Mr. Nick Levis of NSL Capital Management (or someone pretending to be him) dropped by last week to let us know that he takes exception to our characterization of him in our post late last year on Tandy Brands Accessories Inc (NASDAQ:TBAC). We wrote that TBAC presents an interesting conundrum: an undervalued asset situation with a current asset value that has deteriorated significantly over the year and an activist investor – Mr. Levis – with little track record. We ultimately elected not to take a position in TBAC for two reasons:
- TBAC, while statistically undervalued on an assets basis, is rapidly losing money. Its current asset value has halved over the preceding year and we are concerned it will slip out of the ER and into the morgue before the doctor can go to work.
- Mr. Levis and NSL Capital Management are unproven at implementing catalytic events in listed stocks. We reviewed the public information about Mr. Levis in order to make an assessment as to the likelihood that he could a. influence the board given his slate’s rejection in the proxy fight for board seats and b. turn around TBAC. We concluded that Mr. Levis would have trouble even getting into the ER let alone laying on hands to TBAC.
In conducting our review of the public information and the proxy material, we noted some unusual elements in the contest: Mr. Levis’ defense of his unlicensed firearm charge, his age (29) and lack of track record and his use of a hotmail email account. While none of this would prevent him from salvaging what value there is to be had from TBAC, we did feel that the situation was “a little ‘vaudeville’ for our tastes” and likened it to turning on MSNBC and finding a Three Stooges film playing instead.
Mr. Levis (or someone pretending to be him) has responded in the comments and once again flicked the switch to slap stick:
Hello Greenbacked,
My name is Nick Levis, and I ran the failed campaign to gain board seats at TBAC….
The main reason I lost was as you pointed out, I had a gun CHARGE on my “permanent record” which was dismissed. I did plead guilty to smoking pot (possession of marijuana), and I definitely inhaled. I don’t smoke the devil’s herb anymore, but I think its a statement about your own lack of a personal life to call me
three stooges for going papparazo on here about my “pension for guns.”Like millions of other regular Americans, I see marijuana as fairly harmless. In fact, many times only those bespectacled socially inept types who remained virgins throughout college have not tried the substance.
So that’s why I lost the contest. You may not think I am “qualified” for the position, but no offense, who the heck are you?
I find it rather condemning that you would call me “too vaudeville” for this position as it appears to me you are a “blogger” with a tendancy for arrogance in your writings. What makes you so special?
Anyways, the investment community is filled with thousands of people who get conned by the Britt Jenkins’s of the world and have no guts. So I let it on the line and tried to stop the scamming there, and it may have even worked – a new CEO is on board who is well qualified (although he owns no stock)….
I merely pointed out in my letter that getting high of reefer when your in college is not the same as ROBBING MILLIONS OF DOLLARS.
If you lose money at the helm of a public company, you aren’t any better than the guy sweeping the streets of your hometown or the cashier at Hardy’s, and maybe you are worse as you could be morally corrupt.
I hold TBAC shares but I feel that liquidation value is higher than you suggest. Still, I enjoyed reading your rant about the company and wish you well finding whatever the hell it is that you are looking for.
This is a tough situation, and I am sure you realize that I DID NOT LOSE THE 49MM DOLLARS – MANAGEMENT DID!
I merely tried to do what the other istitutions are too scared to do – some housecleaning and ARSEKICKING…
So maybe you should pack your bags and come out to new mexico and meet me face to face before satirizing or slandering me. I run a wholesale lumber and trucking business here. We could teach you to go hunting (I promise not to bring a bag of “the chronic” with me this time, ok?)
Adios, been fun bantering with you guys and sorry the votes were cast for the “reckless in not knowing” or intentionally fraudulent ballot slate – again, thanks for focusing in on the victim of the fallout and not the real perpetrators of value destruction – value investors are suppossed to stick together! Regardless of whether we hit the huka in college or not.
Best Regards,
Nick Levis
Res ipsa loquitur.
We’d like to thank Mr. Levis for getting in touch and to wish him the best of luck with TBAC and his future endeavors.
Nick
Thanks once again for dropping by and contributing to the site.
We agree with everything you’ve said above (except perhaps diversifying to 30-50 holdings – we think the sweet spot is somewhere between 10 and 20, with the best idea at no more than 1/4 to 1/3 of the portfolio).
Feel free to let us know what’s going at Levis Fund Management.
Greenbackd
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Hey Thanks,
When you lose millions of dollars when invested in a public corporation that at all times had a 40% discount to your estimate of liquidation value, (and no debt with positive cash flow) it helps to have a sense of humor…
As for Tandy, I wish the new CEO and current CFO well — they are good managers as far as I can tell… and clearly liquidating the company at this point is not on the table at TBAC — the board making 100K each likes to keep their free cash rolling in…
I wish that I could have known before they (TBAC management) wrote down much of the firm’s assets in just one quarter that the company was not being honest with their investors (including myself and my family as the largest outside shareholder) as to how much the inventory of the company was worth. Apparently, in one year its worth about half of what they said it was worth.
I wish that the company would have liquidated two years ago — something I pushed for for years with no positive result. (like yelling at fence post)
Instead of the maximization of shareholder value (the number one goal of a corporation according to Aswath Damodaron) we witnessed a good ol’ boy board of directors sit back and allow an entrenched management team to either lose or steal millions of assets (at one million a year in salary on a 10MM company, its stealing or akin to stealing no matter what actually happened to the $8 per share of liquidation value you mentioned that the company had… just one year ago)… and it raises goosebumps wondering where the millions of dollars actually went… just as I am sure Bernie Madoff’s investors are wondering where there money is…
SO, this is a case of insiders using the publically traded corporate asset for their own benefit and at the expense of the shareholder…. pretty standard really (Thanks, SEC!!!)
Statistically, this stock looked cheap at $14 …
So, whatever the company’s motives were, shareholder value creation clearly was not driving the ship here over the past few years….
Lastly, as for my hotmail account — you somehow picked that up from a cached website I created 5 years ago… But in fairness I had to laugh at myself for that one…. well done.
Their are more opportunities to buy cigar butts than ever in today’s market… The key to cigar butt investing in my now currently worthless opinion is diversification across no less than 30-50 names. If management does not own 15% or more of the common, stay away — the new mantra in corporate america in the boardrooms and executive suites of publically listed small cap stocks is “ME FIRST.” So watch those interest allignments…. stakeholders should ALWAYS come second, never first with public companies — and that’s why America was so competitive in the 1980’s because of the Icahns, Buffetts etc….
TBAC put literally everyone before the stockholder, and that’s why the company failed. That’s why America might fail. We gotta watch them greedy bastards that run the really corrupt public corporations as though they were thieves working at a goldmine. If you want to make money, buy a bunch of them at half liquidation value and apply pressure — no one else cares (think SEC and insiders collecting checks).
All the best,
Nick Levis
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