Hi Bob, I added more OMQP twice more in as many weeks. All in the low $11s.
I attended the annual meeting today. Other than the usual formal "Roberts rules" stuff at the beginning it was very upbeat.
Presentation indicates that there's been a major change in the ownership of the "distributor network" in very recent times. The network is consolidating in very rapid fashion. Where there were many small distributors last year, two $1B+/year now reside. This is a good news/bad news joke for now. It means they will be dealing with a stronger entity with potential savings in sales and accounts receivables, but also that their customers have a bit more clout with them as well. Also, temporarily, the annual buying pattern was disrupted. This should smooth out over the next few quarters.
I asked about their foreign business. Where OMQP had very little foreign business a year ago, it now is guessed to be approaching the 10% mark in revenues. Some of the new business is in Australia where there was an established Snorkel business. They've added products from Lull and Trak's lines to fill out their offerings there. Within the last 12 months they've also added distributors in Argentina, Chile, Brazil (!) and Mexico. These relationships will work in similar fashion to domestic distribution channels.
A question of product liability exposure was asked and addressed. Mr. Stiff said it is a "cost of doing business" that's hard to avoid, but is managed. They consider 5 outstanding litigations to be about the norm for them. He said they are usually settled in satisfactory fashion.
A question of what OMQP was doing to promote its "image" on Wall Street was asked and addressed. Mr. Stiff said that they hope their performance will speak for itself. Mr. Nickelson (COB) suggested that there are a couple of houses that are following OMQP now and that's good from a company of their size. He indicated that you can't just call up analysts and tell them how great you are! He feels as the company's track record is fleshed out over the next few years exposure will improve. (I noted in the annual report that there are only about 200 stockholders for the company. Hardly OmniQuip.com!)
A comment on valuation was made that with the P/E as low as it is relative to revenue growth rates, that OMQP was a relative bargain. This comment was from an investor in the audience. The person sitting next to me had just purchased OMQP stock a week ago, so now there's 201 shareholders! He's a college student and had written a report on OMQP for a business class - then put his money into it!
I asked about institutional investors, noting that there is currently about 1/3 of the outstanding shares owned by institutions. Mr. Stiff said this has been essentially unchanged over the last year and that most of the larger holders had been with OMQP for a long time. He felt this had given the stock some "stability." (Thank goodness! '98 was quite a ride!)
I sort of answered my own thoughts about why 4 of the directors owned no stock of consequence. Two of the four are with Harbour Group, a venture capital group that's been involved with OMQP for some time. One is a principal of Edward Jones & Co. and the last is involved in the construction contracting business. Three of the four have options for at least 10,000 shares priced in the low teens. So, if they don't have a stake now, they may in the future. Officers and directors beneficially own 6.9% of the outstanding issue.
I own nearly three times as many shares as I did when I attended the meeting in Milwaukee a year ago. My account isn't 100% invested at this time, but was back in October. I let a small portion of my holding go as the price climbed to the $15+ range. My account is down in value from its high water mark about 20% still. It won't take much of a move in price per share to boost it back to a new high for me.
Finally, Mr. Stiff said that their projections for '99 look to be on target and achievable.
Best regards, Tom |
