Micro-Cap Land Proprietor, Strategic Possible choices

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CKX Lands (CKX) (~$27MM marketplace cap) is a sleepy micro-cap that is going again to 1930 when it used to be spun from a financial institution.  CKX owns 13,699 web acres (about part is wholly owned, the opposite part is thru a 16.67% passion in a JV) in southwest Louisiana which it earns royalties from oil and gasoline manufacturers, bushes gross sales and different floor rents it collects.  Income skews in opposition to oil and gasoline revenues, however the worth of the land is most likely extra in its use as timberland (they do not give oil and gasoline reserve numbers). 

On Monday, CKX put out the beneath press free up:

CKX Lands, Inc. Broadcasts Evaluation of Strategic Possible choices

 

LAKE CHARLES, LA (August 21, 2023)—CKX Lands, Inc. (NYSE American: CKX) (“CKX”) lately introduced that its Board of Administrators has decided to begin a proper procedure to judge strategic choices for the corporate to strengthen worth for stockholders. The Board of Administrators and the control staff is thinking about a large vary of possible choices, together with proceeding to perform CKX as a public, impartial corporate or a sale of all or a part of the corporate, amongst different possible choices.

 

The corporate has engaged TAP Securities LLC as monetary marketing consultant in reference to the assessment procedure. Fishman Haygood, L.L.P. is serving as criminal marketing consultant to the corporate.

 

There is not any cut-off date or definitive timetable set for the final touch of the assessment of strategic choices and there can also be no assurance that this procedure will lead to CKX pursuing a transaction or every other strategic result. CKX does no longer want to make additional public remark in regards to the assessment of strategic choices till it’s been finished or the corporate determines {that a} disclosure is needed through legislation or differently deemed suitable.

 

CKX Lands, Inc. is a land control corporate that earns earnings from royalty pursuits and mineral rentals similar to grease and gasoline manufacturing on its land, bushes gross sales, and floor rents. Its stocks industry at the NYSE American marketplace underneath the logo CKX.

 

TAP Securities is an associate of TAP Advisors, an funding financial institution offering monetary advisory, mergers and acquisitions and capital-raising services and products. TAP Securities is positioned in New York Town, telephone quantity (212) 909-9034.

The corporate’s disclosures lack a lot element, it’s difficult to worth this asset from the out of doors.  Control right here has a vital informational edge over public marketplace buyers, however with this, they’re signaling that CKX is most likely price significantly greater than the present buying and selling worth.  Having learn a couple of of those bulletins over the years, if I needed to bet, the highlighted phase feels like control desires to take it personal.

Moreover, control does not take any money wage and as a substitute the board granted them a beneficiant inventory incentive package deal that vests over the years as CKX hits positive proportion worth objectives.

Probably those are cheap objectives, the $12 threshold used to be prior to now met, however the stocks lately industry at roughly $12/proportion.  To look if that is cheap, on a handy guide a rough again of the envelope, I’ve the stocks buying and selling for roughly $1350/acre.

To be price $15/proportion, the acreage (most commonly timberland) should be price nearer to $1900/acre.  By means of poking round Land Watch, for the beneath parishes, it does seem that $1900/acre is in all fairness.

I do not actually have a excellent sense of the way a lot CKX is price, instead of I just like the setup, I might be eager about listening to extra whole ideas from others that experience executed extra paintings on CKX, please be happy to remark beneath.

Disclosure: I personal stocks of CKX

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