tts

In this case the Board members bought over $4M over the last few days, which is close to 1% of the market cap.

Wouter28

Wouter,

R u sure that TTS market cap is $40 Mill?

R

TTS market cap is $534 mill. Those inside purchases r an incredible tell; good find!

Wouter,

R u sure that TTS market cap is $40 Mill?

R

Oops! was supposed to read $400 Mill?

In this case the Board members bought over $4M over the last few days, which is close to 1% of the market cap.

With the market cap at $534M, $4M is .75% of the total. Pretty close to 1% in my book. If you consider all the insider purchases over the last 6 months, they spaent $7.6M and have purchased over 1%. See insider activity here:

http://openinsider.com/search?q=tts

If you subscribe to Rule Breakers, you can see more discussion here:

http://discussion.fool.com/1069/rbs-tile-shop-holdings-tts-12074…

At this point, TTS has had some trouble with a supplier in China (funky business with people too close to to management & has been resolved), slowing comps (still increasing marginally), macro benefit of aging housing in need of repair and lower expected profitability. The last item really hammered the stock.

Gross margins are stable @ about 70% (vertical integration enables this) and the company has a lot of expenses related to its expansion. With only 100 stores, primarily on the Northeast and Central US, there is a a lot of room for growth. They are expanding West, and have a relatively new distribution facility in Oklahoma City, which should satisfy 40 stores (I think it may support 60, but I need to check my notes). They expect to open about 400 stores in total. This estimate is driven on a population basis, extrapolated to the areas where the expansion is planned. It is not unreasonable to expect such growth.

Saul should be interested in this, because of the growth runway (100 to 400 stores) and the margins. If these guys keep doing what they’re doing, even with low comps and a small hit on margins, the expansion should carry the share price a lot higher over time. The problem with this is that they may only grow 20 stores per year for the foreseeable future, which is not enough to satisfy a growth investor given the slowdown in comps.

If you want to learn more about the state of housing in the US, go here and have a good read: http://www.jchs.harvard.edu/research/publications?field_date….

If one assumes a current lull in housing (existing home sales is their primary metric), a bit of an acceleration later, a bit faster than 20 stores/year expansion and sustainability of margins, the stock is cheap.

Oh, and then there is the insider buying now.

I will qualify this by disclosing the fact that I was over-weighted in this company prior to losing about 40% of my capital. I am not over-weighted, because of the drop in pice.

If Saul’s Investment Discussions are interested in this company, I have some basic research I can share, including income statement projections and macro stuff. I do the numbers only annually, because I have a really busy job.

At the end of the day, I will add to my position. Tile Shop is a good company with a long growth runway that investors hate right now. They are doing a lot of things right, and I am patient. The insider buys make me feel a little better about buying more. But I do acknowledge that I can lose another 40% before things get better.

DJ

5 Likes

DJ, I’d be interested in your reasearch if you care to share it.

I just posted this on the TTS board:

Another Day, another insider purchase

Peter Kamin, who made the big $2.9M purchase last week felt that he just didn’t own enough shares, so he purchased an additional 70,000 shares on Monday (8/4) at 9.77 for $683,900. That brings his recent purchases up to $3,586,000 over the last few days. It brings the recent total insider buying up to $5,059,298 over the last few days and $8,659,636 since February.

See insider buying link below:

http://openinsider.com/search?q=tts

Here’s Peter bio:

Peter H. Kamin has served as a member of our board of directors since August 2012. Previously, Mr. Kamin served as a member of The Tile Shop’s board of managers from January 2012 to August 2012. Mr. Kamin has served as managing partner of 3K Limited Partnership, an investment fund, since January 2012. Previously, Mr. Kamin was the founding partner of ValueAct Capital, an investment fund, from January 2000 to January 2012. Since June 2012, Mr. Kamin has been a director and member of the audit committee of Ambassadors Group, Inc., a publicly-traded educational travel company; since May 2012, Mr. Kamin has been a director and member of the governance committee of MAM Software Group, Inc., a publicly-traded provider of business automation and ecommerce solutions for the automotive aftermarket; and since April 2012, Mr. Kamin has been a director and member of the audit committee of Rand Worldwide, Inc., a provider of technology solutions and professional services to engineering and design companies. Mr. Kamin previously served on the board of directors and as a member of the audit committee of Adesa, Inc., a publicly-traded provider of vehicle auction and remarketing services, from April 2007 to December 2011; on the board of directors and as a member of the audit and compensation committees of Seitel, Inc., a publicly-traded provider of onshore seismic data to the oil and gas industry, from February 2007 to December 2011; and on the board of directors and as a member of the governance committee of Exterran Holdings, Inc., a provider of natural gas compression products and services, from January 2007 to September 2008. Mr. Kamin holds an M.B.A. from the Harvard University Graduate School of Business and a B.A. in Economics from Tufts University. We believe that Mr. Kamin is qualified to serve on our board of directors due to his significant experience as a director of publicly-traded companies and his substantial experience as an investor.

3 Likes

Wouter & Fools,

This is a visual I made earlier in the year showing the geographical potential by coverage. Basically, here are a lot of major geographical areas that are not yet covered by Tile Shop. It is impressive to se this visually.

https://docs.google.com/presentation/d/1i6Rsl0uS2Io8heah7N70…

Here is a work-in-process spreadsheet, which contains an income statement for projections (I use goal seek to change the assumptions), market data (stores, sores pivot & mkt spend tabs have my input), the list and tables tabs (from Harvard on the state of remodeling in the US).

https://drive.google.com/file/d/0B-hm1LKEzFaDV1lVWWtiZXBKRHc…

I intend to refine this and make it more concise (I’m really busy at work, which means I cannot say when). Regardless, one can look at the information and get a really good idea about the prospects of Tile Shop.

DJ

2 Likes