I'm expecting to post again tomorrow with a summary of how the meeting goes, so stay tuned. For anyone new to the Solitron situation I have a short summary below. For everyone else skip straight to the questions.
In 2010 I discovered a tiny profitable net-net, with a slug of cash on their balance sheet. The company had a number of liabilities stemming from their bankruptcy in the 1990s. I wrote a number of posts detailing the investment case for the company, and ultimately waited for something to happen.
I eventually wrote a letter to the Board, urging a stock buyback and encouraged them to hold an annual meeting. After hearing an outcry from investors (including one filing a lawsuit) the company acquiesced .
In the meantime the company paid off all of their known environmental liabilities stemming from their bankruptcy. The company is now a pile of Treasury bonds with a profitable electronics manufacturing company attached. It's worth noting they are still undervalued, according to some measures significantly so.
The annual meeting is tomorrow at 9am at the firm's law offices in central Miami. I was disappointed by the location considering their facility and headquarters are than 10 miles from where I traditionally stay when in Florida. I would have been nice to see their facility from the inside as well.
I have written too many posts on Solitron to link to each, so here is the Google link for all of them.
Solitron Board Questions
- Are there any residual liabilities from the bankruptcy that are off balance sheet or haven't been noted?
- Why hasn't the company grown in the last decade? Especially in light of the extraordinary defense spending and growth rich environment.
- What is your approach to target new markets?
- Has your customer list changed much in the last decade? Have you gained new customers?
- How has the sequester affected your business?
- What accounted for the $190k increase in SG&A this past year?
- How do you measure the business?
- What is your standard of success?
- Do you consider Solitron successful?
- Why haven't you hired a CFO?
- [Statement] As a shareholder I, and others would be happy if the company paid more per year for an audit if the auditor would remain the same year over year.
- Have you considered taking the company private?
- Is the company more likely to execute a dividend or buyback with the excess cash?
- What is holding the company back from distributing excess cash to shareholders?
- If the company pays a dividend or buys back shares, and shareholders become less vocal will you discontinue annual meetings and stop listening to shareholders again?
- Have you considered an acquisition?
- What would you look for in a potential acquisition?
- Would you consider using debt to finance an acquisition?
- How would you evaluate a potential acquisition target?
- [Statement] As a shareholder, seeing how the business has failed to grow in the past decade I would prefer the company give cash back to shareholders, instead of attempting to grow the business through an acquisition.
If anyone has anything they wish to add to this list leave a comment. Fair warning, I might be slower to approve comments, I will have my phone at the beach, but won't be checking it as often, please be patient!
Disclosure: Long Solitron