Reko International Group Inc V.REKO

3Q21/22

[DempsterMill]

-18% (although very low volumes) seems like a bit of a harsh reaction on the report. It for sure wasn't strong, but there were some positives in regard to the future within it as well. The change in business strategy that is happening, perhaps on a smaller scale - a bit too far from the company to really know, seems interesting and might hopefully lead to some positive changes in the not too distant future. 

Also, during the quarter 2.5% of the shares outstanding were bought back - that is quite of an aggressive buyback rate, especially considering the low volumes in the market. Considering the share is trading at around 0.5x tangible equity buybacks has a very positive impact on TB/sh. Hopefully we will continue to see further buybacks at these levels. But in a long-term perspective, we of course need to see some higher earning power than currently is. 

Any other thoughts on the report?

[hevin]

Hi Dempster: a bunch of us investors are in touch so I can tell u that I know the person who sold the bulk of those shares after the results.... didn't really want to but needed the powder for a faster return on another stock (at least the person believes it will happen). So not to worry. EPS would have been approx 7 cents/share without the restructuring costs. And the restructuring should

[DempsterMill]

Hi Hevin - many thanks for the extensive reply, and good to hear! Agree that there does not seem to be much of a reason to stay listed - perhaps it is a family planning thing with shares being further spread out within the family over time. But I don't think I've read that there is a next generation of Reko's active within the business? I do however think the buybacks makes a lot of

[GordonB]

Unfortunately, that "slow motion buyout" has been twenty years. The company did its IPO roughly 30 years ago at $6.50 and has done nothing with its public company status since then. They are simply trying to wear out the remaining non family shareholders.

[hevin]

Well said, well said! Makes me angry too!

[DempsterMill]

fair enough - I haven't been with the company long enough to feel that way, and I got in significantly lower than today. But one might indeed wonder why they are public - does anyone remember the original "pitch" for going public? 

[GordonB]

They needed the money to expand their core mold business (which they no longer have) and to allow employee share ownership. They expanded into things, mostly through acquisitions, which failed miserably. They bought concorde machine and that's basically all that they are now. If they had stayed in their core business, they would basically now be making significant money as the mould industry

[DempsterMill]

many thanks for the recap of the story GordonB! Very interesting, and quite a common route for companies to have taken - especially the ones who finds themeselves trading at a significant discount to book value.

[DempsterMill]

some insider buying here recently - among some quite significant buybacks. Glad to see those positive signals, even though the last report wasn't the best.