How I Look To Have Affected Bab Inc. With My Recent Article On Them.

How I Look To Have Affected Bab Inc. With My Recent Article On Them.

In the past two months while I have been working on getting our business started I pretty much blacked out everything investing related.  I did this for three reason; so I wouldn’t be tempted to go back to researching companies because that is where my heart lies, so I could concentrate on getting the business going, and because I needed to take a break physically from the amount of work I was doing.

In the past week or so I have been going over the companies I have written articles on, especially the ones I am interested in or own, to see if I have missed any news in the past two months that is very important and it looks like I have with Bab Inc (BABB.)

My recent article series on them, part 1 and the conclusion, laid out how overall I thought BABB was a very interesting company and how I would love to invest in the company, and possibly becoming activist in the company to help fix its major problem of overly excessive executive pay and overall excessive payroll in my opinion.  In my opinion this is the only major problem with the company and if executive pay and overall payroll was lowered it would help raise the companies earnings and cash flow, and would most likely help to unlock the underlying value of the company that I see beneath the excessive pay.

When looking back to see if I missed anything on the companies I am interested in I found this link.  Since I do not believe in coincidences, apparently BABB management noticed my article somewhere or were threatened by another investor, and have decided to adopt a “Stockholder’s Rights Plan.”  This allows the company to issue rights to current shareholders in the event that someone buys 15% of its shares (20% in the case of an institution) to “Protect Shareholders best interests” from outside investors. These rights would be issued to shareholders as of May 13th if someone were to purchase 15 or 20% of BABB and look to essentially be a way to keep people from making too much noise about change at the company.

There is also this line from the announcement:

BAB’s Board of Directors may redeem the Rights for $0.001 per Right at any time before an event that causes the Rights to become exercisable. The Rights will expire on the third anniversary date of the Agreement, unless the Rights have previously been redeemed by the Board of Directors.

This gives a further advantage to insiders over regular shareholders and is again put in there to keep outside investors from making changes in the company, and is completely ridiculous in my opinion.

It looks to me that current BABB management likes the status quo of taking giant payrolls, losing market share, and losing restaurant counts and does not want to have things shaken up by outside investors who may want to lower overall pay, help the company become more profitable, and help the company potentially grow again.

This is my first experience with a company doing something like this and I knew it would eventually happen because of how most nano caps are managed by only a small number of individuals who control the company.  It is still surprising and disappointing that they would do something like this, but apparently they would rather just keep milking the company instead of putting some of that excessive pay towards growing the company or growing earnings and cash flow.  Suffice it to say that I am glad I did not buy into BABB as this shows that in my opinion management does not care about the best interests of shareholders.

This does make me want to buy into the company though to change things even more for the betterment of all shareholders and not just the few at the top of the pyramid, maybe I will at some point.

Getting Back Into The Swing Of Things, My Investing Book, Sold $STRT Up 75%, And What Have I Missed?

Since my last post almost two months ago now my brother and I have been working very hard in our business Black Hills Tech Solutions so I have had almost zero time to look at the stock market since then.  We are doing relatively well so far and are working on building a company’s website right now.  Okay well my brother and his buddy are doing the bulk of the website building since I have no idea how to do any of that.

I have also gotten off of my allergy shots, which have made me feel quite a bit better consistently and have also been forcing myself to take time off from things and relax every once in a while.  I do not know which has helped me the most but I have not been sick in about two straight months since I have started the above and have generally felt pretty decent most of the time.

Since I have been feeling better, (i.e not getting sick all the time mainly) and since I have had a bit of free time with less going on at the business I have had some time to fill my want/need to research companies, learn about investing, and work on my investing book in the past week or so.

In the past week so far I have finished up another two chapters in my book and tonight I will start on another chapter.  I also have been looking for a company to start research on but have thus far had no luck.  It seems that the market has continued to get even more over heated in the past couple months as a week ago I took cursory looks through about 250 companies to potentially do research on and the only ones I found to be even a little undervalued or interesting were Chinese nano caps.

If you have been following this blog for a while you know that Chinese small caps terrify me because of the fraud, misreporting, lying, etc and that I lost a lot of money on them when I first started investing.  Suffice it to say that if I am not comfortable buying into Chinese small caps that I won’t consider even looking into Chinese nano caps.

I have also sold out of Strattec (STRT) in the portfolios that I manage due to it reaching the higher end of my valuation range and I sold out up 75% since December when I originally bought into them.  If, and more likely when, the market crashes I will definitely think about buying into them again as I still really like what they are doing now that they have fixed the bulk of their problems and their management.  The portfolios that I manage are now sitting around 55% cash because of how overheated I think the market is.

I will continue to look for a company to do research on and continue working on my book and hope to post again a bit more regularly now that we have slowed down and settled in a bit more at the business.

Having said that I now ask you if there are any links, websites, articles, etc that have come out in the past couple months that you think are fantastic.  I pretty much blacked everything investing related out in that time frame to concentrate on opening and starting the business so I am sure I missed out on some pretty good information.  I would very much appreciate it if anyone has anything to share that you think I would like to learn from and might have missed in the past couple months and would really appreciate if you were able to share some of those with me.

Until next time.