ELEMENTARY VALUE
  • Home
  • About
  • Forum
  • Books
  • Tools
  • Contact

Seychelle  Environmental Technologies Inc (SYEV) - Tiny, cheap, illiquid and hairy

9/15/2019

24 Comments

 
Picture

I came across Seychelle Environmental Technologies Inc (SYEV) whilst rooting through stocks which Dan Schum has disclosed in his portfolio but not written up yet (Thanks for the idea Dan!).

As I suspected the firm is tiny, cheap , illiquid and hairy. Just how I like 'em!
SYEV 's description on the OTC markets website reads as follows;

"Seychelle is a worldwide manufacturer and marketer of portable water filtration products with proprietary filters that remove up to 99.9999% of contaminants that can be found in drinking water sources. Over 7 million filters have been sold in 33 countries through a network of dealers, distributors, humanitarian and faith-based groups, and militaries. The extensive product line includes bottles, water pitchers, drinking water straws, canteens, pure water bags, pouches and pumps; ideal for daily family use or emergencies."

The firm was founded back in  1986 by Carl Palmer who was a pioneer in creating home reverse osmosis products. This is the third water filtration company he's started having sold the previous two,  Aq-ro-matic  Inc to Coca-Cola Co. back in 1973 for $4 Mil in stock and cash, and  PurWater International/Interntional Membrane Laboratories   to AMF Cuno Corp for  around $6 Mil in 1986.

You can read a bit about him here.


If you want to listen to a podcast interview with the founder you can listen here.

Here's some numbers;

Market Cap = $2,125,945
Share price = $0.08
Common = 26,574,313
BV = $3.489,247
Total Debt (not inc. warrants or operating leases) = $877,030
Cash = $2,174,866

No prefs but there's  currently   6,407,221 warrants outstanding with a weighted average life of 1.54 yrs and an excise price of $0.21.

Operating lease obligations are ;



2019 =   $147,509 
  2020$= 258,181 
  2021 =   $153,209 
  Total   =   $558,899


Revenues and earnings are lumpy with SYEV,  every few years the firm turns a profit when a natural disaster hits or a tele-evangelist   pumps their products.

Here's BV for the last few years;

2015 = $4.58 Mil
2016 = $5.86 Mil
2017 = $3.62 Mil
2018 =   $4.3 Mil
​2019 = $3.75 Mil

Here's revs and net profits/losses for the last few years;

2015 = $4.31 Mil / -$1.41 Mil
2016 = $10.91 Mil/ $1.03 Mil
2017 = $4.38/ -$2,15 Mil
2018 = $5.28 Mil/ $660k
2019= $3.15 Mil/ -$240 k

​Now to the charts.

Picture
SYEV 5 yr Chart
Picture
SYEV Long-range Chart

I see a stock selling at it's lowest price since 2004, I see a stock which has frequently moved up several hundred percent in the past. I hear the ghost of Ted Warren whispering into my ear 'This is a buy'.

Before we get too carried away let me describe the fine head of hair this stock currently sports.

​For starters, despite being based in CA, the firm is  incorporated in NV. It re-incorporated there from  Utah back in '98. At this point you might want to start running away!

Given the outstanding warrants there's  a good chance of some dilution if SYEV runs up like it has in the past.

The firm is also currently involved in legal proceedings;
​

"There is a pending legal action named Rolling Tides, LLC vs. Carl Palmer, Seychelle Environmental Technologies, Inc., and other defendants.  The case was brought in the Superior Court of the State of California, County of Orange.  The action alleges certain fraudulent transfers occurred from Seychelle to the various defendants.  The plaintiffs have refused to identify any such transfers by date or amount.  The matter is in discovery and trial is set for August, 2019.  All the defendants have denied the allegations of the complaint, and are vigorously defending the matter.  It is not likely that the case will be settled without trial.  The Company believes that the case has no merit."

​This  is probably enough to put most people off but not me.


When I'm looking at a stock I ideally want to see 3 things,


a) discount  to tangible assets

b) multi year or absolute low on the long-range chart

c) Some evidence or prospect of change


Point  C brings us to the  recent release of an 8K by the company;

"Effective March 8, 2019, Mr. Carl Palmer resigned from his offices as Treasurer, President, CEO and CFO of the Company. There are no disagreements between the Company and Mr. Palmer. He remains a Director of the Company and plans to continue to work with the Company primarily in a consulting capacity, with a focus on strategic issues. A copy of his resignation letter is attached.

Also on March 8, 2019, Ms. Cari Beck became the President and Chief Executive Officer of the Company. She is also a Director and HR Manager.

Effective March 8, 2019, Ms. Jocelyn Straubinger became the CFO and Secretary-Treasurer of the Company."

The board had previously removed Palmer from the helm  back in 2016 stating  ;

"This decision of the Board is the result of its dissatisfaction with Mr. Palmer’s past performance regarding both ongoing operations and customer and employee relations"

​Shortly thereafter they did a U-turn and announced a Co-management structure.

You can read about these actions here and here.

Given Palmer is 85 years old it's probably reasonable that he takes a step back. A point of interest is the fact that Mr Palmer is the Father of  Cari Beck and the Father-in-law of  John Beck (Director).

So, it's a family affair. Could be a good thing, could be a bad thing.


Right, what's SYEV worth?

Assuming it should be  worth it's current BV then around $0.13 per share might be fair value, you might have a different opinion after seeing those warrants and operating lease obligations.

If SYEV has another good year like 2016 where it earned  $1 Mil then maybe  it's worth a lot more.


​If it can earn 3 or 4 cents per share again and get a no growth P/E pricing from the market of  7-8  then maybe it's  fair value range is somewhere between $0.20-0.32 per share.

Last I checked the firm had a $300k backlog.

Given the recent unfortunate events with Hurricane Dorian and the imminent Humberto perhaps the firm's business will increase.


In terms of ownership, the family owns  58.25% of the common. If they want to screw minority shareholders they can.


I'm a simple man and my thesis is simple here.


I see a tiny illiquid stock which is  currently subject to negative market sentiment, it is selling at a multi year low and has the potential to run up several hundred percent if it has a good earnings year.  I see some emerging potential with a  change in leadership.

I buy then sit and wait.

Thanks for reading ,

David


Long SYEV



​





24 Comments
G
9/16/2019 06:48:00 am

Insightful write-up, thank you! This one hit my radar too but once the operating leases were accounted for it didn't look as appealing (from a discount to NCAV perspective) relative to other opportunities.

Specifically, how do you think insiders could screw minority shareholders with their 58.25% ownership? Some might argue that this high insider ownership actually aligns interests.

Reply
David
9/16/2019 07:41:35 pm

Hi G,

With 58% ownership they've got a strong voting position, they can pay themselves egregious salaries, dilute shareholders equity through excessive issuance of stock options, do reverse splits to force minority shareholders out, all kinds of permutations really.

Not much of a concern to me though, just another stock in the basket.

Reply
G
9/16/2019 11:45:48 pm

Thought if I'd ask there would be something new to uncover. How can they use a reverse spilt to force out minority shareholders? I get it technically; they'll have a share price higher than the value of current shareholders holdings... in that case what happens to minority shareholders stock?

David
9/17/2019 09:09:14 pm

Hi G,

The reverse splits can be done so that minority shareholders end up with a fraction of a share. The firm can then stipulate that those with only fractions of a share get cashed out.

Reply
G
9/18/2019 12:03:08 am

That usually happens at what price? Current market price?

David
9/22/2019 10:33:32 am

Hi G,

If memory serves me correctly the cash out is done at the market price when the announcement is made.

Reply
michael boller
9/16/2019 12:26:58 pm

Is it possible to invest e.g. USD 10k in this Stock?

Reply
David
9/16/2019 08:23:07 pm

Hi Michael,

Not in one trade, you'd have to build a position over several purchases.

Reply
Dan schum link
9/16/2019 03:05:13 pm

That’s a fun read! A large part of my buy was the chart on this one. I hope to catch a big spike one day. But since my buy all that happened is what I thought was cheap has gotten cheaper...

Reply
michael boller
9/16/2019 07:07:27 pm

Yes, but if you go global you can can find even cheaper stocks. E.g. Kerlink (ALKLK) trades for a Net-current asset / Market Cap ratio of about 2, price to sale of 0.35 and price to book of 0.3.

Reply
David
9/16/2019 08:32:40 pm

Thanks Dan,


One of these days SYEV will have a good run up :)

Reply
David
9/16/2019 08:50:38 pm

Thanks Dan,

One of these days SYEV will go on a run :)

Reply
michael
9/17/2019 11:23:43 pm

There are several things that I like about this stock; it is tiny, illiquid, trades below net-current assets and at a multi-year low, debt free, cash flow from operations is slightly positive, high cash balance.

Reply
J
9/25/2019 08:12:17 pm

Hi David - how are you alerted if a stock like this in your portfolio shoots up to a price you'd consider selling at?

Thanks for the very interesting blog!

Reply
David
9/25/2019 09:09:46 pm

Hi J,

I can set alerts in my brokerage account that notify me if a stock hits a certain price but I tend to just check my account a few times a day to see what is happening. Most of the spikes in stock price tend to occur right at the open so I'll check then.

Thanks for taking the time to read my blog.

Regards,

David

Reply
Bala
4/26/2020 05:36:35 pm

Hi David,

I dont see SYEV in his blog portfolio though ? i'm looking at in wrong place. Please clarify.

Thahks
Bala

Reply
David
4/26/2020 05:47:14 pm

Hi Bala,

If you look at Dan's most recent portfolio performance update here;

http://www.nonamestocks.com/2020/04/noname-annual-performance-2019-2020.html?showComment=1587833783065

Then scroll down to the chart where Dan lists his stock holdings you'll see SYEV is the 8th stock in on the right of the chart.

Regards,

David

Reply
David
6/17/2020 07:30:34 pm

SYEV has filed a Form 15;

https://www.otcmarkets.com/filing/html?id=14181854&guid=2IzFUWbePFz7m3h

Not sure if the company will continue to provide financials via it's website or mail. I'll have to get in touch and ask.

Reply
Iota
6/18/2020 05:01:30 pm

IT is moving up and down like crazy with tiny volume. Probably some traders who use market orders. So i dont see any sell off

Reply
Ahmad
7/6/2020 07:06:55 pm

I talked to the company and they are not planning to provide any financials anymore neither on website, OTC nor mail. They are going fully dark

Reply
David
7/8/2020 06:13:09 pm

Hi Ahmad,

Thanks for the update.

Iota
7/9/2020 07:44:49 am

So they are going to kill the warrants?
there will be some angry shareholders of these warrents
"6,407,221 warrants outstanding with a weighted average life of 1.54 yrs and an excise price of $0.21."

Reply
Ahmad
7/9/2020 09:48:09 pm

She told me they are going fully dark only because of the expenses of audit, report, etc.. I feel there's more to it than just the expenses though. My guess is the pending litigation has something to do with this

Reply
Jim McGonigle link
9/3/2021 02:41:34 pm

We need to talk now! We have a tremendous amount in common. Check out www.noplaceforcommonsense.com. It is my life's story and will give you some idea of what I am about.

Hope to hear from you soon.

We really do need to talk!

Reply



Leave a Reply.

    David J. Flood

    UK based Investor. I focus
    ​on Net-nets, Pico/Nano caps, AIM/OTC/Dark stocks & Special Situations. Balance sheets & Long-range price charts are my guide. Caveat Emptor!


    For updates enter your email address and hit subscribe


    RSS Feed



    Archives

    May 2022
    January 2022
    November 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    December 2020
    September 2020
    June 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    November 2018
    October 2018
    August 2018
    April 2018


    Categories

    All
    AFFY
    AWRY
    BVERS
    CDTI
    CWPS
    Dark Companies
    ECRO
    EESE
    ENET:AIM
    EQTL
    FULO
    GTC:AIM
    HDT:AIM
    HGPI
    HMGN
    IMUC
    IOF.L/IOFNF
    LTRE
    MFCO
    MGAG
    MIRI:AIM
    MNO:AIM
    MYRX
    MYX:AIM
    NFPC
    NTIP
    NVTRQ
    ORGN
    PCOA
    PHSC.AIM
    PLWN
    Podcasts
    PPMT
    PSSR
    SPCB
    Svenda's Manual Of OTC Stocks
    SYEV
    TCN:AIM
    TTYP
    WSTL
    ZCOM


    BLOGS I FOLLOW

    No Name Stocks

    Svenda's Manual of OTC Stocks
    ​
    Caveat Emptor Stocks
    Leaven Partners
    OTC Adventures
    Nothing But Net Nets
    Clark Street Value
    Value Investing Blog
    Alpha Vulture
    Deep Value Investments
    OddballStocks
    Value Stock Geek
    Barel Karsan - Value Investing
    Shadow Stock
    Hidden Value
    Yet Another Value Blog
    Streets Of Value
    TES Optimal Value Investing
    The Bad Investor
    ​
    Undervalued Japan
    ​Liquidation Almanac
    ​
    Adventures in Capitalism
    White Chip Stocks
    Light Blue Value
    ​Global Investing Insight
    ​Mesaba Range Value
    The  Market Plunger
    Neto's Notes
    ​Battleship Investing Blog
    The Investment Long-List
    Oceania  Value
    Grahamian Value Digest
    Stock Speaking
    Canadian Value Stocks
    Analyzing Bargain Stocks
    MicroValue
    ​
    Hidden Gem Investing
                                                             © COPYRIGHT 2018-2021 ALL RIGHTS RESERVED
  • Home
  • About
  • Forum
  • Books
  • Tools
  • Contact