Lumber Prices vs Saw Log Prices

Tom McClellan tweeted this chart showing that lumber prices have been on a tear while log prices have not.



This is similar to what has been going on at the grocery store. Cattle futures prices are down this year, but I'll bet your cost per pound for a nice steak isn't.

Processing is a bottleneck: meatpacking and sawmills. Often when processing is a bottleneck the processors make a lot of money. If you are in refining and a big competitor is down for maintenance, the crack spread rises and you clean up.

Except in this case, covid is just screwing up processing plants: decreasing volumes and increasing costs. Here is what Tyson Foods said in the second quarter:
We are experiencing multiple challenges related to the pandemic. These challenges are anticipated to increase our operating costs and negatively impact our volumes for the remainder of fiscal 2020. Operationally, we have and expect to continue to face slowdowns and temporary idling of production facilities from team member shortages or choices we make to ensure operational safety. The lower levels of productivity and higher costs of production we have experienced will likely continue in the short term until the effects of COVID-19 diminish. Each of our segments has also experienced a shift in demand from foodservice to retail; however, the volume increases in retail have not been sufficient to offset the losses in foodservice and as a result, we expect decreases in volumes in the second half of fiscal 2020.
This is relevant in thinking about our Oddball companies who own timber, for example: Keweenaw Land Association, Pardee Resources, and Coal Creek Company. (Be sure to also read one of our older pieces, The Problem With "Sum of the Parts".)

We will have more about this topic in upcoming Issues of the Newsletter. If you are curious about the Oddball Stocks Newsletter, you can find out more (including à la carte Issues). Also be sure to follow Nate Tobik and the Newsletter on Twitter.

Update on Hauppauge Digital Inc. ($HAUP)

In December we did a post on a lawsuit that had been filed against Hauppauge Digital Inc. ($HAUP): a Verified Complaint to Compel Inspection of Books and Records in Delaware Chancery Court.

Regarding Hauppauge Digital Inc. (HAUP), see also these posts from other bloggers:
There have been some new developments in the case. The court granted Plaintiff a default judgment on April 24th:

Then, at the beginning of June, Hauppauge filed a motion to set aside the default judgment.

The motion was granted, and the default judgment has been set aside:


Conclusion:

I conclude that Hauppauge has met its burden of showing excusable neglect, a meritorious defense and that Rivest will not suffer substantial prejudice if the Motion is granted.39 However, recognizing that Section 220 actions are intended to be summary proceedings,40 and given the delays that have occurred related to this Section 220 action, I intend, once this report becomes final, to ensure that this matter proceeds as expeditiously as possible in the future.

Scheid Vineyards ($SVIN) Releases Quarterly Earnings

Nate did a post last month, "Interpreting the Scheid Vineyard 2019 Results". The trends that he noted in that post, and also in our post last summer about developing concerns with Scheid, have not really changed.

Gross profit was flat year over year, but SG&A is $4.2 million quarterly and gross profit is only $2 million. And that does not include interest expense, which at $1.2 million is now almost 60% of gross profit. There was a comment on our last Scheid post that is worth including here:
Nice post. COVID will certainly put a damper on their cased goods growth this year. Their new low calorie/health conscious line of Sunny with a Chance of Flowers seems like the right move, though.

One thing I would add is that they're currently in the process of monetizing a few parcels of unencumbered land. This has been in the works for some time, but looks like it was gaining significant ground before COVID hit. Check out the Greenfield town meetings documents on "Las Vinas" and "Pinnacles Plaza". Unfortunately, it looks like they will need to monetize these properties relatively soon. If they can sustain their case growth for two more years (e.g., sell over 600,000 cases), I think they will be fine. Though it truly is a binary, option-like play. 
Shares are now offered for $18.75, which is a seven-year low. We will have an update with our thoughts and analysis in the upcoming August Issue (#31) of the Oddball Stocks Newsletter.

Earnings 1st Qtr Fiscal 2021 by Nate Tobik on Scribd

Bank of Utica Statement of Condition for June 30, 2020


Bank of Utica (ticker symbols BKUT and BKUTK) is a perpetually cheap (relative to book value) bank that we have covered for a long time.

If you are not a Newsletter reader, you can check out a sample that mentioned BKUT a couple of years ago. We also posted about the 2019 annual results, and investors' reactions, back in February, and their Q1 results in May.

You can view the financials directly on CompleteBankData.

We are planning to make the upcoming August 2020 Issue of the Oddball Stocks Newsletter (Issue 31) a "Bank Issue," so we will of course be updating readers about Bank of Utica in detail.

SouthFirst Bancshares ($SZBI) 2019 Annual Report

We posted on SouthFirst Bancshares (SZBI) way back in December 2014 (actually twice), and it was also mentioned on Credit Bubble Stocks back in 2017. In the Newsletter, we talked about SouthFirst in the following Issues: 20, 22, 24, and 26.

At the current $1.65 per share, the stock is the lowest it has been since the summer of 2013. The annual report and proxy statement just came out as you can see below. We noticed something interesting in the footnotes to the 2019 financial statements:
On February 26, 2020, the Board of Directors of the Company elected to cancel the executive Change in Control Agreements (“Agreements”) that were in place for certain officers, as described in Note 13. The cancellation constitutes a 12‐month prior written notice of the Agreements in place. The Agreements remain in effect until February 26, 2021, in which any benefits may be provided under the Agreements in the event a change in control occurs prior to February 26, 2021. From and after February 26, 2021, the Agreements will be cancelled and no benefits will be provided under the Agreements for any change in control that occurs on or after that date.
We are planning to make the upcoming August 2020 Issue of the Oddball Stocks Newsletter (Issue 31) a "Bank Issue," so we will of course be updating readers about SouthFirst in detail.