Before I reveal all 48 of the current crop of triple-nets -- companies trading between 2x and 3x net current asset value, or NCAV -- that I'll be tracking over the next year, I'll reveal a few more of my favorites. From the past two columns, found here and here, that list already includes Liveramp Holdings Inc. (RAMP) , the much-hated Inc. Fitbit (FIT) , Johnson Outdoors Inc. (JOUT) and MarineMax Inc. (HZO) . Don't be surprised if you've never heard of some of them; these are small names that fly under the radar and may have a few fleas.
I'm doubling down on one of last year's hand-selected picks, Crimson Wine Group (CWGL) , which admittedly has not performed well since it was spun off from Leucadia National (now Jefferies Financial Group (JEF) ) in 2013. Shares are down 24% since the spin-off, and despite topping out above $11 in 2017 it has been downhill ever since for Crimson Wine, which now trades for about $7. CWGL currently trades for 2.21x NCAV and just 0.83x tangible book value per share.
Crimson Wine's ultra-premium wine brands include Pine Ridge Vineyards, Archery Summit, Chamisal Vineyards, Seghesio Family Vineyards, Double Canyon, Seven Hills Winery and Malene Wines. As of last fiscal year-end, Crimson Wines owned 967 vineyard acres. The company ended its latest quarter with $27 million in cash and $23 million in debt. CWGL has no analyst coverage and is not generating much of a bottom line, but is the type of name that ultimately could be acquired by a bigger fish. Ultimately, in this case, could be a long time, and for many, owning CWGL might be about as boring as watching paint dry or grass grow.
Other triple-nets that look interesting include:
- Astec Industries Inc. (ASTE) , which trades at 2.12x NCAV, and about 14x next year's consensus earnings estimates.
- Dril-Quip Inc. (DRQ) , which is trading at 2.34s NCAV and 40x next year's consensus estimates, although the following year's consensus shows expectations for a jump in earnings and a price-to-earnings (P/E) multiple of 28.
- National Presto Industries Inc. (NPK) , which currently is trading at 2.17 X NCAV. The defense and small appliance name ironically is mentioned in one of the late editions of Ben Graham's Intelligent Investor as a net/net (in Graham's definition, a company trading at less than two-thirds NCAV). Its shares are down 30% over the past year. NPK garners no analyst coverage and ended last quarter with nearly $23 per share in cash.
That's a total of eight of the more interesting triple-nets that I'll be tracking versus the idea of indexing, or taking a stake in all 48. Last year, indexing won.