferred revenue.

VasoHealthcare IT Divestiture

In November 2025, Vaso sold VasoHealthcare IT Corp. to Nano-X Imaging (NASDAQ: NNOX) for up to $800,000 — $200,000 at closing and up to $600,000 in earnout payments tied to post-closing performance. The price tag is modest. That’s not the point. The act of selling matters more than what they got for it. It signals the board is genuinely willing to clean house. And with NetWolves still on the books — a larger, money-losing managed network business — a follow-on divestiture may not be far behind.

What 2025 Results Mean for 2026

Full-year 2025 revenue came in at $89.1 million, up 2.7% from the prior year. Net income jumped from just under $1 million in 2024 to $1.6 million. Operating losses totaled $2.9 million, but strip out the $4.6 million goodwill impairment charge tied to the IT sale, and the company would have reported $1.7 million in operating income. Add back D&A and EBITDA for the year, and the result lands just under $2.6 million.

With VasoHealthcare IT now gone, the IT segment should post smaller losses in 2026. Last year, the combined IT unit (VasoHealthcare IT + NetWolves) ran about -$1.14 million in EBITDA after stripping out the impairment. Given that NetWolves drives over 92% of IT segment revenue, a reasonable working estimate puts NetWolves’ EBITDA at roughly -$1.5 million for the year.

Meanwhile, the Professional Sales segment continues to do the heavy lifting. Deferred commission revenue grew 10.6% year-over-year — from $34.9 million to $38.6 million — pointing to continued momentum into 2026. That segment generated roughly $6.75 million in EBITDA last year.

Being conservative — assume zero EBITDA growth in Professional Sales, and fully absorb losses from IT (-$1.5M), Equipment (-$1.05M), and corporate overhead (-$1.6M) — and you still arrive at around $3 million in consolidated EBITDA for 2026.

Valuation

At current prices, Vaso carries a market cap of $31.7 million. Debt is minimal at $1.8 million. Cash stands at $35 million — meaning, once again, investors are getting the entire operating business for free.

At 5x EBITDA, the operations are worth approximately $15 million. Add cash, subtract debt, and you get a net asset value of roughly $50 million — or just under 28 cents per share. That’s about 55% above where the stock trades today. And that’s before any credit for what management might do with $35 million sitting idle on the balance sheet.

Potential Catalysts

Further divestitures. NetWolves is the logical next candidate. Selling it — even at a discount — would eliminate a highly-unprofitable unit, concentrate the entire company around its high-margin professional sales engine and almost certainly trigger a re-rating.

A buyback or special dividend. With cash exceeding market cap, a meaningful buyback would be immediately accretive to per-share value and signal that management is thinking like owners, not operators. Buying back 10–15% of shares outstanding at current prices would be transformative.

Q1 2026 earnings (mid-May). Investors will get their first clean look at the restructured business — no goodwill charges, no VasoHealthcare IT dragging on results. If the Professional Sales segment shows continued deferred revenue momentum, or management drops any hints about further capital allocation plans, that alone could be enough to restart the conversation.

M&A. Vaso could deploy some of its cash pile into a bolt-on acquisition. American Shared Hospital Services (NYSE: AMS) is one name worth watching in this context.

NYSE/NASDAQ Uplisting. The SPAC route failed. But there are other paths off the OTC market, and even a modest uplisting to a major exchange would expand the investor base and likely compress the discount.

Risks

The single biggest risk remains contract concentration. The GE HealthCare agreement runs through 2030, but it’s still a single-counterparty arrangement. If GE restructures its go-to-market or brings sales in-house, a dominant portion of Vaso’s revenue disappears overnight.

M&A execution is the other one. Using cash to buy something is only a catalyst if the acquisition is disciplined. Vaso’s track record with IT acquisitions doesn’t inspire confidence, and a poorly priced deal would burn the one thing currently underpinning the stock’s floor.

The Bottom Line

VASO isn’t a home run story. It’s a slow-burn value thesis that requires patience and a tolerance for OTC illiquidity. But with cash exceeding market cap, a core business that genuinely earns money, a 20-year GE partnership now extended through 2030, and management showing — for the first time in a while — a willingness to make hard decisions, the risk/reward here looks asymmetric. The downside is largely protected by the balance sheet. The upside depends on execution.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in VASO.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from VASO or any other entity for writing this article. I have no business relationship with VASO, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading VASO stock. Do your own due diligence, and caveat emptor.

Back in October, I wrapped up my last piece on Butler National Corporation (BUKS) by suggesting that patient investors might get one more attractive entry point in the $1.75–$2.00 range ahead of the planned December earnings call. For those who acted on that, congratulations. It’s been quite a ride since then.

Currently, BUKS is trading for around $3.80 per share. That’s basically at my fair value estimate from five months back. The bull case continues to play out. Management keeps delivering strong results, and aggressive share repurchases have continued.

Better yet, while shares keep hitting new all-time highs, and the valuation gap is narrower than ever, it may be worth holding onto a position, as Butler National’s successful turnaround enters new stages.

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A Quick Recap of the Bull Case

In case you missed my prior articles on BUKS, here is the bull case in a nutshell: For several years, the new management team has successfully maximized the value of this odd holding company, which is primarily an aerospace company but also owns/operates a regional casino in its home state of Kansas.

Over time, the gap between the underlying value and the trading price has been closing. In large part, thanks to the current boom in the aerospace segment, which has both improved Butler’s results and provided greater justification for a higher valuation.

Other factors helping to bridge the valuation gap include Butler National’s use of share buybacks to return capital, as well as greater investor communication, including the resumption of quarterly conference calls.

Butler held the first such call in December, presenting Q2 FY2026 results, or the quarter ending Oct. 31, 2025. The results were solid across the board. Revenue for Q2 FY2026 came in at $23.25 million, a 9% increase versus the prior year, with operating income rising 46% and EPS climbing to $0.09 from $0.05.

Aerospace revenue jumped 20% to $14.0 million, lifting segment margin to 38%, while backlog reached $46.3 million and the company repurchased 687,852 shares during the quarter. If Q2 was good, Q3 was exceptional.

Recent Results Spark Another Surge

On March 12, 2026, Butler National released its Q3 FY2026 results. For the third quarter ended January 31, 2026, Butler reported revenue of $26.9 million (up 27%), operating income of $9.2 million (up 129%), net income of $6.7 million (up 98%), and EPS of $0.10, up from $0.05 in the prior year period.

The Aerospace Products segment was the standout performer. Revenue from the Aerospace Products segment increased 50% to $17.1 million in Q3 FY2026 compared to $11.4 million in Q3 FY2025, driven by a $3.1 million increase in aircraft modification activity and a $2.3 million increase in special mission electronics sales.

The Professional Services segment told a more mixed story. Overall revenue climbed slightly higher, with Q3 FY2026 coming in at $9.9 million, versus $9.8 million for the prior year’s quarter. However, this was entirely due to increased sports wagering revenue, which increased from $1.8 million to $2.2 million.

Butler’s Boot Hill casino continues to experience declining revenue, with its top line falling 5% to $6.5 million during the quarter. Yet while the performance of Butler’s gaming business remains lackluster, in the grand scheme of things, this is not a great concern.

Presumably, management is still waiting for the opportune time to divest this asset, whether through a sale or a spinoff. Personally, I like the idea of Boot Hill becoming an independent company, whether through a full-on spinoff or a Reverse Morris Trust-type transaction.

Maybe it’s too early in the gaming industry downturn, but it would be interesting to see a scenario where Boot Hill is spun off, an experienced gaming operator runs it/takes control, then uses this separate entity (Butler Gaming, perhaps?) as a vehicle to acquire/turn around other struggling regional casino properties.

However, getting back to the topic, now that we have two more quarters of data, let’s revisit the sum-of-the-parts analysis.

Valuation

Gaming

Previously, I estimated that Butler’s Gaming segment was generating annualized EBITDA of around $14.1 million. For the nine months ending Jan. 31, 2025, Gaming reported $6.1 million in operating income. Adding back depreciation/amortization of $2.3 million, plus interest of $1.2 mllion, and this gives us nine-month EBITDA of around $9.6 million. Annualized, this gives us EBITDA of approximately $12.8 million for Gaming.

Butler National’s segment-level results for the nine-month period ending Jan. 31, 2026 (SEC 10-K)

Before, I used a propco/opco blended valuation for this business, as in, if sold, Butler could sell off the operating business and the casino’s real estate separately. At this 10x multiple, we can estimate Boot Hill’s value at $128 million.

However, given a softer gaming market, it may be best to adopt a more conservative valuation. Although micro-cap-sized casino operators like Full House Resorts (FLL) and Century Casinos (CNTY) are still sporting double-digit EBITDA multiples, with companies like Boyd Gaming (BYD), which still owns most of its casino real estate, trading at a 7x EV/EBITDA ratio, it can’t hurt to conservatively value this business.

At a 7x-8x multiple, Butler’s Gaming unit is worth just under $90 million.

Aerospace

For the nine-month period ending January 31, 2026, Butler’s various Aerospace divisions, including its Aircraft Modification, Avionics, and Special Mission Electronics units, generated total operating income of around $14.9 million. Add in depreciation/amortization, as well as interest expense, and nine-month EBITDA comes to $18 million. On an annualized basis, this segment has EBITDA of around $24 million.

Before, we’ve compared the valuation of Butler’s aviation business to that of companies like Optex Systems Holdings (NASDAQ: OPXS) and Innovative Solutions and Support (NASDAQ: ISSC). Currently, both these stocks trade at EV/EBITDA multiples of 12x-13x.

Also, before, I’ve discounted Butler’s valuation, given its holding company nature, plus its OTC-listing, lowering the EBITDA multiple used to 9x. Still, even at this discounted value, the Aerospace segment is now worth more than ever, thanks to the segment’s incredible growth in recent quarters.

At a 9x multiple, this business is worth around $216 million.

Putting it All Together

With Gaming worth around $90 million, and Aerospace worth around $216 million, we get a gross value of around $306 million for Butler’s operating business.

Add to this figure Butler’s $36.5 million cash position, subtract $29.4 million in long-term debt and lease liabilities, and we get a net value of around $313.1 million, or just under $4.90 per share.

Compared to Butler’s current stock price, it’s clear that the valuation gap has narrowed significantly. Last July, I argued Butler was trading for around half its underlying value. In October, shares were trading at a 57.5% discount to fair value. Today, the stock trades at just a 23% discount to the underlying value.

Again, however, given the upside potential of Butler’s further transformation, it may be premature to take profits today.

Potential Upside from Butler’s Transformation

From here, the next game changer for Butler could be its full transformation into an aerospace pure play, with a major market listing. That said, taking a look at the latest earnings conference call, it’s unclear whether Butler is looking to quickly get rid of its non-core Gaming business.

When questioned about “the strategic role of Boot Hill within Butler National,” CFO Adam Sefchick noted that “Boot Hill plays an important role in generating consistent cash flow for the company. Its stability supports reinvestment, such as in Aerospace, while contributing to our overall financial strength. We view this segment as both a dependable earnings contributor and a source of balance within our operating model. Our approach is to manage the property efficiently, invest thoughtfully in the guest experience, and preserve its ability to support long-term contractual commitments to the Kansas Lottery and our corporate objectives.”

While not a definitive statement of “we’re keeping Boot Hill for the cash flow, we ain’t going to sell,” this does indicate that Butler isn’t hastily looking to drop this asset like a hot potato. Perhaps, instead of looking to sell now, or to spin it off now as a problem asset, Butler is waiting for the local and national economy to improve, so Boot Hill’s fiscal performance turns around again, providing a more favorable time to sell out/spin off the asset.

I should also note that Butler is partnering with a local developer to build a Best Western-branded hotel adjacent to the Boot Hill Casino. In time, this hotel could help improve foot traffic at the property.

Furthermore, while I have been of the view that Butler needs to become 100% an aerospace company to command a higher valuation, that may not be necessary. Perhaps, as long as the aerospace segment keeps growing/Butler further bulks up this unit, the market will not necessary continue giving Butler a “conglomerate discount” for its shares.

Based on current results, if Butler re-rated to a 12x EV/EBITDA multiple, presumably after listing on a major exchange/successfully selling itself as an aerospace up-and-comer, the company would have an enterprise value of around $441.6 million. Add cash, subtract debt, and one gets a net valuation of around $375.7 million, or around $5.86 per share. Additional actions, such as more share buybacks and/or further organic growth, could, in time, propel this stock to even higher price levels.

Risks, Concerns, and the Bottom Line

Several risks warrant ongoing attention. Aerospace revenue remains tied to legacy military aviation platforms, which face long-term obsolescence risk, though management’s investment in new STCs and international certifications through EASA and CAA provides some mitigation. The casino headwinds are similarly persistent — the regional agricultural economy in western Kansas isn’t recovering quickly, and consumer-discretionary pressures on Boot Hill are real, even if management is navigating them reasonably well through sports wagering and the hotel development. Meanwhile, the uplisting narrative, while developing, is not guaranteed, and the timeline remains within management’s control.

Against those risks, Butler National has delivered on nearly everything outlined in prior write-ups: improved governance, stronger aerospace results, resumed earnings calls, continued buybacks, and a market that is beginning to recognize the company’s worth. The stock has nearly tripled from its lows of roughly $1.50 less than a year ago, and yet shares still appear to trade at a meaningful discount to intrinsic value. The aerospace business is executing at a level that warrants a higher valuation multiple than it currently receives, and the buyback program continues to improve the per-share math each quarter.

The conclusion depends on where you got in. If you owned BUKS at $1.50, $2.00, or even $2.50, there is no compelling reason to sell. For those who missed earlier entry points, the margin of safety is narrower than it once was — but given the business trajectory, ongoing capital returns, and the continued gap between price and intrinsic value, BUKS remains a hold and, for patient new investors, still worth a close look.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in BUKS.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from BUKS or any other entity for writing this article. I have no business relationship with BUKS, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading BUKS stock. Do your own due diligence, and caveat emptor.

I hate to say it, but I’m attracted to special situations like a moth to a flame. Despite making it a New Year’s Resolution to stay away from such plays, Value Never Sleeps’ first post of 2026 was nonetheless about a special situation: Franklin Street Properties.

As discussed in my initial write-up, my main thesis with FSP was that the office REIT would benefit from a relief rally, once it refinanced its maturing debt. Financing did arrive last month, on Feb. 26, but alas, this update did little to shift sentiment back in the right direction.

Admittedly, it’s not surprising this has happened, as the refinancing does have its fair share of red flags, at least for FSP common shareholders. That said, it may be worth exploring whether it’s time to head for the hills or double down on this distressed stock.

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Franklin Street Properties, the refinancing, and why investors have exited in droves

On Feb. 27, FSP finally announced a resolution to its debt overhang issue. On that day, the REIT announced that it had secured a $320m secured credit facility with an affiliate of TPG Credit.

While at the onset, this refinancing news sparked a modest relief rally, shares have since pulled back sharply, falling from around 85 cents per share to around 62 cents per share as of this writing.

Looking at the details, this is not surprising. Franklin Street Properties has initially drawn $275 million from this facility. With $16.5 million representing a 6% original issue discount, FSP has $258.5 million, more than enough to retire $249 million in outstanding debt.

The REIT plans to draw on the remaining balance of this credit facility for building/tenant improvements and leasing commissions.

If terms like an issue discount are not concerning enough, other aspects of this refinancing signal more red flags than green shoots. FSP is borrowing this money at 9%. If FSP extends the loan after one year, the rate goes up to 13%. On any repaid amount, a 4% exit fee applies. The collateral for the loan consists of a “first priority lien” on substantially all of the company’s assets.

After reviewing the details of this deal, I can now see why “private credit” has become so hot on Wall Street. With the effective yield on this money well into the double digits, far above the commercial mortgage rates FSP was paying previously, this REIT will need to thread the needle, contending with high borrowing costs while waiting for the office market to normalize.

Unfortunately, that brings us back to the dilemma that had me somewhat on the fence about this idea when I presented it back in January. I’m talking, of course, about the “Denver Overhang.”

The Denver Overhang, and Further Revisions to FSP’s Valuation Post-Refinancing

In my initial write-up, I noted that FSP’s Denver portfolio appeared particularly troublesome, given the fire-sale prices Denver office properties have been selling at recently. Namely, the sale of the Johns Manville building for just $41 per square foot.

Based on this valuation, FSP’s Denver buildings could be worth as little as $87.8 million, a far cry from my NOI-based gross valuation of around $229 million. In turn, this has a more dramatic impact on my estimated breakup value of the REIT.

In my “best case scenario,” in which I valued the buildings based on NOI at a 9% cap rate, I arrived at a gross valuation of $513 million. Net of debt, this gave us a valuation of $266 million. Adding back $31.4 million in cash, this came out to a net value of $297.4 million, or $2.87/share.

In my “worst case scenario,” I adjusted the valuation for the Denver and Minneapolis properties based on the weak demand in both markets. I maintained Texas valuations using the same 9% cap rate calculation. Getting a gross value of $302.6 million, net of debt and adding back cash, resulted in a net value of $86 million, or around 83 cents per share.

To be more conservative before and assume that FSP will have to sell at fire-sale prices, I’m now leaning more strongly toward the “worst case scenario” valuation. With FSP’s outstanding debt now effectively $286 million, taking into account the 4% repayment fee and add-back cash, we get a net value of just $48 million, or just 46 cents per share.

Even this conservative valuation may not be conservative enough, given the latest financials. On Mar. 9, Franklin Street Properties released its 10-K for the fiscal year ending Dec. 31, 2025.

Net Operating Income of $45.8 million was in line with figures reported for the TTM period, but with vacacies rising, it’s difficult to see this figure improve in the near term.

This is concerning, given how, following the refinancing, FSP’s annual interest expenses will now rise to nearly $25 million. Suspending $4 million in annual dividends may help to mitigate this, but the elimination of the dividend has contributed to the stock’s near-term volatility.

Having said this, however, with debt refinancing, albeit at less-than-favorable terms, the path to stabilize/sell FSP remains. However, as before, much hinges on management pursuing this path, rather than their current strategy of paying high compensation to “manage” a hodge-podge of increasingly vacant office properties.

The Bull Case (or What Remains of it)

Fair-feather fans of Franklin Street Properties have jumped ship. Skeptical yet optimistic investors like me are also considering exits. However, there’s one vocal investor that haven’t thrown in the towel—Timothy Stabosz, a private microcap investor who often (and quite candidly) discusses his investing process/current positions via the comments section of Seeking Alpha.

It was Stabosz’s early commentary on FSP that first put the stock on my radar. In many ways, it was relatively high conviction about this high-risk position that made me think it was worth coverage here on VNS. Hence, it may be Stabosz’s continued confidence in the long-term underlying value of Franklin Street Properties that makes me decide to double down, if weakness persists.

Based on his latest comments on FSP, Stabosz remains interested in taking the contrarian view on the stock. Per his view, the key risk (debt maturity) has been resolved, even if the lending terms are fairly unfavorable to FSP shareholders.

Stabosz appears satisfied that management did not sell the REIT outright, given that now is not an opportune time to sell its properties. At the same time, however, the private investor notes dissatisfaction with management and expresses a desire to investigate the board’s independence, suggesting possible activist moves on his part down the road.

That said, Stabosz’s biggest issue—a key issue among all FSP shareholders in general—is that management compensation/G&A is way too high, relative to the size of the property portfolio.

Other commentators have talked about “going activist” on FSP. Unfortunately, this could be difficult, as the recent refinancing includes a “key man provision” that would pose significant challenges if Chairman/CEO George Carter were ousted.

New Risks Have Emerged

In my initial write-up, I discussed risks with FSP, including the risk that the REIT would be sold outright at a fire-sale valuation and the risk of shareholder dilution. Following the refinancing, these risks have dissipated.

However, in their place, a new set of risks threatens the bull case. First, given the terms and high interest rate on the TPG loan, it appears that TPG is extremely well-positioned to capture potential upside, leaving FSP with crumbs, even in the “best case scenario.” where FSP’s properties are sold off for a grand total of $513 million, net of $286 million in new outstanding debt, and adding back cash (now down to $30.5 million), we get a valuation of $2.48 per share.

Keep in mind, though, that this assumes FSP doesn’t tap the loan facility further to pay for capital improvements or other one-time expenses. This would further reduce potential upside for shares. A possible sale of all or portions of the REIT could take years to unfold, with upside largely dependent on both the stabilization of FSP’s properties and an overall improvement in demand for office space.

Much like other liquidations or de facto liquidations of REITs, it may appear to be a profitable situation on paper, but in practice ends up being lackluster in terms of annualized returns.

The Bottom Line

In hindsight, my concerns about the “Denver overhang” should have led me to skip FSP entirely.

Not to say that my interest in FSP was simply a case of piggybacking on Stabosz’s high conviction.

Stabosz’s focus on a possible post-refinancing “relief rally” reminded me of past situations like Medical Properties Trust (NYSE: MPT), another distressed REIT that has experienced wild price action, rallying on any news suggesting an improving situation. However, it was a mistake to believe that FSP could be an MPT-style situation.

Beyond Medical Properties Trust having a much bigger following among retail investors and, hence, being more likely to make such “meme moves,” MPT has also long been heavily shorted and thus vulnerable to short-squeeze-type price volatility. FSP, despite its troubles, has a short interest of only 2.35%.

With FSP now in at around 62 cents per share, the question now is, “buy, sell or hold?” I have yet to exit my position, but believe that such a move may be imminent. I am interested in keeping an eye on FSP, even if it dips further or delists and becomes an OTC-listed stock.

In such a scenario, the stock could be so low that even a fire-sale liquidation would produce significant gains for shareholders. If there is any profitable takeaway from this situation, it has at least piqued my interest in exploring the office REIT sector further, to find distressed office REITs that either aren’t on the verge of entering an unfavorable private credit deal and/or lack red flags akin to FSP stock’s “Denver overhang.”

Share Value Never Sleeps

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in FSP.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from FSP or any other entity for writing this article. I have no business relationship with FSP, or any other company referenced. This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading FSP stock. Do your own due diligence, and caveat emptor.

CCA Industries (OTCMKTS:CAWW) is a stock I’ve followed for at least a decade. I recall at some point in the past either owning it or purchasing some of this consumer health product company’s products off of Amazon, I can’t remember which one.

During this time frame, CAWW frankly hasn’t been worth owning. Namely, due to its small size, which has long limited its ability to be consistently profitable. CCA generates healthy gross profit from its product portfolio and has successfully outsourced most production-related aspects, but all this gross profit has been gobbled up by fixed overhead expenses.

However, at present, this stock may be an interesting opportunity. Just this week, CCA sold one of its many brands, Lobe Miracle, for $1.2 million in cash plus $218,886 from the sale of inventory. While not certain, this transaction could signal continued efforts to fully realize the business’s underlying value.

Although there is ongoing litigation between two key shareholders that may delay the pursuit of major strategic alternatives, this may be a name to keep an eye on/slowly accumulate on weakness.

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Share Value Never Sleeps

Background

Based in Fort Washington, PA, CCA Industries is a purveyor of over-the-counter health, beauty, and personal-care products. CCA-owned brands include Plus White, Sudden Change, Nutra Nail, Bikini Zone, Hair Off, and Solar Sense. Since its founding, CCA has focused more on brand marketing than on production, relying on third-party manufacturers.

While the company was founded over 40 years ago, the most relevant history for us investors dates back to the early 2010s, when entrepreneur Lance Funston became involved with the company. Funston (via his entity Capital Preservation Holdings) acquired the company’s Class A shares from CCA’s co-founders in 2014 in a negotiated private transaction, giving him control over that entire class of stock.

As these Class A shares gave him the right to elect 4 of the company’s 7 directors, this deal essentially gave Funston control of the company. Funston then proceeded with efforts to turn the company around.

A few years before Funston’s involvement, investor Sardar Biglari and his Lion Fund also became involved in the stock. Biglari, along with his associate Philip Cooley, served on the board from 2011 to 2014, left the board, then returned in 2015, as part of a Lock Up and Put Agreement with Funston. As part of this agreement, the Lion Fund agreed not to sell its 12.9% stake in CCA until 2018, unless the company were sold or became insolvent.

In exchange, the fund had a put right to sell its stake to Funston for $6 per share at the end of the lockup period. This lockup period was eventually extended to 2019 but was never consummated, leading to litigation. To date, Biglari’s fund has maintained its position in CCA. As hinted earlier, this litigation could stymie any near-term sale/liquidation of the company.

Flashing forward to the present, in a nutshell, Funston’s turnaround efforts had little lasting impact on CCA’s growth or profitability. The company reported positive earnings in 2016 and 2017, but since then, it has reported negative net earnings. Again, the company generated gross profit from product sales, but it was eaten up by overhead and operating expenses.

With this, the stock began its plunge from the low single digits to sub-$1 per share. Previously listed on the NYSE American, CAWW moved to the OTC market in 2019, which has likely contributed to its further price decline, although the company’s declining sales and persistent net losses are more to blame.

In 2021, Lance Funston stepped down as CEO but remained Chairman. Christopher Dominello replaced him as CEO. Prior to CCA, Dominello served as CEO of two similar companies. First, Ducere Pharma, which owned old, familiar brands like Doan’s and Bufferin, before selling them to generic-drug maker Dr. Reddy’s in 2016. Then, prior to Ducere, Dominello ran Ultimark, another consumer company run by Funston, which owned brands like Prell and Denorex, until their sale to Scott’s Liquid Gold.

Funston died in 2023, and his son, Brent Funston, took over his controlling interest in the company. Brent Funston also took over his father’s position as Chairman of Ultimark. With these leadership changes, the story with CCA has slowly shifted from growth to profitability and asset sales.

First, the company sold off its Bikini Zone brand for $2.5 million in 2023. CCA didn’t sell off any brands during 2024 or 2025, but with the aforementioned Lobe Miracle sale, perhaps there are plans for a more rapid sell-off of CCA’s other brands, with the exception of Plus White toothpaste, which CCA appears to be positioning as a core brand.

At the same time, CCA has implemented cost reductions, which have at least enabled the company to reach breakeven profitability on an EBITDA basis.

So, how much could CCA generate from further asset sales, and more importantly, could this translate into increased shareholder value, or will the company fritter away any sales proceeds?

Valuation

Given recent asset sales, I believe valuing CCA on a liquidation basis is the best approach.

CCA Industries currently has a market cap of $3.8 million. As of the release of CCA’s latest quarterly financials (Aug. 31, 2025), the company had just $83,513 in cash and $857,730 outstanding on its line of credit. However, this outstanding amount, coupled with A/P, is covered by other current assets. Later on, we will back out our debt, leaving us with a “net working capital” figure to use in our “sum of the parts” calculation.

For the nine months ended Aug. 31, 2025, CCA had EBITDA of approximately $40,000, so essentially breakeven. During this period, 18.4% of CCA’s $5 million in sales came from ear care products. On an annualized basis, this suggests Lobe Miracle sales were approximately $1.2 million, indicating the brand was sold at 1x sales.

Based on gross margins of approximately 67%, it’s possible that selling Lobe Miracle could negatively affect gross profit by $800,000 over the next year.

But before going through the risk of reduced gross profits, let’s explore how much more CCA could generate from selling off its brands.

Besides Plus White, CCA’s other brands include Neutein memory support supplements, Nutra Nail, Hair Off, Pain-Bust RII, Porcelana, and Scar-Zone.

Neutein is licensed from an entity known as Para Bellum Partners, while Porcelana is licensed from Ultimark. Based on reported royalty payments/royalty rate, Neutain generates around $110,000 in annual sales, while Porcelana generates around $685,000 in annual sales.

Net of Lobe Miracle, CCA has annual sales of around $5.44 million. Net of the licensed brands, sales go down to around $4.64 million.

Lobe Miracle sold for 1x sales, but could CCA get more than 1x sales for its brands? Possibly. After all, larger over-the-counter health products companies, like Prestige Consumer Healthcare (NYSE: PBH), with EBTIDA margins of 33%, trade at EV/Sales ratios of 3x-4x.

I believe that CCA could find buyers for these brands willing to pay 2x sales, in deals that would still be accretive/profitable to the buyers.

Hence, I value CCA’s brands at between $4.6 million and $8 million. Outside of the brands, along with the $1.2 million in Lobe Miracle sales proceeds, there is also CCA’s $2.7 million in current assets, of which $1.8 million is inventory. With its prior brand sales, CCA has successfully had the brand buyer acquire the remaining inventory at cost.

Add it all up, and we get a gross valuation of between $8.5 million and $11.9 million. Total liabilities come up to $2.15 million, $1.3 million in A/P and $857,730 borrowed from the company’s credit line. There are also 175,000 outstanding shares of preferred stock, with a liquidation value of $3.50 per share.

Hence, deducting around $2.7 million in total liabilities, we get a net value of between $5.8 million and $9.2 million, or between 76 cents and $1.20 per share. However, there’s one other “hidden asset” left CCA’s NOL carryforwards, which total $26.2 million.

Based on the current federal income tax rate, these could produce tax savings of $5.5 million. For the right buyer, of course. There’s also IRC Section 382 restrictions to work around, but as I discussed in my article last summer on Trinity Place Holdings (TPHS), these can always be worked around.

How much are these NOLs worth? Using the same method Contrarian and Correct valued Rubicon Technology’s (RBCN) NOLs, the present value of CCA’s NOLs is a little over $2 million, or around 26 cents per share. Not game-changing, but adds a little to the overall upside proposition.

In short, I believe CCA is worth at least $1 per share, perhaps as much as nearly $1.50 per share. The question is whether this value can be realized before this additional value gets eaten up by operating expenses.

How CCA Investors Could Get $1.00 to $1.50 for this 50-cent stock

Admittedly, my valuation calculations assume that CCA’s value could be fully realized in a direct manner. That’s far from the case. Besides the likelihood of operating losses during a period when CCA would be selling off brands, the current shareholder structure complicates the prospect of a third party acquiring the NOLs.

A lot hinges on what Brent Funston, who controls the board, decides to do. His family owns around 19.3% of the outstanding equity. Perhaps they could decide to structure an IRC Section 382 workaround, acquiring 40% more of the company today, then the rest three years out. Perhaps they could continue downsizing operations, selling off more brands and licensing others, rendering CCA more or less a NOL shell.

Then again, there’s also the Sardar Biglari factor to consider. Biglari’s fund still owns its stake in the company, and based on the aforementioned litigation, is still trying to get Funston’s estate to honor the put agreement.

Risks

In my view, the main risk here is that the sale of Lobe Miracle impacts earnings, with CCA reverting from breakeven to a six- or seven-figure annual cash burn. CCA’s underlying value continues to erode, putting pressure on shares while limiting upside.

Again, a lot may hinge on how much longer the Biglari/Funston litigation lasts. While the fraud allegations have been dismissed, the latest developments in the case indicate that Funston’s estate remains liable for the purchase of Biglari’s position for $6 per share, or around $4.7 million.

While this litigation doesn’t directly affect CCA, it could complicate the completion of a transaction. Biglari’s continued presence also raises the possibility that the investor is using the litigation as leverage to take control of CCA and use it as a NOL shell. In terms of whether a Biglari-controlled NOL shell would be worth being a minority shareholder in, I’ll let Biglari’s past actions as CEO of a public company speak for themselves.

Conclusion

Recently, I initiated a small tracker position in this name, but I am waiting for lower prices before accumulating more shares. The company likely could sell its assets for far more than the stock price, using the proceeds to acquire a more profitable venture, with operating income sheltered by the NOLs.

However, it’s unclear whether Brent Funston has the capital or vision to go with this approach, given what appears to be CCA’s current game plan: sell off smaller brands and focus on its main brands. I’m skeptical of this plan, as although CCA has been successful in bringing itself to breakeven profitability, is there room for further cost cutting, given that this 4-employee company practically outsources everything as it is?

It is a relief that Brent Funston doesn’t compensate himself too heavily. He receives a $50,000 cash retainer for serving as Chairman. On the one hand, such compensation isn’t going to bankrupt CCA anytime soon; on the other hand, that’s quite a high amount relative to the value of his family’s stake in the company (under $750k).

That said, ever hopeful, I will continue to keep an eye on CCA in the event the company pursues a strategy that leads to rapid price appreciation.

DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in CAWW.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from CAWW or any other entity for writing this article. I have no business relationship with CAWW, or any other company referenced. This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading CAWW stock. Do your own due diligence, and caveat emptor.

Share Value Never Sleeps

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Among commercial real estate assets, office space remains one of the least sought-after. Vacancy rates remain high, leading to tighter lending standards and a wariness among investors to allocate capital to office REITs.

For many names, the resultant discounted valuations make sense. Yet, as always, there may be a few situations where the market has thrown the baby out with the bathwater. Possibly, that’s the case with Franklin Street Properties (NYSEAmerican: FSP).

Franklin Street owns a portfolio of Class A and B office properties throughout secondary markets in the United States. Sovereign wealth funds and the Kushners aren’t going to bid up these properties: whoever is in the market for them will want them at bargain prices.

But that’s both the risk and the opportunity at hand. Even as these properties are worth far less than their “on the books” valuation, there may be a path for this REIT to experience a significant re-rating.

Share Value Never Sleeps

Franklin Street Properties at a Glance

Originally a privately held real estate investment firm founded by George Carter, Franklin Street became a publicly traded REIT in 2005. Carter continues to serve as Chairman and CEO of the company. In addition, his sons, Jeffrey Carter and Scott Carter, serve as President/CIO and EVP/General Counsel, respectively.

Currently, Franklin Street owns 4.8 million square feet of office space. Although headquartered in Wakefield, MA, just outside Boston, FSP’s buildings are located in the Dallas, Denver, Houston, and Minneapolis metro areas.

Until 2020, Franklin Street had a significantly larger portfolio of office properties. However, over the past five years, as COVID triggered a steady rise in office vacancy rates, putting the squeeze on FSP’s profitability, the REIT has sought to deleverage and divest, selling off over $1.1 billion in property.

Unfortunately for investors, this slimming down has not led to a recovery. Trading for over $6 per share as recently as 2022, the stock has since experienced a prolonged decline and now trades for around 90 cents per share. It’s not surprising that shares have steadily declined during this time frame.

To conserve cash, FSP slashed its quarterly dividend from 9 cents to 1 cent per share. As the operating performance of its properties has since continued to worsen, the REIT’s quarterly payout has not returned to prior levels. Over the past year, several developments have sparked renewed optimism, but each wave has proven short-lived.

Recent Developments

Last May, Franklin Street Properties announced plans for a “review of strategic alternatives,” including a possible sale of the company, the sale of certain assets, or a possible refinancing. So far, this has yet to lead towards the REIT locking down a buyer for the company, a buyer for specific properties, and the completion of a refinancing that would help extend its debt maturity. FSP’s outstanding debt is scheduled to mature this year.

That said, back in November, Franklin Street issued a follow-up press release, vaguely stating how the REIT’s board continues to explore strategic alternatives, with a stronger emphasis on the FSP’s debt refinancing efforts.

Of course, much like the initial announcement of strategic alternatives, this news only temporarily assuaged concerns. After rising back over $1 per share since late November, the stock has once again pulled back to sub-$1 levels.

Alongside fatigue and impatience with Franklin’s lack of “strategic alternatives” progress, another factor has likely also weighed on its stock price: recent comps of properties in the Denver office market, which suggest far lower valuations for FSP’s properties than what’s on the books.

Valuation

With FSP’s tangible book value of $5.91 per share, versus a current stock price of $0.95 per share, even at a discounted valuation for the buildings, this stock could still be undervalued.

On the balance sheet, the buildings are valued at cost and have a value (before depreciation) of around $1.2 billion. However, as evidenced by the high vacancy rates across most properties, the purchase price is not a reliable indicator of a property’s current value.

Below is a full list of FSP’s current property portfolio:

Source: Franklin Street Properties 10-Q filing, Sep. 30, 2025

There are several ways investors could decide to value this REIT. First, investors could calculate the effective NOI of these properties, which is equal to total revenue minus property expenses, and apply a cap rate to it.

During the trailing twelve months ended September 30, 2025, this figure totaled $46.2 million. Applying a conservative 9% capitalization rate, we arrive at a valuation of approximately $513 million. With a net of $247.3 million in outstanding debt, this works out to approximately a $266 million valuation. Add in FSP’s $31.4 million net cash position, and total net value works out to $297.4 million, or around $2.87 per share.

However, these estimates may be exaggerating the value of some of FSP’s property. Particularly, those located in markets facing greater distress/questionable recovery chances. In the case of the REIT, I’m talking primarily about the Denver and Minneapolis metro areas.

For instance, last November, Brookfield Asset Management sold its Johns Manville office complex in downtown Denver for $57.5 million, at an 85% discount to its purchase price. This resulted in approximately $41 per square foot for a series of properties with a 60% occupancy rate.

That implies a valuation of just $87.8 million for FSP’s Denver properties. Based upon the weighted average rent per occupied square foot figure, these properties generated around $48.4 million, or around 44.6% of FSP’s overall revenue over the past year, implying a gross valuation of around $229 million for these properties using the NOI-based method.

As for Minneapolis? In late 2024, the Wells Fargo Center in downtown Minneapolis sold for $85 million. This building, which at the time of sale was only 62% occupied, had previously sold for over $314 million in 2019. $85 million also represented a valuation of $77.27 PSF.

Rounding down to $75 PSF and a total square footage of 757,351 yields a valuation of approximately $56.8 million. This figure, however, closely aligns with a NOI-based calculation. Over the past year, these properties have generated approximately $13 million in rental revenue, accounting for 11.9% of overall revenue, implying a valuation of approximately $61.1 million.

While there’s significant uncertainty about the salability of the Denver and Minneapolis properties, I believe the NOI-based valuation approach is suitable for the Dallas and Houston properties. Besides being in metropolitan areas experiencing stronger economic growth, there may be further opportunities with these buildings if vacancy rates continue to climb.

Namely, some of these facilities may be prime candidates for conversion into data center properties. Hence, I remain comfortable valuing these buildings not based on comps, but their current cash flow capabilities.

During the TTM period, the Texas properties generated approximately $39.5 million in revenue, accounting for around 36% of FSP’s top line. This implies a gross valuation of around $184.7 million.

Putting it All Together

Using our fire-sale valuation forecasts for Denver ($56.8 million) and Minneapolis ($61.1 million), and adding $184.7 million for the Texas properties, we get a gross value of around $302.6 million for the buildings. Subtract $248 million in debt, and add back $31.4 million in cash, and we get a net value of $86 million, slightly less than FSP’s current market cap of $94.5 million.

That said, if Franklin Street Properties proceeds with refinancing its debt and plans to ride out an office market recovery, there may be a future yet for the shares.

Over several years, Franklin Street could continue to sell off properties, or even sell itself outright, at a price far closer to the “back of the envelope” $ 2.87 per share estimate I provided earlier.

Better yet, there may be a path to more rapid upside. The mere news of a successful refinancing may be enough to move the needle, at least partially. In other words, think of a move back to $1.50 to $2 per share in a matter of months.

Additional Risks to Consider

Besides the risk of a fire-sale liquidation, there is also the risk of share dilution if FSP decides to shore up its balance sheet with an equity raise. While doing so wouldn’t completely destroy the bull case, it would uncertainly limit future upside, if an asset stabilization scenario were to play out.

Alongside share dilution, there’s also the risk that FSP’s overall occupancy rates keep dropping. In particular, regarding the Denver and Minneapolis properties. After all, isn’t the fact that recent Downtown Denver office sale comps came in at such low prices indicative of a market getting worse, not better?

If FSP’s cash flow continues to dwindle, this could put additional pressure on the stock. It could even increase the likelihood of the REIT engaging in a dilutive capital raise.

The Bottom Line

Earlier this month, I entered a small, speculative position in Franklin Street Properties. Primarily, on the “refinancing dead cat bounce angle.” Admittedly, I first got the idea of FSP in the place, via

microcap investor Timothy Stabosz’s commentary on the stock, as seen over numerous Seeking Alpha articles covering FSP.

Recent posts suggest that Stabosz still owns the stock and remains bullish that it could eventually rise substantially if the situation stabilizes. In the meantime, while continuing to hold the stock, I plan to investigate other micro-cap and small-cap office REITs, hoping to find even stronger deep-value REIT buys for the coming year.

Share Value Never Sleeps

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in FSP.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from FSP or any other entity for writing this article. I have no business relationship with FSP, or any other company referenced. This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading FSP stock. Do your own due diligence, and caveat emptor.

To start this “end of year” review of my 2025 write-ups, I must express my regret for not providing a greater volume of content on ValueNeverSleeps. In many ways, this Substack is the “side hustle to my side hustle,” and in recent months, for my main side hustle, I have been blessed with the challenge of having more clients than time.

Please keep this in mind if you’re mulling whether to unsubscribe from ValueNeverSleeps. I intend to continue posting at least monthly, with a focus on in-depth analyses of undervalued microcap stocks. These will be either ideas I’ve discovered independently or ones I’ve come across elsewhere, but which I believe are worthy of further attention/where I can add other unique insights.

To my subscribers, I appreciate your continued support and readership.

With that out of the way, let’s get into this post-mortem of my investing ideas posted here on ValueNeverSleeps throughout 2025.

The “Winners”

In 2025, I published write-ups and follow-ups on 19 individual stocks. Of these 19, five delivered what anyone would consider “winning” returns:

Butler National (BUKS)

Price at Publication (3/20/25): $1.75

Current Price: $3.08

Return: 76%

Butler National, an aerospace and casino gaming company that I’ve owned various times over the past decade, was another strong performer this year. I first wrote about BUKS on VNS back in March, when the stock was trading for around $1.75 per share.

Price action for shares was mixed in the months that followed, but over the past three months, BUKS has been on a strong upward trend. Largely, thanks to the current booming demand in the aerospace sector, coupled with bullish sentiment for the industry. When I last wrote about BUKS, back in October, I valued the company at $3.75 per share.

I believe that Butler could eventually reach this price level, especially if progress is made in divesting the casino unit and the company continues to make further progress towards uplisting to a central exchange. Soon, I will write another follow-up piece, going into greater detail about the current situation.

Crawford United (CRAWA)

Price at Publication (5/19/25): $48.00

Current Price: $81.40

Return: 69.6%

Crawford United, an industrial that I called a “Danaher in the making” in my initial write-up back on May 19, has surged 69.6% since publication. Unfortunately, the story may be over for investors here.

That is, earlier this month, SPX Technologies (SPXC) announced plans to acquire CRAWA for $83.42 per share. Many, including GeoInvesting’s Maj Soueidan, are critical of the deal, calling it a “take under” given the company’s record results reported in November.

Perhaps a rival bid will emerge, but the fact that CRAWA is currently trading at a typical merger arb spread to the deal price suggests few in the market anticipate this happening.

Synchronoss Technologies (SNCR)

Price at Publication (11/10/25): $5.20

Current Price: $8.47

Return: 62.9%

SNCR is my most recent write-up, published on Nov. 10. It also holds the honor of being the “fastest winner” among the stocks profiled. Within weeks of publication, the provider of white-label cloud software to the telecom industry accepted a $ 9-per-share all-cash takeover offer from Lumine Group.

Ahead of the deal’s close, expected to happen within the first half of 2026, SNCR trades for $8.47 per share, up 62.9% from what the stock traded for at the time of my write-up’s publication. Of course, my only regret here is not adding to my position.

I entered a small position shortly before publishing this write-up, but failed to capitalize on this stock’s brief plunge to around $4 per share in late November. Hopefully, a few readers who stumbled onto this and other bullish write-ups seized the opportunity.

Vaso Corporation (VASO)

Price at Publication (8/3/25): $0.12

Current Price: $0.17

Return: 41.7%

I first wrote about medical equipment and healthcare IT company Vaso back in the summer, but like SNCR, VASO is another name that’s only become a winner as of late. Last month, Vaso announced the sale of its IT unit, which had been a drag on the company’s financial. This triggered a significant jump in VASO stock, sending it as high as 21 cents per share.

VASO has since settled at 17 cents per share, or approximately 41.67% above the stock’s trading price in August. This is another name that I will follow up on in the coming weeks.

Comstock Holding Companies (CHCI)

Price at Publication (2/6/25): $8.40

Current Price: $11.08

Return: 31.9%

CHCI was one of my first write-ups on here. At the time, shares in the property management company were trading for $8.40 per share. Currently, the stock trades for around $11.08 per share, representing a nearly 32% increase. Earlier this year, the stock was trading for as much as $18.99 per share, representing an increase of over 126%.

While I regret not simply taking profit earlier this year, there is merit in maintaining a position in CHCI at current prices. More or less, the long-term bull case remains. As discussed in my initial write-up, CHCI, through its affiliation with the privately held real estate company Comstock Partners, continues to expand its property management portfolio.

Even better, much of the company’s income continues to be sheltered by the substantial amount of NOLs on the books. Despite these strengths, the market continues to value CHCI at a low multiple. Currently, the stock trades for around 9 times TTM earnings. While there are reasons behind this valuation discount, including the fact that it’s a thinly traded controlled company, I still believe that, in time, Comstock will re-rate to 15x-20x earnings, a valuation more in line with other commercial property management companies.

The “Losers”

While it may be tempting to simply tout my winner, I must concede that out of the 19 stocks profiled, 12 of them have been in the red since I published my initial VNS write-ups on them. I will discuss these from “bad to worse,” or in ascending order in terms of negative returns.

Regency Affiliates (RAFI)

Price at Publication (10/13/25): $4.75

Current Price: $4.64

Return: -2.3%

As you may recall from my October write-up, Regency Affiliates is a company you are likely familiar with, if you’ve been in the micro-cap/OTC game for a meaningful length of time.

This odd holding company’s claim to fame was its ownership of a large office building outside Baltimore, Security West, that was leased to the Social Security Administration (SSA). To make a long story short, SSA vacated the building a few years ago; Regency has since torn it down, and the company is now attempting to redevelop the parcel, possibly as an AI data center.

There has been little news or action with this stock lately, as it is very thinly traded and moves significantly on modest volume. I believe that the land, as well as Regency’s only active asset, a portfolio of storage unit properties, is worth around $7.36 per share.

Keep in mind, though, that a majority shareholder, longtime CEO Laurence Levy, controls this company. Regency also has very high corporate overhead relative to its assets. Hence, it’s possible that, between now and when (or if) the Security West land parcel is sold, shares continue to decline in value. In hindsight, this may have been more of a “food for thought” type of article than an actionable idea.

Canterbury Park Holding Corporation (CPHC)

Price at Publication (9/26/25): $16.50

Current Price: $15.16

Return: -8.1%

Canterbury Park Holding Corporation has pulled back slightly since I first profiled it back in September. My view of the stock remains essentially unchanged, mainly that over time, CPHC can extract the remaining value from its real estate assets.

Admittedly, this doesn’t answer another big question: what becomes of Canterbury’s eponymous main asset, a thoroughbred racing track, located in a state (Minnesota) where tribal gaming interests dominate politically, and have continued to stymie any efforts by Canterbury to move beyond just parimutuel wagering and player-banked table games.

Waterboy Stocks touched on this in his October 2025 write-up on CPHC. In his write-up, he discussed how tribal gaming interests were able to quash Canterbury’s attempts to eventually offer “historical horse racing,” which are basically slot machines that use a random horse race to determine the outcome of a spin.

Waterboy also has a much more conservative breakup value for CPHC than I do (around $20 per share), but notes that major investors, such as Gate City Capital and Gabelli, have remained large shareholders, suggesting that a positive outcome will eventually be achieved.

Trinity Place Holdings (TPHS)

Price at Publication (8/21/25): $0.044

Current Price: $0.038

Return: -13.6%

Shares in this NOL shell and onetime condo developer are down 13.6% since my Aug. 21, 2025, write-up. Admittedly, one can argue whether TPHS is an immediate investment opportunity, if an opportunity at all.

For one, due to the IRC Section 382 testing period, it won’t be until February 2028 that Warren Liechtenstein’s Steel Partners Holdings LP (SPLP), which took control of THPS earlier this year, can proceed with acquiring the rest of THPS/begin to utilize its NOLs.

Second, and more importantly, given how outside shareholders have fared in similar transactions involving Liechtenstein and Steel Partners, it’s questionable whether investors can even profit from owning this stock.

At best, THPS could be taken out at a low premium to its trading price. Again, this is more of a name to keep an eye on, but not necessarily one to add to the portfolio.

Precision Biosciences (DTIL)

Price at Publication (2/17/25): $5.41

Current Price: $4.34

Return: -19.8%

DTIL, a biotech company, has traded wildly since I first profiled it back in February. As recently as late October, it was selling for nearly $9 per share, thanks to promising developments related to the company’s gene editing portfolio.

Since then, shares have pulled back. Most likely, due to a dilutive capital raise announced on Nov. 10, I continue to hold the stock, but admit that I likely should not be dabbling in biotech stock, given my lack of experience and knowledge necessary in this complex corner of the market.

Farmer Bros. (FARM)

Price at Publication (9/20/25): $1.90

Current Price: $1.47

Return: -22.6%

Farmer Bros. has fallen by over 20% since I wrote about it three months ago. Much of these declines can be chalked up to the macro issues that have squeezed FARM’s margins lately.

I purchased this name primarily based on the “strategic review” angle, anticipating that management was actively seeking a buyer. Perhaps the current macro environment has stymied this process. Even so, I continue to hold the stock, again under a theory expressed in the write-up:

“A lesson learned from the unexpected high bids for companies like Servotronics (SVT) and DallasNews (DALN) is that, while risky, shares in struggling companies with either a high underlying value and/or high value-add potential are worth buying, assuming you account for the risk and position accordingly.”

TrueBlue (TBI)

Price at Publication (10/6/25): $6.11

Current Price: $4.70

Return: -23.1%

TrueBlue is down by 22.6% since I first wrote about it for VNS back in October. Here’s an interesting story: I first wrote about TBI in an article published on Seeking Alpha earlier in 2025. That article focused mainly on TBI’s rebuff of a takeover offer from HireQuest.

I wrote the follow-up piece, mainly because a private investor, Eric Su, began to rattle cages at TrueBlue, pushing for the company to implement his own turnaround plan. As Su was previously the head of M&A at IAC/InteractiveCorp and has been involved with another staffing company, I am a fan of his plan. Not only that, I could see his plan, if implemented, having the same impact on TBI as Kurt Wolf’s campaign at PBI has been.

I remain long the stock, despite the weak near-term performance. According to a recent press release, Eric Su is continuing his activist campaign, with plans to nominate an alternative slate of directors for the 2026 shareholder meeting.

With the activist angle still ongoing, I plan to follow up on this stock in the near future.

SunLink Health Systems (SSY)

Price at Publication (2/25/25): $1.05

Adjusted Current Price: $0.779

Return: -25.8%

SunLink Health Systems was a special situation I wrote about back on Feb. 25. At the time, shares were trading for $1.05 per share. Back in August, SunLink completed its merger with Regional Health Properties (RHEP).

For every 5 shares of SSY, shareholders received 1.1330 shares of RHEP, as well as 1 share of Regional Health Properties Series D 8% Cumulative Convertible Redeemable Participating Preferred Shares.

At the time of the transaction close, shareholders received securities worth an adjusted total of $1.48 per share, representing a 40.9% premium over the stock’s trading price at the time of publication. However, given that I did not provide an update/recommendation on how to proceed with RHEP, I am tracking this position based on the current adjusted price of the securities.

Unfortunately, both the standard and preferred shares have fallen considerably. Investors still holding on are down 25.8%.

Winland Holdings (WELX)

Price at Publication (3/6/25): $4.90

Current Price: $3.40

Return: -30.6%

Winland Holdings is another name likely widely familiar to those in OTCland. In short, Winland had been a small company specializing in industrial control and monitoring products for many years.

For most of the past decade, however, it has primarily evolved into a cryptocurrency mining and Bitcoin treasury company, first under the control of investor Thomas Braziel, and then by FRMO and other entities/individuals associated with Horizon Kinetics.

Back in March, what piqued my interest with WELX was its ownership of Mt. Gox liquidation claims. Even as my sum-of-the-parts analysis indicated that WELX was worth approximately its then-current trading price, I bought into the narrative, laid out by Horizon’s Murray Stahl, that owning a Bitcoin mining company could prove more profitable than simply buying BTC as an investment.

However, based on some X.com posts from Raging Bull Capital’s Dylan Morello, another Horizon-controlled, OTC-listed crypto mining company, Consensus Mining & Seigniorage (CMSG), may be a better choice. Not only is it a larger enterprise than WELX, but it is also a more established one. Unlike WELX and its premium valuation, CMSG trades at a discount to its book value.

WM Technology (MAPS)

Price at Publication (1/29/25): $1.37

Current Price: $0.90

Return: -34.3%

WM Technology, better known as the parent company of online platform Weedmaps, was another one of my initial 2025 articles. At the time, my focus was on the special situation angle. Management was offering $1.70 to take MAPS private, but outside shareholders balked, considering the bid too low given the company’s long-term potential.

MAPS has experienced choppy price action so far this year. Although the stock did jump on the reclassification of marijuana under federal law, shares have again pulled back. Some of this may be due to investors selling on the news, but I have also seen some start laying out the argument that this development could be a double-edged sword.

That is, while rescheduling may open up new opportunities for MAPS, it could also bring competition from big tech firms, which have previously avoided the space due to reputational and compliance issues. I’ve yet to take action on my MAPS position, but I plan to investigate this further.

Kontrol Technologies (KNRLF)

Price at Publication (4/26/25): $0.12

Current Price: $0.071

Return: -40.8%

Kontrol Technologies has fallen by over 40% since I wrote about it in April. With shares in this Canada-based innovative building technology company, the angle here was the stock’s significant valuation discount to its net cash position, which the company could use to make a bolt-on acquisition.

Most of this price decline has occurred since November, and may be a result of Bitcoin’s significant price decline. As you may recall, Kontrol Technologies has invested millions of its excess cash into the iShares Bitcoin Trust ETF (IBIT), call options, and other assets with BTC exposure. As of Sept. 30, 2025, these assets were valued at $6.2 million CAD ($4.5 million), representing a significant portion of the company’s net tangible value of approximately $9.4 million CAD ($6.89 million).

Still, while the current value of Kontrol’s crypto assets warrants a closer look, it is likely that the stock still sells at a substantial discount to its tangible net book value. The current market capitalization of KNRLF is approximately $3.6 million.

Ark Restaurants (ARKR)

Price at Publication (1/25/25): $13.75

Current Price: $6.20

Return: -55%

Ark Restaurants, which owns/operates restaurants in New York, Las Vegas, and other U.S. cities, as well as owns a stake in the Meadowlands racetrack in New Jersey, has fallen 55% since publication of my initial write-up last January.

Admittedly, I may have been too early to the gaming-adjacent restaurant stock party. On other sites, I published write-ups on other gaming industry stocks, including Full House Resorts, and regret moving so quickly into the sector, as the current slump may be just taking shape.

That said, Ark’s most significant issue at present concerns its Bryant Park Grill restaurant in New York and its ongoing litigation with its landlord. Ark’s lease expired last April, but the company has continued to operate the restaurant, arguing in court that the terms of the lease renewal were unfair. On a positive note, the legalization of the Meadowlands casino appears to still be in motion. The company is also experiencing improved results at its Las Vegas restaurants, thanks to its cost-cutting efforts.

Anecdotally, I can speak from experience on this. Back in November, I visited Las Vegas to conduct some “boots on the ground” due diligence of Boyd, Caesars, and MGM Resorts properties. As part of this reconnaissance mission, I had breakfast at the America diner, one of the restaurants Ark operates inside MGM’s New York-New York casino resort. While my meal was relatively good value for money by strip standards, I did notice significant signs of reduced staffing, including the manager serving as the host, as well as a long wait time for my meal.

Greystone Logistics (GLGI)

Price at Publication (7/22/25): $1.27

Current Price: $0.55

Return: -56.7%

Greystone Logistics (GLGI), a manufacturer of reusable plastic pallets, initially held pretty steady in the months following my July 22, 2025, write-up. Unfortunately, following a horrendous earnings release in October, GLGI plummeted and has yet to recover.

Currently, the stock trades for 55 cents per share, down 56.7% from what GLGI was selling for at the time of publication. During the quarter ending Aug. 31, 2025, Greystone reported a significant drop in revenue and operating losses totaling $1.2 million.

While there has been some scuttlebutt on X.com that better times lie ahead, you may want to hold off taking advantage of near-term tax loss selling.

The “Also-Rans”

BAB Inc. (BABB)

Price at Publication (3/31/25): $0.84

Current Price: $0.89

Return: 5.95%

Not surprisingly, BABB has remained essentially unchanged since I first wrote about it back in March. There’s little going on with this franchisor of bagel and muffin shops. In a nutshell, this company essentially operates the remnants of a once larger business, generating sufficient cash flow to pay six-figure salaries to its management, as well as distribute a 5.6% dividend to shareholders.

Outside of that, it’s hard to see this stock making any needle-moving moves anytime soon. Shareholder activism has made little progress in the past. It may take the eventual retirement of the current C-suite for significant changes to occur, such as a sale of the business to a strategic acquirer.

As I previously argued, given the potential to eliminate overhead costs, this company could be worth as much as $1.40 per share to a buyer. Also, as before, consider this more of “food for thought” write-up, than an actionable investing idea.

PCS Edventures! (PCSV)

Price at Publication (6/24/25): $0.12

Current Price: $0.12

Return: 0%

PCS Edventures!, which traded at 12 cents per share in June, has remained rangebound at this price level during the second half of 2025. Changes in federal funding for after-school programs continue to impact this provider of STEM-based educational materials and lesson plans.

That said, PCS Edventures! is managing to deliver breakeven profitability, despite the significant drop in sales. The company has also continued to aggressively buy back stock.

If the company’s performance improves, this could result in a significantly more substantial rebound relative to current prices. PCSV is a name that warrants further investigation and a follow-up article.

Three Takeaways From 2025: What Worked, What Didn’t, and What to Avoid Going Forward

1. Most of My Losses Came From “Special Situations” That Never Became Situations

A clear pattern emerged across my weaker ideas, characterized by a reliance on anticipated events that were neither forced nor time-bound. Many of these were labeled as “special situations,” but in practice, they were optional.

Names like Canterbury Park Holding Corporation, Winland Holdings, Kontrol Technologies, and BAB Inc. all shared a similar flaw: upside depended on management action, regulatory shifts, or market recognition that could be delayed indefinitely.

Frankly, I also believe that it’s becoming increasingly complex in general to profit from special situations. Look at the recent returns of Special Situation Investments, for example. Perhaps it’s similar to how merger arbitrage and net-net investing have become more challenging over time.

With too many people targeting/picking over these types of opportunities, potential returns are far lower than what could be achieved in the past. At the same time, lower-quality “special situations” are, in fact, overvalued relative to their risk.

2. I Perform Best When the Business Works Even If Nothing Happens

My strongest winners were not exotic restructurings or complex breakups. They were operating businesses with real earnings power, where corporate events simply accelerated outcomes that were already justified by fundamentals.

In cases like Butler National and Crawford United, the downside was mitigated by cash flow, customer base, and strategic value to acquirers. Even without a deal, these companies could compound or rerate organically.

By contrast, many “special situations” required something to happen just to justify today’s price. From now on, my core focus should be businesses that make sense on a standalone basis, with catalysts viewed as upside, not prerequisites.

3. Complexity Is Not an Edge, It’s a Hidden Tax

Several underperformers were hindered by structural or analytical complexity that diluted any informational advantage.

Multi-security merger consideration, preferred share participation, NOL shells, crypto treasury strategies, or activist narratives without proxy mechanics all created situations where the market was not “wrong,” just indifferent.

Examples like TrueBlue and PCS Edventures! Highlight another trap: being early in complex situations often looks identical to being wrong for long stretches.

Meanwhile, my highest-return ideas were easy to explain in one sentence. If an investment requires ongoing explanation to remain attractive, it is probably not mispriced; it is simply complicated.

Bottom Line

In 2025, my results suggest that avoiding low-quality special situations would have improved returns more than finding additional winners. In the future, I intend to be more selective, reserving special-situation exposure for cases where outcomes are forthcoming, not optional, and where there’s still the opportunity for upside, even if the “special situation” or “strategic alternative” does not play out as desired.

DISCLOSURE: As of Publication, the author (Thomas Niel) holds positions in ARKR, BUKS, CPHC, DTIL, GLGI, MAPS, PCSV, RHEP, RHEPZ, SNCR, and TPHS.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from ARKR, BUKS, CPHC, DTIL, GLGI, MAPS, PCSV, RHEP, SNCR, TPHS, or any other entity for writing this article. I have no business relationship with ARKR, BUKS, CPHC, DTIL, GLGI, MAPS, PCSV, RHEP, SNCR, TPHS, or any other company referenced. This article is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading ARKR, BUKS, CPHC, DTIL, GLGI, MAPS, PCSV, RHEP, RHEPZ, SNCR, TPHS, or any other stock discussed in this article. Do your own due diligence, and caveat emptor.

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First things first: I need to give a shoutout to M-SparCapital (@Matt_Kolb_) for first disseminating this idea. M-SparCapital has had some bangers lately, including Yatra Online (YTRA), possibly the one stock I regret not doing a write-up on here at Value Never Sleeps.

Synchronoss is likely a name a lot of you in micro-cap land are likely familiar with; in fact, perhaps, like me, you’ve owned in the past, and were burned, when the company’s initial pivot to its current line of business failed to deliver the sort of “game changer” returns one expects from value-oriented micro-cap ideas.

While trying to avoid saying the cringeworthy phrase “this time, it’s different,” the current situation with Synchcross likely fits the bill for this phrase. With this in mind, let’s dive in, and see why this may be one of the most interesting ideas currently out there among microcaps.

Background

Synchronoss Technologies has been in business since the turn of the 21st century. Originally, the company was a provider of various backend software for telecom companies, moving into cloud software, messaging, and DXP software via acquisitions in the 2010s.

Since the start of this decade, however, Synchronoss has pivoted to being primarily a provider of “Personal Cloud as a Service,” or white-label cloud software to the telecom industry. In 2022 and 2023, respectively, the company sold off its non-cloud businesses.

Alongside streamlining its business, Synchronoss, under the influence of activist investors, has also engaged in improving its capital structure. Previously, the company’s highly-leveraged balance sheet, with high debt servicing costs, served as an albatross on Synchronoss’ neck.

However, in 2024, Synchronoss completed a partial refinancing, enabling it to buy back preferred stock and senior notes that had long served as an overhang on the stock.

Earlier this year, Synchronoss completed a full refinancing, extending the maturity of its outstanding debt, which at the time totaled $200 million. Furthermore, the company experienced a liquidity event that set the stage for a moderate amount of de-leveraging.

In July, the company received a $33.9 million tax refund, in connection with the 2020 CARES act. Syncronoss used $25.4 million of these proceeds to pay down outstanding debt, bringing total debt to $173.4 million. As seen in the company’s latest quarterly earnings release, the company has made further progress with these de-leveraging efforts.

Recent Quarterly Results

On Nov. 4, Synchronoss released earnings for the quarter ending September 30, 2025. During the quarter, revenue came in at $42 million. While down from the prior year’s quarter, 93.8% of it represented quarterly recurring revenue.

Gross profit declined slightly, from $29.9 million (69.6% gross margin) to $29.2 million (69.4% gross margin) Adjusted EBITDA declined slightly as well, from $12.7 million to $12 million.

The company also provided updates to full-year guidance. For 2025, Synchronoss expects revenue of between $169 million and $172 million, 90% of which is expected to be recurring. As for adjusted EBITDA, management provided a range of $50 million to $52 million.

Prior guidance called for full-year adjusted EBITDA of between $52 million and $56 million. Yet while results and guidance were mixed at best, management did provide upbeat commentary for 2026 and beyond.

As CEO and President Jeff Miller noted, “We continue to make meaningful progress with our key customers, including strong subscriber growth at AT&T, implementing new initiatives to accelerate growth at Verizon, and advancing cloud application discovery integrations at SoftBank that position us for expanded subscriber reach.”

Regarding the potential for customer wins, Miller noted “Given the sales cycle in our business and a robust pipeline, we have high confidence in adding at least one new cloud customer in 2025 and a new tier 1 customer in the first half of 2026.”

Valuation

De-leveraging and the reporting of ok results may not be getting SNCR stock much love on Wall Street, but these developments have further increased the stock’s status as a deep value play.

At present, Synchronoss Technologies has a market cap of $55.8 million. Add in $163.2 million in debt, $16.5 million in other long-term liabilities, then subtract the current cash position of $34.8 million, and we get an enterprise value of around $200.7 million.

Based on the aforementioned adjusted EBITDA guidance, this means that SNCR now trades at an EV/EBITDA ratio of around 4x, give or take. Compare that to the valuation of small SaaS companies, and it’s clear these shares remain very undervalued.

The valuation of stocks in this category vary widely, with faster-growing companies of course being valued at EBITDA multiples in the mid-to-high double-digit range. Yet even among some other slower-growing/headwind-laden SaaS companies, including WM Technology (MAPS), a name I’ve written about in the past, SNCR is simply too cheap.

Add in the high degree of leverage, and this is a situation where even a modest re-rating to a 6x EBITDA multiple would result in massive price appreciation. At such levels, the company would be worth around $300 million give or take. Net of debt and long-term liabilities, with the cash position thrown back in, the company would be worth around $155.1 million, or around $14 per share, or 170% above the current stock price.

Potential Catalysts

Further Activist Activity

For years, business development company 180 Degree Capital Management, which recently was merged into Mount Logan Capital (PYCFF), has been an SNCR shareholder, owning 7.7% of the company.

Taking on a behind-the-scenes “constructive activism” role, 180 Capital has been instrumental in guiding SNCR’s de-leveraging efforts, as well as other efforts to increase shareholder value. Yet while one would assume that 180 Degree’s successor may be interested in pursuing further activist activity here, admittedly it’s questionable.

Namely, because, following the 180 Degree/Mount Logan combination, Mount Logan filed a 13G filing for the holdings, suggesting that this entity will take a passive role with its position, or even potentially begin exploring a divestiture of this position.

That could be positive or negative, depending on how you look at it. Perhaps this means Mount Logan will be open to a sale of the company, but it could also mean that it simply sells off its position into the open market, which could place pressure on shares.

Nevertheless, given how undervalued the company is today, further activist activity from other parties is within the realm of possibility. Previously, there was another fairly-well known entity engaged in activist activity with SNCR.

Years back, B. Riley Financial (RILY) was a major shareholder, and even made a bid to acquire the company in 2023. B. Riley has since pared down its stake, and is now below the 5% reporting threshold.

Even if B. Riley doesn’t come back on the scene as an activist and/or as a potential acquirer; other value-oriented institutions may see the opportunity to come in and push for further changes.

Strategic Alternatives

Irrespective of activist activity, the company may decide to put itself up for sale, given its low valuation and improved balance sheet. Private equity may be the most likely acquirer of the company, perhaps as a vehicle to roll-up other white label cloud data companies.

That said, perhaps some strategic acquirers in this industry may be interested in buying Synchronoss as well. Given the high debt position, a would-be buyer may be able to offer a substantial premium to the current stock price, and still get this company at a low valuation.

SNCR Takes Off Organically

A sale of the company may seem like the most logical avenue for Synchronoss to fully unlock value, but a growth resurgence would do the trick as well. If discussion about possible customer acquisitions pan out, this could lead to a significant re-rating for the stock.

Return of Capital

As M-SparCapital has discussed in his postings on SNCR, return of capital may be another possible catalyst for the stock. After the latest debt reduction efforts, the company has more wiggle room to repurchase shares.

Even as Synchronoss’ outstanding debt comes with high interest expenses (SOFR +700bps), given the current valuation of the stock, buying back shares would have a tremendous impact on the per-share underlying value of SNCR.

Risks to Consider

Admittedly, there are some other risk factors with Synchronoss that go beyond the company’s high debt and recent sluggish growth. As a deep-value investing Redditor pointed out in a brief write-up published earlier this year, customer concentration is a key risk.

The company’s largest customers are AT&T and Verizon. They may prefer to use white-label cloud storage from Synchronoss as opposed to buying it from one of the big tech giants that dominate the space, but on the flip-side, the two telecom giants have the leverage to renegotiate their contracts down the road.

Customer losses have also been a factor in this year’s results. As Sidoti & Co. noted in a recent research note on SNCR, the termination of the company’s contract with British Telecom at the end of 2024 has offset growth stemming from subscriber growth among the company’s main customers.

Synchronoss also has some events in its corporate past that may be continuing to negatively affect its reputation, such as alleged accounting improprieties that occurred during the 2010s. Interestingly enough, one of the execs involved in the scandal was famed growth stock analyst Dan Ives, who at that time was the company’s head of IR.

Lastly, while not a risk per se, it’s possible that future re-capitalization efforts are perceived incorrectly by the market. That is, if Synchronoss, in order to complete its de-leveraging, sells newly-issued shares (perhaps to one of its behind-the-scenes activists), investors may initially see this share dilution as bad news, even as doing this could lead to valuation expansion that counters cutting the pie into many more slices.

The Bottom Line

Synchronoss has long been a messy story, but much of the messiness has been cleaned up in recent years. The issue (and opportunity) is that the market has yet to fully. With shares pulling back after earnings, investors are clearly still a “wait and see approach.”

That may not be the case in a few quarters, if the company announces a customer win, renews agreements with its existing major customers, or even if the board decides to pursue strategic alternatives to unlock SNCR’s underlying value.

With this in mind, now may be the time to consider entering a position.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in SNCR.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from SNCR or any other entity for writing this article. I have no business relationship with SNCR, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading SNCR stock. Do your own due diligence, and caveat emptor.

If you are a member of the OTC value investing community, chances are you are not only familiar with Regency Affiliates (RAFI). Chances are, you’ve at one point or another owned shares in this Larchmont, NY-based holding company. Perhaps, back when it was a landlord for one of the best known U.S. Federal Government Agencies.

Today, Regency Affiliates no longer hold this somewhat interesting status. The company does, however, continue to own this piece of not-so-prime property, in addition to another real estate-related cash-generating asset.

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Moreover, it is exploring ways to repurpose its former crown jewel, in a manner that capitalizes on the recent AI data center buildout trend. All bets are off whether Regency is successful with this endeavor, but the question now is whether shares, which have fallen considerably in recent years but have as of late been on an upswing, are worthy of a buy.

Regency Affiliates Background

Regency Affiliates has been around for decades, but the most relevant piece of its corporate history has to do with the past twenty or so years. In the early 2000s, a financier named Laurence Levy took control of the company, then a NOL shell that owned a 50% interest in a large office complex located outside Baltimore, Maryland, known as “Security West,” that was leased to the U.S. Social Security Administration.

In the ensuing decades, Regency has owned various other assets, largely cash-generating infrastructure-type assets like power plants, but Security West was for the longest time the main point of interest among investors in RAFI stock. Back in 2015, Dave Water’s Alluvial Capital was a Regency shareholder, and in a quarterly client letter, detailed the appeal of Security West, including the perceived tenant stability, as well as the potential for Regency and its partner to recapitalize the property when the SSA renewed its lease in 2018, creating a liquidity event.

Ahead of this renewal, in 2017, I myself put together a write-up on RAFI, published on Seeking Alpha. By that time, Regency not only still held Security West, but had recently acquired a portfolio of self-storage facilities, an asset the company continues to own to this day. In the write-up, I discussed the then-upcoming lease renewal, and how it could result in cash-out refinancing of Security West.

In 2018, the SSA did indeed renew its lease on Security West, for an additional 10 years. However, instead of aggressively refinancing the property, in order to pay out a large recapitalization distributed, the entity holding Security West (Security Land) decided to refinance only to the extent to roll over existing debt, pay for capital improvements, and provide a distribution of just $1.2 million to Regency.

Worse yet, a few years later, Security Land found itself to yet another victim of the “office building apocalypse,” aka the rapid rise in remote work after the onset of Covid-19, leading to reduced office building demand.

In 2021, the GSA decided to terminate the SSA’s Security West lease early, effective November 2023. For nearly two years, the property sat vacant, until May 2025, when Security Land demolished the existing building. Security land is “currently investigating and evaluating redevelopment opportunities for the site, which includes the possibility of developing a data center on the site with significant power supply infrastructure.”

Over the past ten years, in light of the disappointing refinancing of Security West in 2018, the vacating of GSA from said facility in 2023, it’s no surprise that RAFI stock has performed poorly, losing nearly 60% of its value. However, in more recent months, shares have bounced back from multi-decade lows, in light of the data center development plans, plus Regency’s decision to suspend its dividend, to conserve cash as well as to pivot towards using stock buybacks as the preferred means of returning capital to shareholders.

Current and Potential Value

To assess the potential value opportunity at hand with Regency Affiliates, let’s take a look at the balance sheet, to determine this company’s current underlying value.

Cash and Short-Term Investments

Per RAFI’s latest quarterly financials, as of 6/30/2025, the company had $378,553 in cash, plus around $4.7 million in short-term investments, giving it a total of around $5.1 million in this category.

Security West

Regency Affiliates owns a 50% interest in Security Land, the limited partnership that owns the Security West property. As mentioned earlier, the old Security West building previously leased to the SSA has been demolished, and the partnership is looking to position the property, consisting of 34.3 acres of land located in Woodlawn, Maryland, just west of Baltimore, Maryland.

It should also be noted that, per a May 2025 amendment to the partnership agreement, the general partner of Security Land is now entitled to 20% of any sale proceeds exceeding $27 million, and 30% of any proceeds above $67.5 million, subject to a priority return of 8% per annum for the limited partners. RAFI owns 5% of the general partner, so some, but pretty much a de minimis amount, of the carried interest would come back to the company.

To value this land parcel, I took a look at available commercial and industrial land properties currently listed for sale on Loopnet,located within a 5 mile radius of Woodlawn, MD. Some of these parcels are selling for around $1 million per acre, while others are something closer to $100,000 per acre.

Given how this used to be the site of a large commercial building, I’m leaning towards the high end of this range, or $1 million per acre. This suggests a value of around $34.3 million. Taking the GP’s carried interest into account, the GP would receive $1.46 million from the sale, leaving $32.8 million for Regency and the other 50% LP to split, or around $16.4 million.

Harrisburg Holdings (Self Storage Properties)

In 2016, Regency Affiliates purchased an 80% interest in an entity set up to acquire a portfolio of self-storage facilities in the Harrisburg, PA area). In 2024, Regency bought out its minority partners, making the self-storage properties a wholly-owned asset.

During the six months ending 6/30/25, the properties generated $2.45 million in revenue, and had operating expenses and depreciation of $822,520 and $401,815, respectively. Ignoring the depreciation, we get operating income of around $1.6 million. On an annualized basis, this comes out to $3.2 million.

Based on cap rates on self-storage properties currently for sale in the northeastern U.S., I believe that an 8% cap rate on these properties is reasonable; this suggests a value of around $40 million.

Per the balance sheet, net mortgage payable on these properties is $23.2 million. Alongside the mortgage, Regency Affiliates has on the parent company level a $4.9 million loan payable, related to last year’s buyout of the minority shareholders. Net of both these figures, the net value of the Harrisburg properties is around $11.9 million.

Putting it All Together

Taking $4.7 million for the liquid assets, $16.4 million for Regency’s LP interest in Security Land, then $11.9 million for the storage properties, we get a valuation of $33 million, or around $7.36 per share. That’s around 55% above the current RAFI stock price.

The Caveats (there are many)

Before you rush into Regency Affiliates stock, there are many caveats to keep in mind. For one, much of this potential upside is contingent on the sale of the Security West land parcel. While the AI data center building boom is in full swing, it could take years for such a buyer to emerge for this property.

Even finding a developer to buy this parcel for other purposes, like to build multifamily housing, an industrial park, or maybe even a new, modernized office complex, may be more aggressive in lowering the sale price of the parcel. Who knows? Perhaps, instead of selling to a developer, maybe Security Lands swaps land in exchange for an interest in a partnership that develops the land.

That could be more profitable for Regency in the long-run, but participating in the development could prove costly/keep a key asset frozen for many more years. Beyond uncertainty over when the parcel is sold, it’s highly uncertain what Regency Affiliates would do with its Security West sale proceeds.

Regency could return the capital to shareholders via a buyback or special dividend, but who’s to say Laurence Levy doesn’t have plans for a new investment?

Furthermore, as it’s been common to note, in criticism about this company and the stock, G&A expenses are relatively high. Last year, G&A came out to $1.67 million, and in the past six months alone, G&A has totaled over $1.1 million.

Then again, who’s to tell Laurence Levy otherwise? Levy, directly and via his privately-held Royalty Holdings investment vehicle, owns 60.7% of the company’s outstanding shares. This controlled company status, coupled with the high overhead is key to why RAFI has, and will likely continue, trade at a discount.

The Bottom Line on RAFI Stock

On top of uncertainty surrounding the bull case playing out for RAFI within a reasonable time frame, there’s also the matter of liquidity with this name. RAFI is not very liquid, and typically has a high bid/ask spread.

Currently, this bid/ask spread sits at $4.21/$4.75 per share. To accumulate a position, you’d likely have to pay $4.75, maybe even $5 per share. With this, potential upside is likely narrower than the amount I projected above.

Regency Affiliates is interesting food for thought, in terms of what micro-cap companies can do to make lemons out of lemonade. Yet while the company may be working on a creative way to repurpose this former crown jewel asset, consider it best to look elsewhere.

I’ve owned RAFI stock in the past, but sold it years back, and have no intention of buying in near-term. That said, if hype surrounding an AI data center developer sale pushes shares dramatically lower, perhaps back to the sub-$3 per share prices the stock hit earlier this year, I may reconsider my view.

DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from RAFI or any other entity for writing this article. I have no business relationship with RAFI, or any other company referenced. This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading RAFI stock. Do your own due diligence, and caveat emptor.

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Share Value Never Sleeps

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Some of my fellow Substack publishers have beaten me to the chase, but now seems like a great time to publish a follow-up piece on Butler National Corporation (BUKS), an aerospace and casino holding company that’s finally started to “make it,” in terms of being appreciated by the market.

Over the past month, BUKS has taken flight yet again, rising from around $1.50 per share, to at one point this week hitting nearly $2.50 per share. As of this writing, the stock is pulling back yet again, but there may be good reason not to assume the latest rally will be short-lived.

Although shares could experience some volatility in the near-term, shares could find support in the $1.75 to $2.00 range, establishing a new floor, before cruising to even higher altitudes, as the new management team further establishes this company as an aerospace pure play, not to mention makes other moves that enable this stock to reach prices fully reflective of its underlying value.

BUKS Stock: Recap and Recent Earnings

As discussed in my March and July write-ups on Butler National, here is the bull case for the stock in a nutshell:

• Management changes, alongside improved results for Butler’s two main businesses (aerospace and gaming), have resulted in major price appreciation for BUKS.

• Still, shares remain undervalued when compared to aerospace and gaming peers.

• However, management appears to be pivoting towards making BUKS an aerospace pure play, although concrete plans to sell/spin off the casino business have yet to be revealed.

• In time, if the casino is jettisoned, and the aerospace business continues to be firing at all cylinders, shares are poised to experience a further re-rating.

While shares didn’t exactly take off following my write-up, following the company’s release of its latest quarterly results in September, the company appears to be making progress in terms of living up to the aforementioned bull case.

During Butler’s Q1 FY26 (quarter ending July 31, 2025), the Aerospace Products unit reported another solid quarter, with revenue and operating income up 7% and 105%, respectively, year-over-year.

Butler’s “Professional Services” unit, i.e. the Boot Hill Casino in Dodge City, KS, reported declining results, with sales falling 5% YoY, and operating income falling 16% YoY.

Clearly, the market’s current bearishness about the casino industry is warranted. Whether Vegas-style destination resorts, or local joints like Boot Hill, macro challenges are clearly impacting discretionary income of households, in turn affecting gaming demand.

Combined, operating income rose 32% YoY, from $3.5 million to around $4.7 million. Net income increased by 64%, from $2.2 million to $3.7 million. Thanks to share repurchases over the past year, EPS was up by an even higher figure, surging 100%, from 3 cents to 6 cents per share.

With stronger results from Aerospace outweighing weakness with the Professional Services segment, it’s no wonder that shares have been performing strongly since the earnings release.

Better yet, a few weeks after earnings, Butler National held its annual shareholder meeting, presenting at said meeting an investor presentation that included other promising information about the company and its future prospects.

Key Takeaways From Investor Presentation

Butler National’s Oct 1, 2025 Investor Presentation may be one of the most shareholder-friendly of such presentations I’ve ever seen. Yes, that may sound like an exaggeration, but taking a closer look, it’ll be hard to disagree with me.

Yes, at first, the presentation seems like your boilerplate slide deck from Investor Relations. The slides discuss the current management team/board of directors, the corporate structure, as well as provide financials for the preceding fiscal year.

This report also provides an updated backlog figure for Butler National. As of Aug. 30, 2025, Butler’s contract backlog totaled around $52.9 million. Quite stunning, given that figure was at only $33.6 million at the end of the fiscal year (April 30, 2025).

Regarding “most shareholder-friendly presentation ever,” all one needs to do is look at the last section of the presentation, “Common Shareholder Questions.”

Here are some of the answered questions:

What is the Board doing to improve overall corporate governance?

• With longtime independent shareholder Joseph Daly leading the governance and nominating committee, Butler has implemented several policies to strengthen this area.

• The company now has stock ownership guidelines for directors, along with a director retirement age of 75.

• Butler National has also removed prior policies that entrenched management, including its past “poison pill” shareholder rights plan.

Why does Butler National not uplist to a larger exchange?

• Butler explained how the company needs to complete certain government governance changes to achieve uplisting, but appears to be pursuing this down the road.

• Sustaining a $2+ stock price, preferably a $4+ stock price, also appears to be a necessary component. I would presume BUKS’ aggressive share repurchases, besides being a means to return capital to investors, are also helping the company eventually achieve an uplisting.

What is the Corporation doing with its generated cash

Again, Butler notes how its aggressively buying back stock. Since 4/30/25, BUKS has bought back around 2.9 million outstanding shares.

[Is Butler] going to spin-off/sell Boot Hill?

• Butler’s responses to this question indicate that a spin-off/sell off of Boot Hill may not be imminent.

• The company is working with a local hotelier to build a Best Western-branded hotel adjacent to the casino, with an estimated completion date in FY2027.

• Butler also appears to see owning the casino as beneficial as a cash cow for financing buybacks, as well as acquisitions/growth for the aerospace business.

Alongside these most pertinent questions, Butler also disclosed in this section how it plans to hold its first quarterly earnings call in years within the next few months. In mid-December, BUKS will hold a call for its Q2 FY 2026 (quarter ending Oct. 31, 2025) results.

In the Q&A section, Butler also discussed how it plans to focus on growing its aircraft modification business over its other aerospace businesses in the near-term.

Valuation

With the latest financials, not to mention further details about current corporate strategy, in our hands, let’s do a new assessment of Butler National’s underlying value.

Once again, I’ll do a “sum of the parts” analysis for BUKS. Based on the investor presentation, the company appears likely to hold onto Boot Hill for now.

Gaming

Previously, I discussed how Boot Hill generated annual EBITDA of around $14.1 million last fiscal year. This fiscal year, however, I believe it’s right to be more conservative, in estimating the profitability of this segment.

Last quarter, operating income came in at around $1.8 million. Add in depreciation and interest expense, and we get an EBITDA figure of just under $3 million. Annualized, that’s around $12 million in EBITDA.

Unlike before, when I valued this property, I used a 10x multiple. In light of current sentiment in the gaming space, this may be too high of a valuation. This time, it may be right to go with a 7x-8x multiple for this business, or 7.5x to meet halfway. At this multiple, the casino is worth around $90 million.

Aerospace

Taking operating income for the past quarter, and adding back depreciation and interest, we get an estimated EBITDA of $3.9 million for the last quarter, Annualized, this works out to $15.6 million. Previously, I valued this segment at 9x EBITDA.

Howevr, given the recent strong backlog growth, there may be even more reason than before to value BUKS’s aerospace business on par with small and micro-cap competitors like Optex Systems Holdings (NASDAQ:OPXS) and Innovative Solutions and Support (NASDAQ:ISSC). OPXS and ISSC are currently valued at 13.1x and 11.8x EBITDA, respectively.

Again, we’ll be conservative, and just value Butler’s Aerospace segment at 10x EBITDA. That gives us a valuation of $156 million for this business unit.

Putting it All Together

$90 million for the casino and $156 million for Aerospace gets us to around $246 million for the operating business. Coincidentally, this is the same total figure I calculated previously, with a higher valuation for Boot Hill, and a lower valuation for Aerospace.

Still, while operating assets may be worth as much as they were back in July, there have been some other changes. Butler’s cash position has continued to zoom higher. As of July 30, 2025, it stood at $33.4 million.

Add that figure to the $246 million, then subtract total debt/lease liabilities of $37.9 million, and we get a net value of around $241.5 million. However, following the share repurchases, outstanding shares have continued to come down. Per the investment presentation, there are now just 64.45 million outstanding shares.

Hence, on a per-share basis, BUKS’s underlying value may be around $3.75 per share, or around 57.5% above the current stock price.

Risks/Concerns

As Unfair Advantage wrote in his post-earnings write-up on BUKS, a key issue to consider with this company is the sustainability of its aerospace-related growth, given how much of it hinges on continued high spare parts demand for legacy military aviation.

Achieving full value for the stock also hinges highly on the casino business eventually being sold. That said, I have warmed up to management’s game plan to hold onto the property for now, given its cash flow as well as potential upside with the hotel buildout. Butler may not directly benefit from the hotel, but it may help boost gaming foot traffic/revenue for Boot Hill.

The Bottom Line

xxIf you already own BUKS, I don’t see why now would be the time to sell. Action/progress may take time, but it appears that management is focusing on maximizing Butler National’s value, and will continue to pursue whatever it takes to do so.

Whether that means continuing to organically grow/grow by acquisition the aviation business, shore up corporate governance for an eventual uplisting, position the casino property for sale, or other types of changes, I am confident Butler’s board and management will stay the course, and that shares will catch up to underlying value further over time.

Right now, that figure is around $3.75 per share, but after further rounds of buybacks and asset divestitures, this figure could continue to grow. In terms of entering a position, I believe the opportunity to do so, at prices slightly below present levels, could present itself between now and the end of November, ahead of the planned December earnings release/conference call.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in BUKS.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from BUKS or any other entity for writing this article. I have no business relationship with BUKS, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading BUKS stock. Do your own due diligence, and caveat emptor.

A few months back, I wrote on Seeking Alpha a write-up on TrueBlue (TBI), a staffing firm that had rejected a takeover offer from competitor HireQuest (HQI), opting to “go it alone” when it came to riding out the current downturn in the industry.

At the time, I argued that there was merit in holding onto TBI stock as a turnaround play, but warned that shares, which had moved higher on the HireQuest offer, were at risk of coughing back then-recent gains. Flash forward to now, and TBI stock has more-or-less held steady at where shares were following the HireQuest offer.

However, there may be a new reason to consider the stock. Last month, a private investor made a public appeal to TrueBlue’s board, calling out past poor performance, as well as laying out a concrete plan to turn around the company.

Only time will tell whether this activist will prevail, but if there’s progress with this recent development, who knows: this could turn into a Pitney Bowes (PBI) type of situation, in terms of an activist-led turnaround leading to significant gains for shares.

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TBI Stock: Background and Recent Performance

In my initial write-up on TBI stock, I argued that the company, best known for its PeopleReady temporary labor services business, had a strong chance of success with its approach to riding out the current labor market downturn.

Not only that, there was also the optionality of TBI potentially selling its core business to HireQuest, in lieu of the merger offer. Such a transaction would provide the company with a massive capital infusion, enabling it to bulk up its other, higher-margin businesses (healthcare staffing, outsourced recruiting).

In terms of the “go it alone” approach, I argued that while it may take a few years for the staffing business to get back to more favorable market conditions, the potential upside for shares was substantial, with the stock possibly rising back to the mid-teens per share.

So far, it’s tough to say management’s gameplan is a winning one. In TBI’s latest quarterly earnings release, revenue growth was flat year-over-year, but this was including revenue from the recently-closed acquisition of Healthcare Staffing Professionals (HSP) in January .

Adjusted EBITDA improved, but just marginally, rising from $1 million in the prior year’s quarter, to $3 million. All of this suggests that improved results remain a work-in-progress, and that more aggressive efforts are likely necessary.

Shareholder Activist Calls Out Past Mistakes, Current Strategy

On Sep. 23, Eric Su, a private investor operating through an entity known as EHS Investments, issued a press release containing a letter written to TrueBlue’s board, outlining a myriad of concerns about the company’s past mistakes and current game plan to ride out the staffing industry downturn.

In the letter, Su called out how TrueBlue’s M&A strategy, including the recent HSP purchase, have not been good for shareholders. TrueBlue has spent nearly $490 million on acquisitions over the past twelve years, but EBITDA today is less than 1/6th of what it was when this acquisition spree began.

Su also criticized the company’s poor timing of share repurchases, as well as leadership’s lack of “on the ground” presence in the main markets where the company provides labor staffing services. For example, while headquartered in Washington, large states like California, Florida, and Texas are where the company’s presence is largest. Not only that, TrueBlue’s C-suite operates remotely, with the CEO working out of Kansas, and the CFO out of Chicago!

Alongside this criticism, Su has also provided an alternative turnaround plan for the company, further fleshed out in a PowerPoint presentation made available on the EHS Investments website.

How Su’s Transformation Plan Could Turn TrueBlue Around

It should be noted that Su may not necessarily be a run-of-the-hill activist investor, pushing for changes here in a general sort of way. Previously the head of M&A at IAC/InterActiveCorp, Su’s resume includes stints at Marcato Capital Management and Evercore partners.

Most relevant to how he could become the catalyst TBI investors have been waiting for, Su has also been directly involved with the staffing industry. From 2023 to 2025, he served on the board of Employbridge, a provider of supply chain and light industrial staffing, just like TrueBlue’s PeopleReady unit.

Hence, I wouldn’t view this as a situation where an activist is going to make a lot of noise, rattle a few cages, but not actually provide a concrete way to maximize the value of this business. With this, I find his turnaround, proposed in the “Transforming TrueBlue” presentation, to be very promising.

In the presentation, Su first presents the value proposition inherent with TBI stock. At current prices, shares trade for less than tangible book, and at just ~2-3x its historical average annual free cash flow. Other factors, including HireQuest’s takeover attempt earlier this year, further underscore its value, as does the current macro “reshoring” trend.

Su also points out another interesting bit of “hidden value,” which I will discuss later. After establishing the value opportunity at hand, Su goes into how poor corporate governance has “exacerbated” cyclical industry challenges, again underscoring how outside shareholders need to take on the responsibility of changing TrueBlue’s future destiny.

Throughout the bulk of the 78-page report, Su goes into exhaustive detail about TrueBlue’s various strengths and weaknesses, as well as current management’s past failures, and how these have manifested in the form of weak results and missed opportunities.

In the last third or so of the presentation, Su lays out his turnaround plan, which would entail a sales force reorganization, increased investment in the company’s brick and mortar branch network (Su believes the digital app should complement, not replace, the branch network), as well as a possible shift toward a franchise-based model similar to that of HireQuest. Per the presentation, franchising could lead to an incremental improvement in annual EBITDA totaling $57 million.

Su’s turnaround also calls for a geographic realignment, shifting operations toward states best positioned to experience growing demand for light industrial labor. The plan also discusses how TrueBlue needs to pursue cost-cutting measures, in order to get EBITDA margins back to at least historic trough margins (around 2%-3%).

So, how much could this turnaround plan, if implemented and executed correctly, impact TBI’s share price? First, let’s take a look at TrueBlue’s current valuation.

Substantial Upside Potential, if Activist Catalyst Further Plays Out

TrueBlue currently has a market cap of $181.2 million. Add in debt and lease liabilities ($110.1 million), and back out cash ($21.9 million), and TBI’s current enterprise value is around $269.4 million.

Compared to current results, TBI stock may not appear cheap, but again this is all about the turnaround potential and/or potential for TBI to get acquired by a strategic competitor. As mentioned earlier, shares trade at a discount to book, over 40% in terms of regular book value, and 25% in terms of tangible book.

That’s not all. Like I said earlier, there is a considerable piece of “hidden value” here on the balance sheet, highlighted in Su’s presentation. Like other staffing companies, TrueBlue keeps in reserve liquid assets that are used to secure workers’ comp coverage from insurers. In the past, asset coverage of reserve liabilities averaged 104%, but in more recent years, this has jumped to around 127%.

If TrueBlue were to rebalance this, releasing collateral to bring this ratio down to 110%, slightly above historic levels, this would free up $19 million in cash. Not a bad chunk of change compared to TBI’s market cap. Furthermore, we could consider this figure to be additional upside for when we calculate the company’s post turnaround upside value.

Circling back to current and potential future valuation, at today’s prices, in the company’s “as-is” condition, TBI shares are likely undervalued, perhaps by a figure akin to the aforementioned discounts to regular book and tangible book.

In terms of upside/future valuation, the sky may be the limit. At last, based on the turnaround plan proposed by Su in the investor presentation. For instance, per Su, if his plan were to be successfully executed, annual adjusted EBITDA could hit $70 million by 2027, then onto $164 million in 2028, $173 million in 2029, and $182 million by 2030.

In such a scenario, TBI’s EPS would hit $4.75 per share in five years time, an achievement that would undoubtedly result in this stock trading for at least ten times what it trades for today. Even if a turnaround merely helped TrueBlue re-hit past levels of profitability, that would still likely lead to massive upside compared to the current stock price.

For instance, let’s say TrueBlue gets back to around $100 million in annual EBITDA by 2030. Using a conservative 7x multiple, this would result in the company having an enterprise value of around $700 million. Subtract debt/lease liabilities, add back cash, then add in the $19 million in excess workers comp collateral, and we get a valuation of around $630.8 million, or around $21 per share, nearly 3.5x what share trade for today.

Thinking of a far shorter timeline, if TBI achieves partial turnaround success within two years, aka annual EBITDA of $70 million, that gives us a $490 million estimated enterprise value (at 7x EBITDA multiple). Adjust again for debt/lease liabilities, cash, and excess workers comp collateral, and net value comes out to $420.8 million, or around $14 per share, around 132% above the current stock price.

Potential Challenges to the Activist Catalyst

So far, Eric Su has acquired just 2.8% of TBI’s outstanding shares. It’s unclear if he is going to increase this position to 13D reporting level, but the fact that the public-facing activism has already begun calls this into question.

Unless Su makes headway convincing the board to implement some of his proposed plans, or if they decide to add him to the board, further success with the activism catalyst may require another activist investor to enter a position.

Right now, several small/micro-cap focused funds, including funds managed by Azarias Capital Management, Pzena Investment Management, and Royce & Associates, are 5%+ shareholders in the company, but each of these entities has disclosed them as passive 13G positions.

TrueBlue also implemented a “shareholder rights plan” aka a poison pill, in response to the HireQuest offer back in May. This could complicate any effort from another activist/investor group to build up a 15%+ position in the company.

Still, that may not stop another activist fund from acquiring a 10% stake, possibly partnering with Su to launch a more substantial activist campaign. In terms of other positives pointing to success with shareholder activism, it should be noted that TrueBlue does not have a staggered board, all nine directors are up for re-election annually.

As Su pointed out in his turnaround slide deck, at the last shareholder meeting in May, 10.3% of shareholders voted against the incumbent slate last year. SEC filings corroborate this.

Other Risks to Consider

There may be multiple issues with TrueBlue that could be resolved with the implementation of a new corporate strategy, but the underlying cause of the company’s current financial underperformance remains largely outside of anyone’s control.

That is, a turnaround hinges highly on U.S. labor demand improving. Beyond whether this happens sooner rather than later, in the interim companies like TrueBlue are likely to experience further challenges with profitability.

Since 2024, TrueBlue has been burning through cash, in the past twelve months alone, operating cash burn has totaled $34.9 million. While perhaps TrueBlue will reduce its workers comp collateral, instead of this cash going back to shareholders, the company may end up having to use this money to offset operating losses.

Unless the activist catalyst gains momentum and/or TrueBlue receives/accepts a new offer from HireQuest, negatively could weigh further on shares, possibly sending them back to lower prices. Over the past twelve months, TBI stock has traded for as low as $3.45 per share.

Bottom Line

It may be too early to say this,but I believe TrueBlue to having the makings of a Pitney Bowes-style activist-led turnaround success story. If Eric Su and/or another activist ups the ante, either negotiating for some board seats, or successfully gaining them via a proxy fight, the destiny of this moribund company could be improved for the better.

Whether through asset sales, cost cutting, and/or other measures, much like PBI stock, TBI stock could rise considerably, as opportunities are capitalized upon, and underlying value is unlocked. Due to these factors, I’m long the stock, and am interested in increasing this position, if the possible activist catalyst develops further.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held a position in TBI.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from TBI or any other entity for writing this article. I have no business relationship with TBI, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading TBI stock. Do your own due diligence, and caveat emptor.

Canterbury Park Holding Corporation (CPHC) is both a stock I’ve held for many years, as well as a stock I’ve written about on other platforms in the recent past. Back in 2020, at the height of Covid-19 lockdowns, I argued in a Seeking Alpha write-up how CPHC stock, then trading for around $13 per share, was worth substantially more, given the value of the horse race venue owner’s excess land holdings, which were in the early stages of redevelopment.

Over the next two years, CPHC made major progress either selling off excess land, or swapping it for equity interests in a smattering of real estate developments. This, coupled with a post-pandemic rebound for the company’s operating business, resulted in a rapid rally for the stock, with CPHC briefly trading for prices north of $30 per share during early 2022.

Since then, however, shares have made a serious reversal, coughing back nearly of these gains. Trading for around $16.50 per share today, despite the steep drop, at first this re-valuation by the market may make sense, due to changes in the performance of the operating business.

However, taking a closer look, it’s clear that CPHC represents decent value at present prices, and there may be the opportunity for history to repeat itself. With this, let’s get back to the races!

Canterbury Park Holding Corporation: Background

The history of Canterbury Park goes back only to the 1980s, when Minnesota legalized parimutuel wagering. Shortly after this, in 1985, Canterbury Downs open in Shakopee, Minnesota, a Twin Cities suburb. Like many horse racing venues built decades after the sport’s peak in popularity, Canterbury floundered, changed hands, and at one point went bankrupt.

However, in 1994, a group of investors, including Chairman and CEO Randall Sampson, acquired the track, renaming it Canterbury Park. In the 1990s, many floundering racetrack became profitable gaming enterprises overnight, with the legalization of casino-style gambling at such facilities.

But while many marginal tracks across the country became cash cows going the “racino” route, Canterbury was not one of them, technically. The dominance of Native American tribal casinos in Minnesota, has, and continues to, stymie the ability of race tracks in Minnesota to add slot machines.

That said, in 1999, legislative changes enabled the company to add a poker room to this facility. In that way, Canterbury became similar to the card-room horse and greyhound tracks that are littered around Florida. Then, eventually, Canterbury was authorized to allow other forms of non-slots gaming, namely “player banked” card games, similar to what the poker room “casinos” of California, particularly in Southern California, offer.

With this, Canterbury Park, which would undoubtedly have stayed unprofitable if it only offered live horse racing and simulcasting, became a consistently-profitable enterprise. Until the 2010s, the company continued to lobby for the ability to have slot machines, but ultimately gave up this fight in 2012.

That’s when the Shakopee Mdewakanton Sioux Community, who just happen to operate Mystic Lake, Minnesota’s premier Native American tribal casino, offered to basically subsidize the company’s horse racing operations, by providing $75 million over the next decade to juice up horse racing purses.

Higher horse racing purses attract higher-quality thoroughbreds, which in turn helps to increase horse racing handle, not just locally but from race fans betting on the races from simulcast facilities or advance deposit wagering (ADW) platforms like TVG or Twinspires.

The juiced-up purses, coupled with marketing funds the tribe also provided, indirectly boosted track attendance as well. In turn, this likely enabled the company to generate more revenues, from these track guests partaking in the facility’s poker and “player banked” card games.

Still, while Canterbury had in its hands a profitable operation, there was more value to unlock: the company’s excess land holdings. For years, many value investors salivated about the potential to turn this raw land into mixed use real estate development.

However, this “potential” did little to excite investors. For well over a decade, CPHC stock was dead money, languishing between around $10 and $13 per share. In 2018, the company received the regulatory green light to launch its “Canterbury Commons” mixed use development, set to transform 140 acres surrounding the track into apartment buildings, houses, office buildings, retail, and other forms of commercial real estate.

In 2018 and 2019, Canterbury got the ball rolling, forming partnerships with a local developer, Doran Companies, for the construction of multifamily buildings. Phase one of this development, known as The Triple Crown Residences at Canterbury Park, was completed in 2020, while phase two was completed in 2024.

After this, Canterbury entered a separate partnership with another developer, Greystone, for the construction of commercial buildings. Since 2021, this has included the building of an office building, retail buildings, as well as a senior living facility.

Canterbury Park formed some other partnerships, but also sold off raw land to separate developers, for the purpose of building single-family homes, as well as for construction of an amphitheater.

Even after this spate of real estate development, Canterbury Park owns acres more of land approved for redevelopment. Still, this success couldn’t prevent the stock from taking a bad turn starting three years back.

Why CPHC Has Entered a Slump

Starting in 2023, Canterbury Park’s subsidies from the Shakopee Mdewakanton Sioux Community came to an end. With this, the financial performance of the company’s race track and other gaming operations has weakened.

For instance, while Canterbury Park’s adjusted EBITDA (EBITDA net of any development-related gains and losses) came in at $13.4 million in 2021, by 2024 this figure had fallen to $10.2 million.

Worse yet, as seen in CPHC’s latest quarterly earnings, the company’s operating business reported EBITDA of just $3.8 million for the first half of 2025, suggesting a further decline in annual EBITDA this year.

At the same time, the opaqueness of Canterbury’s real estate investments, which have produced equity-method losses, have also made investors/analysts question whether this remains a bona fide “hidden value” asset play.

To be fair, it’s not as if Canterbury has failed to pursue efforts to grow the gaming side of the business. In 2021, the company proposed the development of a racino in Kimball, Nebraska. Unfortunately, these plans went nowhere. Then, there’s Canterbury’s efforts to capitalize on the sports betting legalization wave.

Minnesota has still yet to legalize sports gambling. Similar to what has played out in major tribal gaming jurisdictions like California, the Native American tribes argue that under their gaming compacts with the state, that they should have exclusivity for sportsbook licensing.

Canterbury and its harness-racing counterpart, Running Aces, have attempted to grab their piece of the pie, whether through lobbying to be included as potential licensees, or at the very least become the recipients of some sort of carve-out from sportsbook revenue that could be applied to gin up race track purses. So far, these efforts have also gone nowhere.

Previously, Canterbury also tried to get what are known as “historical horse racing” machines, which are basically slot-type gaming machines that use historical horse racing rather than random number generators to determine winning spins.

Putting it bluntly, the lobbying power of the Native American tribes put the kibosh on these plans, with Minnesota legislators making them illegal in 2024. To add insult to injury, elected officials of the Land of 10,000 Lakes also made it so the state’s racing commission cannot expand the types of gaming that race tracks are able to offer.

In short, Canterbury Park is essentially stuck being a slot-less racino, and without subsidies for its racing purses, will likely continue to operate less profitably than it did in the past.

Nevertheless, while CPHC has lost its luster among existing investors over the past few years, for new investors, this may work in your favor. The stock once again trades at a big discount to its underlying value, and while the situation hasn’t played out exactly as planned, it’s not as if this is a Tejon Ranch (TRC) style “dead money” investment.

Valuation: A Treasure Trove of Land, Buildings, and Operating Assets

Currently, Canterbury Park Holding Corporation has a market cap of around $83.9 million. Outstanding debt/lease liabilities are negligible, at just $150,000. In terms of cash, the company has $12.4 million in cash and cash equivalents, $5.9 million in restricted cash, and $4.5 million in short-term investments.

Assuming that the $5.9 million in restricted cash is necessary for operations, we will use only the cash/cash equivalents to determine enterprise value. Adding the debt, and backing out this $12.4 million figure, we get an enterprise value of around $71.7 million.

To value CHPC, I’m going to do a bit of a “sum of the parts” analysis, adding up the value of Canterbury’s operating and non-operating assets. First, we will start with Canterbury Park’s operating asset.

Canterbury Park

As mentioned earlier, CPHC’s operating performance has worsened so far this year, with adjusted EBITDA during Q2 2025 coming in at just $1.87 million, and adjusted EBITDA for the six month period ending 6/30/25 coming in at $3.8 million, down 32.2% from the prior year.

Annualizing CPHC’s 1H 2025 EBITDA figure, it may be reasonable to say that the company’s operating business will report annual EBITDA of $7.6 million. Admittedly, it’s unclear whether the latest drop in profitability is only temporary, the product of decreased betting volumes due to the current macro environment.

To be conservative, let’s assume that current annualized figures are the “new normal” in terms of the profitability of Canterbury Park’s parimutuel and casino gaming operations. In terms of valuing this operating asset, let’s explore both the prospect of Canterbury Park eventually be sold with its physical property included, as well as the prospect of it being sold in an “opco/propco” transaction, where the physical real estate of the facility is sold to a casino REIT or another type of financial buyer, in a sale/leaseback-style transaction. The operating business, with its profitability now adjusted for the rents paid to the propco, is sold to a gaming company.

Right now, small and micro-cap sized casino company valuations range widely. Names like Golden Entertainment (GDEN) and Monarch (MCRI), which both still own most of their physical real estate, trade at EV/EBITDA ratios in the 8-10 range, but many of the small gaming companies with less stellar growth prospects, like slot route operator Accel Entertainment (ACEL), trade at slightly lower multiples.

I believe a 7.5x multiple for CPHC’s operating business, if operations and property were kept together, is a reasonable valuation. Based on the aforementioned annualized EBITDA figure, that gives us a price of around $57 million. At that price, perhaps a strategic buyer, maybe one with deeper pockets, could buy the property, eliminate corporate overhead expenses, then spend heavily to lobby Minnesota for greater gaming opportunities.

Also, who knows? Much like how many casinos and race tracks have been sold to Native American tribal gaming entities, perhaps the Shakopee Mdewakanton Sioux Community would buy Canterbury, realize some cost synergies, as well as smooth over any issues between them and the Minnesota horsemen community.

That said, CHPC could also go with the “opco”/”propco” option, if it ever decides to sell the casino/racetrack. With both the developed land parcels as well as land held for future development separated from “Land, buildings, and equipment, net” on the balance sheet, we can use this category as a proxy for the value of the main operating real estate.

Currently, “land, buildings, and equipment, net” comes out to around $52 million. However, a more realistic valuation could be much less.

Looking at recent casino sale/leaseback deals, such as the December 2024 sale/leaseback of two casinos owned by Bally’s (BALY) to Gaming and Leisure Properties (GLPI), the going sale/leaseback cap rate seems to be in the 8%-8.5% range, with total rent coverage of 2.2x.

In other words, a sale/leaseback would have to be priced in a way where the “opco” wasn’t spending so much on a triple-net lease, that nearly all of EBITDAR was going towards the “propco” lease payments. Taking the rent coverage figure, and applying it to CPHC’s adjusted EBITDA, we get around $3.5 million in base rent this property could realistically pay to a casino REIT owner.

Applying an 8.5% cap rate to this figure, we get a valuation of around $41 million for the “propco” portion. As for the “opco,” while publicly-traded gaming companies that have sold/leased back their properties seem to trade at fairly high multiples, I don’t see the Canterbury Park “opco” selling at such a rich valuation. Rather, a deal similar to this 2022 transaction, where the “opco” was sold for around 5x EBITDA, may be a more realistic deal figure.

With the “ocpo” estimated to have an annual EBITDA of $4.1 million after accounting for master lease payments, this suggests a valuation of around $20.5 million. Together, this makes the “opco”/”propco” value of CPHC’s operating assets around $61.5 million. Given how the other valuation calculation gave us a value in the high-$50 millions, let’s split the difference, and say that the casino/racetrack would fetch $60 million, no matter what manner sold.

Short-Term Investments

Per the latest 10-Q filing, Canterbury Park has $4.5 million in short-term investments. We’ll assume these can be sold at book value.

TIF Receivable

Besides the land, another interesting “hidden asset” of CPHC is the company’s Tax Increment Financing (TIF) Receivables. Back in 2018, when the City of Shakopee approved the development plans, part of the deal was that CPHC, not the local government, would front the cost of required infrastructure improvements.

In exchange, the local government would pay CPHC back, with interest, via future tax revenues from the Canterbury Commons master-planned community. Per CPHC financial filings, “The Company expects to substantially complete the remaining developer improvements by July 17, 2027 and will be reimbursed for costs of the developer improvements incurred by no later than July 17, 2027. The total amount of funding that the Company will be paid as reimbursement under the TIF program for these improvements is not guaranteed, however, and will depend in part on future tax revenues generated from the developed property.”

However, Canterbury Park is confident it will be paid in full, and thus has never applied a loss allowance against this asset. Moreover, as management noted in the Q2 2025 earnings press release, the first repayments for these receivables are expected to arrive starting in the fourth quarter of this year.

On the verge of getting repaid, we’ll value the TIF receivable at book value, or $19.8 million as of June 30, 2025.

Related Party Receivable

As part of its development joint ventures, Canterbury Park has made member loans to these vehicles. These currently total $5.1 million, and will be repaid once as the various developments reach positive operating cash flow.

Redevelopment Joint Ventures

Now we get to the most interesting, and the most complex, element of CPHC’s balance sheet. These joint ventures, classified as “equity investments” on the Canterbury’s balance sheet, consist of the following:

• Doran Canterbury I, LLC (27.4% owned by CPHC): This is the vehicle for phase 1 of the multifamily project.

• Doran Canterbury II, LLC (27.4% owned by CPHC): This is the vehicle for phase 2 of the multifamily project.

• Canterbury DBSV Development, LLC (61.87% owned by CPHC): This is the vehicle for the office, retail, and senior housing portions of the development.

• Trackside Investments, LLC (50% owned by CPHC): This joint venture is developing a 16,000 square foot restaurant and entertainment venue as part of the development project.

Treated as equity investments, CPHC uses the equity method of accounting for book value purposes. With these entities in the aggregate reporting losses, the net value of these joint venture interests has declined from just under $7 million at the start of the year, to around $5.8 million as of 6/30/25.

Source: Canterbury Park Holding Corporation 10-Q, 8/8/25

Furthermore, due to the terms of the JV agreement for Doran Canterbury I, CPHC is on the book for around $6.85 million future capital contributions, which are on included on the balance sheet as “Investee losses in excess of equity investment.”

Hence, in terms of book value, the real estate JV interests were worth -$1 million as of 6/30/25. However, this GAAP-based valuation of these interests provides little-to-relevance, in terms of the true economic value of these assets.

Admittedly, it’s difficult to value these properties, given how the JV financials are not publicly-available. While we could attempt to price the gross value of the completed buildings, the financing aspects are unclear.

In time, however, further information could be provided, which may make the value of the JVs more apparent to the market. For now, we do have some hints as to their value: in the Q2 2025 earnings press release, management made the following statement:

“While our growth and efficiency initiatives are focused on 2025 and beyond, we continue to believe that our record of consistent annual cash flow generation, return of capital through our quarterly cash dividend and strong balance sheet are not fully recognized in our current valuation. Canterbury has no debt and we believe our cash, tax increment financing (TIF) receivables and real estate joint ventures are valued at over $10 per share. In terms of liquidity, we have nearly $17 million, or approximately $3.33 per share, in cash and short-term investments at the end of the 2025 second quarter. We have nearly $20 million, or approximately $3.90 per share, in TIF receivables on our balance sheet at quarter’s end, on which we expect to receive payments beginning in the fourth quarter of 2025. Lastly, we have contributed a total of just over $16 million, or approximately $3.17 per share, in land and cash to our real estate joint venture development projects for which we share in the economics. This estimated $10.40 per share value does not include the roughly 50 acres of land held for future development, the current value of which is not fully reflected on our balance sheet due to it being recorded on a cost basis. We remain committed to delighting our guests, serving our residents and driving significant long-term value to our shareholders.”

Before someone says “lazy analysis” for me leaning on management’s “it’s worth $3.17 per share, trust me bro” statement on the joint ventures, the fact that they were comfortable with referring to the total aggregate investment into these ventures as akin to an asset like cash, short-term investments, and TIF makes me confident that the value of these interests is worth at least what Canterbury’s cost basis to date.

Factors like the rising leasing rates at Phase 2 (95%), the senior housing development (95%), the office building (66% leased) and Phase 1 of the multifamily project (42% occupied) give further credence to this vague yet conservative valuation.

Remaining Land for Development

Even after the spate of development activity at Canterbury Park, there are still acres of unsold land remaining that could be ripe for development as well. In total, CPHC has yet to sell and/or contribute to the joint venture 50 acres of excess land surrounding the race track.

This acreage, known on the balance sheet as “Land held for development,” has a book value of around $2.4 million. However, the value of this land likely far exceeds this figure. At least, based on Canterbury’s last major land sale, the sale of 37 acres for the amphitheater project.

The buyer, Swervo Development, paid $8.8 million for the 37 acre site, or around $237,000 per acre. This implies CPHC’s remaining land holdings could be worth around $11.9 million.

Putting it All Together

• Canterbury Park Racetrack/Casino: $60 million

• Cash: $12.4 million

• Short-Term Investments: $4.5 million

• TIF Receivable: $19.8 million

• Related Party Receivable: $5.1 million

• Real Estate Joint Ventures: $16 million

• Land for Development: $11.9 million

Back of the envelope, I estimate the underlying value of Canterbury Park (before debt and lease liabilities) to be $129.7 million. Subtracting the $150,000 in debt/lease liabilities, we get a net figure of around $129.5 million, or just under $25.50 per share, or around 54% above CPHC’s current stock price.

However, over a longer time frame, I can see CHPC rising back toward prior highs, assuming that management makes some bold moves to start unlocking underlying value.

Possible Paths to $25, $30 or Even More per Share

When it comes to further monetizing CPHC’s assets, the company’s management has numerous options. For one, the company could continue to fleshing out the Canterbury Commons development, locking down partners for the remaining 50 acres of land, perhaps selling a portion of this acreage outright.

Proceeds from this, plus perhaps proceeds from the prior developments reaching the positive cash flow stage, could be used to either increase CPHC’s dividend (currently $0.28 per share annually, or 1.7% yield) and/or to execute an aggressive share repurchase program.

Then again, besides this slow-and-steady type of strategy, Canterbury could instead make a bold move that more rapidly bridges the gap between trading price and underlying value.

For instance, what if CPHC were to split into two companies, one holding the casino/racetrack, the other holding the excess land/JV interests? Independent of the land development business, CPHC could then pursue M&A opportunities in gaming.

If Canterbury’s development projects are too small in scale to justify being a public company, what if the company were to work out a deal where insiders like CEO Randall Sampson, who owns 20% of the company, swap CPHC shares in exchange for ownership interest in Canterbury’s development business?

Splitting off the real estate portion from the casino portion, again CPHC would be free to diversify its gaming portfolio, in turn becoming another micro-cap gaming pure play like Full House Resorts (FLL) or Century Casinos (CNTY).

Canterbury could also consider doing a sale/leaseback of the track’s physical real estate, freeing up capital for the redevelopment project. The company could even explore opportunities to sell the property to tribal gaming interests, who may be able to wring out cost synergies/cross-selling opportunities by having this parimutuel/card casino property under the same corporate roof as a full-fledged Native American casino.

Risks to Consider

Based on current profitability trends for the operating business, plus the stock’s downward trajectory, I wouldn’t rule out the prospect of CPHC to keep trending lower in the near-term.

However, downside risk with CPHC stock is not massive. $10 to $12.50 per share may represent a floor. Chalk this up to both the company’s extensive land holdings, plus the relatively high amount of liquid/soon to be liquid assets.

Alongside the potential for poor results/a lack of development progress weighing on CPHC, the potential for future shareholder dilution should be considered as well. A few weeks back, Canterbury Park Holding Corporation filed a S-3 form for a $100 million shelf offering.

Yes, technically this is an extension of a shelf offering registered in 2022. CPHC has yet to tap into this dilutive funding source, but it could be something to keep in mind. Per the terms of the shelf offering, Canterbury is authorized to “in no event will we sell securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75.0 million.”

Finally, with so much long-term value that’s yet to be realized, it may no longer make such sense for CHPC to remain a public company. What’s to stop Sampson and other insiders from partnering with private equity and taking this company private, at a scant premium. This may be more of a risk, in the event shares continue to drift lower.

Bottom Line on CPHC Stock

At today’s prices, CPHC appears to be an attractive opportunity. With low debt, a big gap between trading price and underlying value, plus the prospect of much of these assets either liquid (in the form of cash/short term securities) or likely soon-to-be liquid (the TIF receivables), unlocking underlying value could be achieved within a reasonable time frame.

While risks remain that Canterbury becomes “dead money” due to a lack of progress with the buildout/monetization of Canterbury Commons, risk/reward appears favorable.

Admittedly, further investigation is needed into the joint ventures, in order to assess their current “as-is” value, and their potential long-term value.

Still, with so much untapped value, and the stock’s tendency to make big moves on any progress with its redevelopment efforts, I believe a long position at current prices is worthwhile.

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DISCLOSURE: As of Publication, The author (Thomas Niel) held positions in CPHC, GDEN, FLL.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from CPHC or any other entity for writing this article. I have no business relationship with CPHC, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading CPHC stock. Do your own due diligence, and caveat emptor.

Farmer Bros. Co. (FARM) may have market cap of just $40.4 million, but this microcap name has a fair bit of a following among investors. The bull case has largely centered on the company’s buyout potential.

Recently though, this angle with FARM stock has taken a hit. Last week, Farmer Bros. posted solid quarterly results paired with disappointing guidance. Commentary around the stock now suggests that, if a deal happens, the premium will be far smaller than investors once hoped.

So, what’s the move? More importantly, why discuss a special situation trade that looks broken? For current shareholders, “take profit” may sound like the obvious answer. Yet for those still on the sidelines, it may be premature to dismiss FARM entirely.

Why? Down the road, a more favorable entry point could emerge.

Farmer Bros. Co.: Background

In business for over a century, Farmer Bros. supplies roasted coffee and related products to restaurants, hotels, and other institutional end-users. On the surface, it’s an easy-to-understand “old economy” business, but the reality is less flattering. Farmer Bros. operates in a mature, commodified business, and must contend with the risks associated with that dynamic.

Intense competition, inflationary pressures, and external factors like the high price of raw coffee have driven a steady decline in revenue and profitability over the past decade.

Activists have tried to change the story. In 2022, JCP Investment Management and 22NW built a combined 15% stake and secured board seats. Yet their involvement has hardly been a home run.

After they joined the board, FARM shares slid on continued weak results. A partial rebound came in mid-2023, when Farmer Bros. announced the $100 million sale of its direct-ship business to Treehouse Foods (THS). Still, the rally didn’t last. Shares moved sideways for the next year, only to fall back to pre-divestiture levels by late 2024. The activist influence has helped significantly, but investors have remained skeptical, jumping ship at any sign of trouble.

‘Strategic Alternatives’ Stymied by Rising Coffee Prices?

So far this year, FARM has been on a rollercoaster. The stock started 2025 at $1.80 per share, then spiked near $3 after the company’s Q2 FY2025 earnings release in March. Improved margins lifted profitability, fueling optimism that a turnaround was underway.

Excitement cooled in the spring, but shares surged again in mid-July when Farmer Bros. announced plans to “explore strategic alternatives,” including a possible sale. By September, the stock climbed back above $2 after Q4 FY2025 results, released on Sept. 11. The initial rally, however, faded quickly as investors absorbed troubling details on the post-earnings conference call.

The results themselves looked strong:

• Net sales rose 1% year-over-year.
  
  

• Gross margins expanded to 44.9%, up from 38.8%.
  
  

• Operating expenses fell to $34.3 million from $36.9 million.
  
  

• Adjusted EBITDA hit $5.6 million, a $7.4 million improvement from Q4 FY2024.
  
  

• Reported net loss was $4.7 million, flat YoY, largely due to pension-related charges.
  
  

For the full fiscal year, sales held steady at $342.3 million, while gross margins improved from 39.3% to 43.5%. Gross profit rose $15 million to $148.9 million. Adjusted EBITDA finished at $14.8 million. Net losses came in at $14.5 million, but this was due largely to one-time expenses related to the company’s pension liabilities.

Yet while the latest results were promising, the near-future appears far less promising. On the post-earnings call, management guided for much weaker FY2026 results. Rising green coffee prices and the U.S.’s new 50% tariff on Brazilian goods, including coffee, are expected to push gross margins back into the “high-30s.” In other words, Farmer Bros. could give back margin gains, and then some.

As Henrik Alex of Seeking Alpha noted, a material change in FARM’s operating performance complicates the company’s strategic review. A buyer may demand a lower price, or worse, buyers fail to line up, leading to a steep drop in the stock price.

Interestingly enough, the stock has held up better than expected. FARM trades around $1.85—well below the $3.29 52-week high but comfortably above early 2025 lows. While there is substance to the more pessimistic view of FARM, there may still be reason for optimism.

Valuation: Why Buyers May Remain Willing to Pay Up for FARM

Currently, Farmer Bros. has a market cap of about $40 million. Add $53.4 million in debt and lease/pension liabilities, subtract $6.8 million in cash, and the enterprise value comes to roughly $86.7 million.

On a trailing twelve-month (TTM) basis, FARM trades at about 7x EV/EBITDA. This valuation is in line with other commodity-sensitive packaged food companies such as John B. Sanfilippo & Son (JBSS), Tyson Foods (TSN), and TreeHouse Foods, which previously acquired FARM’s consumer business.

For a buyer, the appeal lies less in the current valuation and more in the potential for cost synergies. Integration could deliver significant savings by eliminating corporate overhead, consolidating routes, and streamlining sourcing, roasting, and warehousing. Long-term, annualized savings in the tens of millions aren’t out of the question.

Speculation has long linked FARM with Nestlé. CEO John Moore previously sold a coffee company to Nestlé, and later brought on Matt Swenson—Nestlé’s former Director of Coffee—as VP of Coffee Operations at FARM. But Nestlé isn’t the only candidate. Potential buyers could include Lavazza, Keurig Dr. Pepper, Westrock Coffee, or even foodservice giants like Aramark and Sodexo.

Yes, near-term headwinds could drag FARM back into the red. But those pressures stand to prove temporary. Only time will tell when they start to ease, but the acquisition math could still be attractive. A bid north of $3 per share (over 50% above current prices) remains plausible.

Still, given FARM’s historic volatility and the number of investors already positioned purely for a takeover, new buyers may want to wait for a better entry point.

The Best Approach

While strategic buyers may still see value in FARM, there’s no guarantee a deal materializes. If talks stall or fall apart, the stock could drop sharply.

That risk also creates opportunity. FARM’s volatility could reward patient investors who wait for a better entry point. In the coming months, a lack of deal progress and weak quarterly results could push shares back down toward their 52-week low.

Buying in could prove opportune, even if the situation takes a turn for the worse. As CFO Vance Fisher noted on the earnings call, FARM has $32.6 million in additional borrowing capacity, enough to weather turbulence.

At the same time, buyers may remain interested in acquiring this name, and an offer could emerge from left field. A buyer could easily pay a 50%+ premium, and still make it a highly accretive transaction, thanks to the ample cost savings potential.

While comparing this situation to that of other microcap M & A situations this year could be a case of comparing apples-to-oranges, perhaps a lesson learned from the unexpected high bids for companies like Servotronics (SVT) and DallasNews (DALN) is that, while risky, shares in struggling companies with either a high underlying value and/or high value-add potential are worth buying, assuming you account for the risk and position accordingly.

For those mulling whether to buy FARM today, or wait until further weakness, that may be the key takeaway.

DISCLOSURE: As of Publication, The author (Thomas Niel) held no position in any of the stocks mentioned in this article.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from FARM or any other entity for writing this article. I have no business relationship with FARM, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading FARM stock. Do your own due diligence, and caveat emptor.

The other week, I was curious: what ever happened with Trinity Place Holdings (TPHS)? As many may recall, TPHS offered up an interesting mix of net operating loss (NOL) shell and real estate holding company.

Built from the ruins of the defunct Syms discount retail chain, Trinity Place set out to capitalize on hundreds of millions worth of tax-loss carryforwards, as well as on the former retailer’s remaining owned real estate properties.

Namely, by building a condo tower at 28-42 Trinity Place in Lower Manhattan, formerly the site of Syms’ flagship store. In the late 2010s, there was a great deal of bullishness about this eccentric name within the microcap universe.

In fact, at the time, when I wrote an earnest-yet-flawed assessment of a similar name, AmBase Corporation (ABCP), critics of Ambase pointed me to TPHS as the superior opportunity. Funny enough, while ABCP wasn’t exactly a winner for those who bought it in 2017 (shares are down 70% since then), technically it has outperformed TPHS.

That is, over the past eight years, TPHS, formerly trading on a major exchange but since banished to the OTC markets, has gone from around $7 per share, to around 4 cents per share, a decline of around 99.4%.

However, much like how AmBase morphed into a litigation-based special situation, Trinity Place may have potential as a special situation. TPHS no longer has any interest in the condo project (more below), but is still sitting on a slug of NOLs. An investment vehicle controlled by a well-known, albeit controversial investor, is now positioned to capitalize on these NOLs.

Is there opportunity here for outside investors? Let’s take a closer look.

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Trinity Place Holdings: Background

For this background, much of my information comes from a 2019 Seeking Alpha article on TPHS, written by Holmes Osbourne.

As mentioned earlier, Trinity Place Holdings is the successor to Syms. East coasters, especially those from the Tri-State area, may be familiar with Syms’ old slogan “an educated consumer is our best customer.” Fun fact: Trinity Place still holds the trademark for this catchphrase.

I’m not from the Tri-State area, but I remember shopping at Syms—the chain had a location in the Seven Corners area of Northern Virginia that has since become a gym. I remember buying clothes there, the store was very out of date for the early 21st century; the store lacked central air conditioning so they used a large mid-century style fan to cool the store.

Anyway, getting back to what’s relevant, all of Syms locations, as well as the Filene’s Basement locations the company acquired a few years prior, closed when Syms went into Chapter 11.

By going the Chapter 11 route, Syms was able to retain its high amount of NOLs without triggering Section 382 limitations. A group of respected investors, including Third Avenue Management and Michael F. Price’s MFP Investors, gained control of the company, then renamed Trinity Place Holdings, with plans to monetize the NOLs and the real estate.

The main way Trinity Place set out to do this was via the aforementioned redevelopment of the former Syms flagship site, a 42 story building officially known as 77 Greenwich. Although primarily a condo tower, this was technically a mixed-use development, with ground-floor retail, and, interestingly enough, a newly-built New York City public school.

The inclusion of a public school was seen as a plus for this development, as funding from NYC for the school would help to finance the overall construction. In addition to the condo development, which in theory would generate significant, largely tax-sheltered income once the units were sold, Trinity Place has additional Syms-era assets, including a shopping center in West Palm Beach, FL, a retail parcel in Paramus, NJ, as well as interests in multifamily properties in Brooklyn, NY.

Nevertheless, while Trinity Place looked like a winner on paper, in practice this whole NOL-monetization scheme failed to work out as intended. A big reason for this, of course, was the onset of the Covid-19 pandemic. The impact of Covid on NYC luxury condo demand in the 2020s resulted in slower-than-expected sales of 77 Greenwich units.

Trinity Place shored up its balance sheet by selling the WPB shopping center and Brooklyn apartment buildings. The company also changed-up its marketing of 77 Greenwich, renaming the development “Jolie” in 2021. Unfortunately, none of this materially improved the situation.

Flash forward to 2024. After years of cash burn, asset divestitures, and the further shoring up of TPHS’s balance sheet via secondary offerings, the company was just about ready to throw in the towel on its Manhattan condo escapade. That year, the company completed a recapitalization of this development, forming a joint venture 95% owned by TPHS, 5% owned by one of the project’s key lenders.

This year, Trinity Place has continued to tie up loose ends. In February 2025, TPHS sold off the Paramus property. Then, in May 2025, Trinity Place transferred its 95% holding in the condo JV to a third-party trust for the benefit of TPHS shareholders. In short, this means buying into TPHS today doesn’t give you economic exposure to 77 Greenwich/Jolie.

However, alongside the Syms and Filene’s Basement intellectual property, TPHS still sits on $330.4 million in federal tax-loss carryforwards. $226.9 million of these were generated prior to the TCJA, and expire 12 years from now. $103.5 million of them are post-TCJA NOLs, have no expiration date, but are subject to the 80% taxable income limitation.

Steel Partners Enters the Chat

Again, as hinted above, someone already has their eye on these NOLs. Alongside the Paramus divestiture and the JV trust transfer, there’s been another material transaction with TPHS this year. Back in February, Steel Partners Holdings LP (SPLP) purchased newly-issued TPHS shares, giving SPLP a 40% stake in Trinity Place.

Steel Partners Holdings can be thought of as a “poor man’s Icahn Enterprises,” although in its current state Icahn Enterprises (IEP) perhaps is now itself a poor man’s Icahn Enterprises. All jokes aside, SPLP, like IEP, is a master limited partnership (MLP) that owns and invests in various companies, and is controlled by an activist investor, Warren G. Lichtenstein.

However, while IEP, formerly American Real Estate Partners, was a MLP that Icahn took over and successfully turned around before merging it with his asset management business in 2007, Steel Partners arguably has a more controversial backstory.

Steel Partners Holdings started off as a Steel Partners II, a hedge fund with industry standard redemption terms. However, in the aftermath of the 2008 financial crisis, Lichtenstein came up with a creative way to respond to investor redemption requests. Instead of just letting limited partners cash out, they instead received a partial cash distribution, plus interest in a the above-mentioned MLP.

Simply put, this did not go over well with the fund’s limited partners. Several of them sued Lichtenstein, but Steel Partners Holdings LP stayed intact, and for the past fifteen or so years has been a reserve of permanent capital for the financier.

Lichtenstein has also remained the subject of shareholder litigation, most recently with Steel Connect, a formerly publicly-traded company Steel Partners bought out late last year.

In short, it makes sense why, when discussing another Lichtenstein/Steel Partners target, DMC Global (BOOM), people left comments like “anything involving Lichtenstein should be approached with caution.”

Still, let’s run the numbers, see what Trinity’s NOLs are worth today, and whether investors could still profit.

TPHS’s Present Value as a NOL Shell

Currently, Trinity Place Holdings has a market cap of just $2.8 million. As of June 30, 2025, As part of its de-facto takeover of TPHS, Steel Partners has lent $1.3 million to Trinity, for the funding of operations. Per a promissory note agreement between the two entities, TPHS can borrow as much as $5 million from Steel.

Although there’s little to Trinity’s name anymore beyond the legacy retail IP, I believe this NOL shell is worth far more than its current $4.1 million enterprise value. At the current U.S. Federal corporate income tax rate of 21%, the pre-TCJA NOLs could save a profitable owner of them $47.6 million. The post-TCJA NOLs could save an additional $38 million or so in taxes.

Let’s say, like Carl Icahn has done in the past with NOL shells like Cadus Corporation, Lichtenstein eventually acquires full ownership of TPHS, once doing so is not at risk of Section 382 limitations.

In other words, on the third anniversary of Steel’s initial TPHS investment, in February 2028. With Cadus, Icahn bought out outside investors at a 68% premium. Icahn and Lichtenstein are of course not the only investors targeting NOL shells.

In fact, there’s a recent example of a similar situation, which provides insight into TPHS’s future value. Many readers may recall a June 2025 post from Substack publisher Contrarian and Correct, regarding Janel Corporation’s (JANL) pursuit of Rubicon Technology (RBCN), an unprofitable industrial sapphire company that just so happens to be sitting on hundreds of millions in NOLs.

I recommend reading Contrarian and Correct’s piece, as he provides a detailed breakdown on Section 382, how acquirers can avoid triggering it, and how outside investors can potentially profit from such situations.

In the case of RBCN, Janel acquired 45% of Rubicon in August 2022 via a tender offer. That meant that, by August 2025, Janel would then be able to acquire enough of RBCN to increase its ownership to over 80%, in order to utilize the NOLs. Per Contrarian and Correct’s calculations, which entailed using a 15-year time frame to use the NOLs, and an 8% discount rate, Rubicon’s NOLs were worth many times RBCN’s stock price (around $2 per share).

This in turn suggested that Janel would be willing to pay a big premium to the current share price, in a tender offer that would bring ownership to above 80%. Dissemination of this bullish thesis throughout the summer resulted in RBCN stock rising by over 50%.

In theory, if we take our estimated values of TPHS’s pre and post-TCJA NOLs, which total $85.6 million, and apply a similar NPV calculation, using TPHS’s $2.8 million market cap as the “initial investment” variable, we get an NPV of $40 million, or a little over 60 cents per share, for the tax assets.

The Opportunity (or Lack Thereof) for Outside Investors

In theory, even if Steel Partners was aggressive in consolidating ownership at a big discount to his NPV, even an arguably low-ball offer three years from now could still represent a massive premium to TPHS’s current stock price.

Better yet, during this three year period, it’s possible that TPHS declines further, enabling investors to buy in at a lower price, much closer to the end of the IRC Section 382 testing period.

However, while I personally ran out and bought a token position in TPHS, just to keep this name on my radar, it is questionable whether this is really an actionable opportunity for investors.

First off, let’s take a second look at the reputation and past actions of Steel Partners and its key principal. Looking at Steel Partners’ most recent transaction involving the buyout of outside investors (Steel Connect), we can see that the MLP paid a scant premium to buy out STCN’s investors, paying $11.45 per share in cash, plus a contingent value right (CVR), for the outstanding shares. At the time of the deal, STCN was trading for around $10.25 per share.

Second, just taking a look at the latest with Janel and Rubicon, we can see that the situation has not played out as us investors perhaps wanted it to play out. Last night, it was revealed that Janel’s end game with Rubicon was not to tender its way to the NOLs, but access them a different way.

That is, Janel Corporation is merging Janel Group, its logistics services subsidiary, into Rubicon, in exchange for 7 million newly-issued shares of RBCN stock, with the RBCN stock valued at $4.75 per share for the purposes of this transaction. Following this deal, Janel will own 86.5% of RBCN.

At the time of this writing, it’s unclear whether RBCN will re-rate to $4.75 per share, or if disappointment with the fact Janel isn’t going to offer RBCN investors a juicy tender offer is going to cause the stock to drop.

However, we can look to this hot-of-the-presses development as another possible end game for TPHS. Three years from now, it’s reasonable to see Steel Partners execute a similar such deal, merging one of its own operating subsidiaries into TPHS.

Third, a scant takeover premium or a Janel-Rubicon style end game may represent some of the “better case scenarios” for TPHS. Remember when I said that Trinity Place shares could pull back between now and the end of a possible Section 382 testing period?

A big reason for this may have to do with Steel Partners’ lending of capital to Trinity Place. Last quarter, TPHS had $427,000 in operating expenses. This suggests that this entity could continue to burn through $1.7 million a year over the next few years.

Presumably, unless TPHS all of a sudden scores a lucrative licensing deal for the Filene’s Basement brand, the cash to fund these expenses will come from additional borrowing from Steel Partners. In turn, who’s to say that, three years out, Steel Partners doesn’t just swap the promissory notes for equity, increasing its ownership to above 80%, without making a tender offer, and without even having to merge a valuable asset into TPHS?

Bottom Line on TPHS Stock

Although I have bought a few TPHS shares, I would say that this is more of a “food for thought” type of assessment of Trinity Place Holdings, rather than a bullish or bearish opinion on this stock.

Admittedly, when I first started this piece, the discussion regarding Janel and Rubicon was anchored around Janel tendering for RBCN shares. Now, considering the Rubicon news, and after taking a deeper dive into Steel Partners’ past dealings with outside investors, I will say that the opportunity here is questionable.

Share Value Never Sleeps

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DISCLOSURE: As of Publication, The author (Thomas Niel) held positions in TPHS, ABCP, and RBCN.

DISCLAIMER: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation from TPHS or any other entity for writing this article. I have no business relationship with TPHS, or any other company referenced.This article is for informational purposes only, and should not be construed as investment advice. Please consult your financial advisor before making any investment decision. Please be aware of the risks associated with trading TPHS stock. Do your own due diligence, and caveat emptor.