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CCUR Holdings - More Good News For Shareholders

December 10, 2019

 

 

Continuing our coverage of CCUR Holdings (see prior blog posts, as well as our writeup in our Research section), the company today announced in a press release (see full PR here) that it has "initiated further review of capital allocation alternatives to maximize stockholder value, including a potential limited return of capital to stockholders through a special distribution" (emphasis added). It's worth noting that, as of the most recent quarter end, CCUR had $15.8 million in cash, cash equivalents and equity securities on its balance sheet, worth approximately $1.80/share (see balance sheet here). In addition, as of 9/30/18 CCUR had $22.8 million in available-for-sale debt securities, worth another $2.60/share. Having just $1.6 million in long-term debt outstanding, there appears to be ample room for the company to return cash and/or equity or debt securities to its shareholders in the most tax efficient manner possible (in cash or in kind). It is even possible that the company might conceivably lever up a bit and use some of the proceeds to return capital to shareholders (currently CCUR is under-levered).

 

Below is the full 9/30 CCUR balance sheet:

 

It is refreshing to see a company in CCUR's position, with a dominant (~40%) shareholder, publicly signaling that it intends to reward all shareholders, not just controlling ones. This kind of thinking engenders goodwill that normally ends up providing long-term benefits to those running the company, as well as stock outperformance over time (think Buffett and Berkshire Hathaway). The press release also indicates that CEO Wayne Barr and the board are intelligent capital allocators, as they appear to realize that when asset prices are historically high, excess funds should be returned to a company's owners rather than reinvested at exorbitant, unappealing multiples (i.e., at cash flow yields which are below CCUR's cost of capital). Thus, while we await the board's final determination, we render a provisional "Kudos, gents!" verdict on the latest development at CCUR.

 

The market apparently agrees, as shares were up 7.5% on the news at last check:

 

 

 

DISCLOSURE: Long CCUR.

 

 

 

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