Ideas Elsewhere: CKX Lands (CKX)

Strategic Review

 

Clark Street Value recently shared his thoughts on the freshly launched strategic review at CKX Lands. It is a tiny company that owns land in Southwest Louisiana and generates royalties from oil and gas producers as well as timber sales. Management thinks CKX is undervalued and the language in the press release suggests that management buyout is one of the options being considered.

The market currently values CKX at around $1400/acre. Looking at the land prices in Louisiana parishes where CKX owns land parcels, $1900/acre seems to be a more reasonable valuation and would put the stock at $15/share (21% upside). Some incremental value could come from the company’s residential ranchettes which are selling for $13k/acre. Management owns 11% of CKX and has a generous incentive package, most of which would vest at $15/share.

Note: The ‘Ideas Elsewhere’ section is intended to highlight interesting event-driven investment ideas by other authors. These ideas are not my own, and I am simply summarizing them to bring attention of SSI subscribers. I do not intend to actively follow the developments of these ideas, so you should expect limited updates or follow-ups in the comments section.

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1 thought on “Ideas Elsewhere: CKX Lands (CKX)”

  1. CKX updated in April that they:
    (1) “solicited and received preliminary indications of interest from multiple parties related to the potential acquisition of the company or its assets”;
    (2) are “working with a select group of these parties to provide them with additional information”; and
    (3) do “not intend to make further public comment regarding the review of strategic alternatives until it has been completed”.

    (April 18, 2024)-CKX Lands, Inc. (NYSE American: CKX) (“CKX”) today provided an update concerning its evaluation of strategic alternatives that it announced on August 21, 2023.

    As previously announced, CKX’s board of directors determined to initiate a formal process to evaluate strategic alternatives for the company to enhance value for stockholders. The company is actively working with financial and legal advisors in this review process.

    As part of this process, CKX, through its advisors, solicited and received preliminary indications of interest from multiple parties related to the potential acquisition of the company or its assets. CKX and its advisors are working with a select group of these parties to provide them with additional information. The board of directors has formed a subcommittee to provide oversight and management of the process.

    CKX does not intend to make further public comment regarding the review of strategic alternatives until it has been completed or the company determines that a disclosure is required by law or otherwise deemed appropriate.

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