Watchlist and Portfolio Updates
This week I looked at OZK, JCTCF, UUU, HIFS, and PINC
This week I wanted to share some updates from stocks that are in my portfolio, or that I wrote about in my Idea List series and added to my watchlist.
Bank OZK
OZK 0.00%↑ had record quarterly earnings, increasing 3.3% since last years Q2
Earnings per share came in at $1.52 for the quarter and stands at $3.03 YTD
Net charge offs increased slightly, but were only $11.8M in Q2
OZK had return on assets of 1.92% and return on equity 13.98%
Looking at the balance sheet, loans grew 21.5% YoY and deposits grew 24.9%
They announced a $200M share repurchase plan, which is about 4% of the current market cap
A few weeks ago an analyst at Morgan Stanley downgraded OZK because a large life science building that OZK have a construction loan on is taking a while to lease up. CEO George Gleason explained that it is common for certain type of construction projects to be slow to lease up during construction while others are not. For example retail buildings are only constructed once a set of leases are in place, condos often have pre-sales to fund some of the construction. This life sciences building is state of the art and is in desirable San Diego. Gleason further commented that what makes a construction loan risky is not how quickly it leases up, but how much capital the sponsor has, and how committed they are to seeing things through. Gleason basically said that he does not care if it takes 5 years for the building to lease up as long as the sponsor keeps making their payments.
I bought OZK common stock during the selloff from the negative analyst note. So far it looks like that was a good buying opportunity since this bank is humming along
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Jewett-Cameron Trading Company
A while back I profiled Jewett-Cameron JCTCF 0.00%↑ and I recently bought some shares when they sold off a good amount before their latest earnings release
Sales declined from $18.9M to $15.9M YoY, net income was $55k compared to $1.25M
The company’s CEO commented that they are facing headwinds from slower consumer spending and soft demand for housing products
Updated NCAV is $20M, or $5.72 a share
JCTCF is currently trading at $4.50, so below its NCAV and not counting the commercial real estate the company is aiming to sell
Despite the mediocre earnings, I may buy more shares of JCTCF since its trading at such a discount to its asset values
Universal Security Instruments
UUU 0.00%↑ is a tiny company with a $3.6M market cap that primarily sells smoke detectors
The company failed to report its fiscal year end March 31 results on time and just now reported them
For the year, sales were down 10% to $19.9M YoY, and a net loss of $395k compared to income of $720k last year
The CEO main comment was that supply chain and higher freight costs are impacting results
UUU seems to be in a similar boat to JCTCF, feeling pressure form the slow housing market
Despite the poor operating results, UUU net current asset value is $2.15 a share and the company trades at $1.50
The delay in releasing financials is not good, but I still may add more to my position
Hingham Institution for Savings
For Q2 Hingham HIFS 0.00%↑ showed net income of $4.1M compared to $8.3M last year
Total assets grew 2% annualized so far this year, deposits have remained steady
Book value is now $191 a share, a 3% gain over the year
The good news is that net interest margins have increased for the first time since interest rates have gone up. The improved interest income was due to new loans at higher rates, repricing of some of the current loans, and deposit costs stabilizing
The bank had no charge offs and non-performing assets made up 0.04% of total assets
Hingham has in the past been a high quality bank, but has been struggling with the rising rate environment. Hope with net interest margins turning the corner, the bank can get back to previous performance levels soon.
Premier
A few months ago I wrote about Premier PINC 0.00%↑, a company that helps hospitals and other healthcare facilities save money
For a while PINC was trading around $18, a decent discount to my estimated fair value of $23
Recently I started doing more research into the company, and I discovered they have performed a $400M share repurchase program last quarter but will announce the results of the repurchase next quarter. This buyback represents 20% of the current market cap, so this piqued my interest.
Just as I was reading this a week or so ago, small cap stocks have had large rally and now PINC has moved up to $19.50. It’s current price isn’t much of a discount to fair value, but maybe its still worth buying some shares if I believe shares will move even higher once the results of the buyback are released.
