Thursday, March 27, 2014

Scheid Vineyards in the Spotlight, and You'll Never Guess Who They've Teamed up With

High quality pink sheet wine company Scheid Vineyards (SVIN) has fallen off investors' radar since the company went "dark" in 2006, allowing it to remain publicly traded, while avoiding the prohibitive costs of Sarbanes Oxley, and no longer having to file with the SEC.

Scheid has long been fascinating to this site, primarily due to the companies exposure to the wine industry and ownership of  vineyard acres in California. As of late 2013, Scheid owned 1575 acres, which is nearly 2.5 square miles, and leased an additional 1775.

With just 882,000 shares outstanding following a 1 for 4 reverse split in 2006, shares are difficult to come by, and average volume is just 220 shares per day. Data is also difficult to find since SEC filing is not required.

After years of admiring Scheid from a distance, and seeing shares-which traded for $56 (post-split) in 1998, and $39 in 2008- fall all the way to $8 in 2011, I finally took my initial position. I added more in the mid teens. Now trading at $27, the company is starting to get re-discovered.

Some of the attention is due to the recent partnership the company has entered into with none other than Kathy Lee Gifford, and the new Gifft by Kathie Lee Gifford line of wines. She hawked the new venture earlier this week on Late Night with Seth Meyers. Yesterdays volume of 4000 gave a hint that something was happening.

That was certainly a surprise, and should be a positive for the company. As an investor, however, Scheid remains compelling for other reasons, for one the fact the company is trading at just .59 times tangible book value for share, and owns some high quality assets. Scheid Vineyards is also profitable again. Last year, the company earned $8.01 million (which included a $5.8 million gain on the sale of land) on revenue of $36.3 million.

With such a small float, due in part to the Scheid family's ownership interest in the company, the bid/ask spread is usually very wide.

But it's nice to see the company in the news.

Scheid Vineyards
Ticker: SVIN
Shares Outstanding:
Class A: 734,917
Class B: 147460
Price: $27.00
Book Value Per Share: $45.7
2013 Revenue:$36.3 million (year ended 2/28/2013)
Market Cap: $23.8 million (as of 3/26/2014)
Enterprise Value: $81.7 million (cash/debt based on YE 2013 data):
*Data From 2013 annual report

*The author has a position in Scheid Vineyards). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only                                                                                                                          


Dark Sider said...

Mr. Heller,

Annual they post on-line (did not see on their website). Or can a person just by some token shares to get a copy?

Related, I have been following CWGL...a Leaucadia (SP?) spin-off. Marginally profitable, but probably selling at full value (i.e., no position). Thanks.

Jonathan Heller, CFA, Editor said...

Reports are not published, but are available to shareholders.