Earnings season is always fascinating to me, not necessarily due to company results. Still, while I believe there is far too much attention paid to a single quarter, the fallout can provide opportunities when the markets overreact.
What's most fascinating to me, however, are the non-performance-based nuggets of information sometimes gleaned from the earnings reports, or that are released pre-earnings.
Fashion retailer Cato (CATO) , which won't report fourth-quarter results until next month, did reveal something interesting on Friday after declaring its regular 17-cent quarterly dividend. The company announced that a 1 million share increase in its repurchase authorization; it had 135,000 shares left on its prior authorization. This was a good sign from CATO, which currently yields 7.36%.
Admittedly, share buyback programs, which can be announced to generate investor interest, are only meaningful if the company follows through and actually buys back shares. CATO has a long history of buybacks, though, having reduced shares outstanding by nearly 26% over the past, so the follow through is there.
CATO, which is down 4% year-to-date and 45% over the past year, ended its latest quarter with $146 million, or $7.31/share in cash and no debt. The shares closed Friday at $9.24.
Meanwhile, mini-conglomerate Biglari Holdings (BH) (BH.A) issued its annual Chairman's letter, which is always an interesting read. Two weeks ago, I profiled the revelation of the company's "mystery holding," which turned out to be a sizable position in restaurant name Jack in the Box (JACK) . The letter also lists another position, this one being 360,000 shares of luxury auto name Ferrari N.V. (RACE) , a stock in the Action Alerts PLUS Bullpen.
Biglari is also out with full-year earnings Monday, and lost $107.43/share on revenue of $368 million; however, due to the nature and structure of this company, a much deeper dive beyond the top-line and bottom-line numbers is necessary to get the full picture.
The Chairman's letter, dated Feb. 25, lists the value of holdings in JACK, RACE, and Cracker Barrel (CBRL) (of which it owns 9.3% of the outstanding shares) at $343 million alone. Add to that the ownership of the formerly publicly traded Steak n Shake, and Western Sizzlin restaurant chains (which includes sizable real estate assets, namely land and buildings for 155 locations, and another nine properties), 90% ownership of Abraxas Petroleum, Southern Oil Company, First Guard Insurance, and Southern Pioneer Property & Casualty Insurance Company, and you've got an interesting package of assets.
I've owned BH for years, and had a love-hate relationship with it, but am actually optimistic for the first time in ages. It's not for everyone, and has had its share of fleas, but things may be looking up.
More earnings nuggets as they reveal themselves...