Micro-Cap Land Proprietor, Strategic Options

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CKX Lands (CKX) (~$27MM market cap) is a sleepy micro-cap that goes again to 1930 when it was spun from a financial institution.  CKX owns 13,699 internet acres (about half is wholly owned, the opposite half is thru a 16.67% curiosity in a JV) in southwest Louisiana which it earns royalties from oil and gasoline producers, timber gross sales and different floor rents it collects.  Income skews in direction of oil and gasoline revenues, however the worth of the land is probably going extra in its use as timberland (they do not give oil and gasoline reserve numbers). 

On Monday, CKX put out the under press launch:

CKX Lands, Inc. Publicizes Overview of Strategic Options

 

LAKE CHARLES, LA (August 21, 2023)—CKX Lands, Inc. (NYSE American: CKX) (“CKX”) as we speak introduced that its Board of Administrators has decided to provoke a proper course of to judge strategic alternate options for the corporate to reinforce worth for stockholders. The Board of Administrators and the administration workforce is contemplating a broad vary of potential choices, together with persevering with to function CKX as a public, unbiased firm or a sale of all or a part of the corporate, amongst different potential alternate options.

 

The corporate has engaged TAP Securities LLC as monetary advisor in reference to the assessment course of. Fishman Haygood, L.L.P. is serving as authorized advisor to the corporate.

 

There isn’t any deadline or definitive timetable set for the completion of the assessment of strategic alternate options and there will be no assurance that this course of will end in CKX pursuing a transaction or every other strategic end result. CKX doesn’t intend to make additional public remark concerning the assessment of strategic alternate options till it has been accomplished or the corporate determines {that a} disclosure is required by legislation or in any other case deemed applicable.

 

CKX Lands, Inc. is a land administration firm that earns income from royalty pursuits and mineral leases associated to grease and gasoline manufacturing on its land, timber gross sales, and floor rents. Its shares commerce on the NYSE American market underneath the image CKX.

 

TAP Securities is an affiliate of TAP Advisors, an funding financial institution offering monetary advisory, mergers and acquisitions and capital-raising providers. TAP Securities is situated in New York Metropolis, cellphone quantity (212) 909-9034.

The corporate’s disclosures lack a lot element, it’s difficult to worth this asset from the skin.  Administration right here has a big informational edge over public market buyers, however with this, they’re signaling that CKX is probably going price significantly greater than the present buying and selling value.  Having learn a number of of those bulletins over time, if I needed to guess, the highlighted half seems like administration needs to take it personal.

Moreover, administration would not take any money wage and as a substitute the board granted them a beneficiant inventory incentive bundle that vests over time as CKX hits sure share value targets.

Presumably these are cheap targets, the $12 threshold was beforehand met, however the shares at present commerce at roughly $12/share.  To see if that is cheap, on a fast again of the envelope, I’ve the shares buying and selling for about $1350/acre.

To be price $15/share, the acreage (principally timberland) should be price nearer to $1900/acre.  By poking round Land Watch, for the under parishes, it does seem that $1900/acre is inside cause.

I do not actually have a superb sense of how a lot CKX is price, aside from I just like the setup, I would be keen on listening to extra full ideas from others which have completed extra work on CKX, please be happy to remark under.

Disclosure: I personal shares of CKX

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