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 web 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 fuel producers, timber gross sales and different floor rents it collects. Income skews in direction of oil and fuel revenues, however the worth of the land is probably going extra in its use as timberland (they do not give oil and fuel reserve numbers).
On Monday, CKX put out the beneath press launch:
CKX Lands, Inc. Pronounces Evaluate of Strategic Alternate options
LAKE CHARLES, LA (August 21, 2023)—CKX Lands, Inc. (NYSE American: CKX) (“CKX”) at the moment introduced that its Board of Administrators has decided to provoke a proper course of to judge strategic options for the corporate to boost 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 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 is no such thing as a deadline or definitive timetable set for the completion of the assessment of strategic options and there may be no assurance that this course of will end in CKX pursuing a transaction or another strategic final result. CKX doesn’t intend to make additional public remark relating to the assessment of strategic options till it has been accomplished or the corporate determines {that a} disclosure is required by regulation or in any other case deemed acceptable.
CKX Lands, Inc. is a land administration firm that earns income from royalty pursuits and mineral leases associated to grease and fuel manufacturing on its land, timber gross sales, and floor rents. Its shares commerce on the NYSE American market below 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, telephone 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 major 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 couple of of those bulletins over time, if I needed to guess, the highlighted half appears like administration desires to take it non-public.
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 presently 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.
I do not actually have an excellent sense of how a lot CKX is price, apart from I just like the setup, I would be excited by listening to extra full ideas from others which have accomplished extra work on CKX, please be happy to remark beneath.
Disclosure: I personal shares of CKX
