Thanks, great insights as always! Are you still in $DALN by the way or sold out after the Q4 results analysis? I’ve added a bit more at these recent prices. Still think we get a $3.50 dividend, announced in 3 weeks time.
I sold out post Q4 release. With that being said, I am not done yet. It is certainly cheap. I have it at an EV of -$5M. I just felt the need to de-risk my portfolio. There is really no floor on how low it could go right now, in my opinion.
With the large Q4 loss and apparently slowdown of digital circulation growth in Q1, I would be surprised if they pay out a $3.50 special dividend. I think this will be another difficult year and that they need to conserve cash. If they do pay out a special dividend, I imagine it will be $1-2 per share. I have been begging them to do sharebuybacks as it makes way more sense then a dividend.
If you look back at when "Return To Growth" was first mentioned in the conference calls, they talked about getting back to growth in 2023 and 2024. Well here we are in 2025, and no sight on growth. This Return To Growth strategy has been a near herculean effort... but I don't think it will succeed anymore.
You may be right. Maybe they do a big special dividend and the stock pops. Last time I spoke with mangement, it definitely seemed that a dividend was still under consideration.
But for me to jump back in this year, I'd like to see a strategic investor get involved (Hoffmann) or for DALN to market themselves for sale. There is no reason they should remain public.
Appreciate the comment and let me know if you have any further thoughts.
Yes fair enough. I agree that execution has been poor and delayed. Q4 results were not great but overlaying the $5m savings that they have reiterated multiple times should at least get them to breakeven (I would be very disappointed if those savings don't materialise). Yes they will need to cut costs further or grow revenue to be profitable which is not straightforward given track record.
What I haven't figured out is what is Decherd's end goal here? Is he driven by money or legacy or both? Feels more like its legacy to me. Back in Sep 2019 he bought $3.3m (at ~$3.60 per share) worth of shares in DALN and in Oct 2024 another $150k (at $6 per share). These are big numbers but still not much compared to the share value he holds at Kimberly Clark of ~$7m. His comments in past earnings calls for DALN are also mixed:
- On being taken over because of the negative EV situation "It's important to keep in mind I have 51% of the votes [...] get us in a position where we can work this very smartly with the right pace"
- On consolidation in the industry "There is a tremendous amount of consolidation. But the quality component of content exists only with a few companies. I will spare you with my view whether that's good or bad for the country"
- "[...] there are choices as to whether we look again at share repurchase. We've done that from time to time. There are other aspects of that, that are a little tricky. We already are thinly traded that would make us even a more thinly traded."
I think ultimately, Decherd doesn't want DALN to be taken over and "gutted" by a private equity type investor. Equally, in a consolidation scenario it would have to be with some guarantees on DALN still being somewhat independent in content etc. Is Hoffman willing to provide these guarantees? Potentially.
I think the pension liability situation goes a bit back to legacy. Decherd would not trust a new owner to make the pension liability "whole" so I think that the annuitizing of the pension now may actual be an important part of timing for a sale of some kind.
On the dividend, my thinking is as follows:
- Since September 2020, the quarterly dividend has been ~$0.16 per share. Dividends were halted after the March 2024 quarter so probably $0.64 per share has been "accrued" to date. This will be thought of in the context of the special dividend. I can't see them paying less than the prior special dividend when the note receivable was paid which was $1.50. So at the very least I would expect $1.50 + $0.64 = $2.14.
Finally, one other interesting point is that Denver Smith, Carlson Ridge Capital, LLC, bought 5.6% of DALN a few months ago. They are a small hedge fund but activist in a sense. For example, back in June 2022 they issued a letter to Innovative Food Holdings demanding Board changes to unlock value. He was appointed to the Board and share price as 6x-7x since June 2022. He gave an interview recently where he commented on $DALN and mentioned for the time being he's not taken an "activist" role yet but I wouldn't be surprised to see this change.
I think the $5M in savings still happens... but print revenue ad revenue is dropping too quickly and all signs are pointing to slowing digital. I saw on the website that they are now doing 1-year digital subs for ~$50. Unless they are generating 10k sign-ups a quarter from that, which I don't think they are, this is not good. Meanwhile digital subscribers at the old $30/month continue to churn. The $5M gives them some breathing room... but that's it.
Whats your source for Decherd's $7M in Kimberly Clark? Agree with all your comments on Decherd as well.
Thanks for sharing the interview with Denver Smith. I know he was involved but I hadn't seen this.
Thanks, great insights as always! Are you still in $DALN by the way or sold out after the Q4 results analysis? I’ve added a bit more at these recent prices. Still think we get a $3.50 dividend, announced in 3 weeks time.
I sold out post Q4 release. With that being said, I am not done yet. It is certainly cheap. I have it at an EV of -$5M. I just felt the need to de-risk my portfolio. There is really no floor on how low it could go right now, in my opinion.
With the large Q4 loss and apparently slowdown of digital circulation growth in Q1, I would be surprised if they pay out a $3.50 special dividend. I think this will be another difficult year and that they need to conserve cash. If they do pay out a special dividend, I imagine it will be $1-2 per share. I have been begging them to do sharebuybacks as it makes way more sense then a dividend.
If you look back at when "Return To Growth" was first mentioned in the conference calls, they talked about getting back to growth in 2023 and 2024. Well here we are in 2025, and no sight on growth. This Return To Growth strategy has been a near herculean effort... but I don't think it will succeed anymore.
You may be right. Maybe they do a big special dividend and the stock pops. Last time I spoke with mangement, it definitely seemed that a dividend was still under consideration.
But for me to jump back in this year, I'd like to see a strategic investor get involved (Hoffmann) or for DALN to market themselves for sale. There is no reason they should remain public.
Appreciate the comment and let me know if you have any further thoughts.
BB
Yes fair enough. I agree that execution has been poor and delayed. Q4 results were not great but overlaying the $5m savings that they have reiterated multiple times should at least get them to breakeven (I would be very disappointed if those savings don't materialise). Yes they will need to cut costs further or grow revenue to be profitable which is not straightforward given track record.
What I haven't figured out is what is Decherd's end goal here? Is he driven by money or legacy or both? Feels more like its legacy to me. Back in Sep 2019 he bought $3.3m (at ~$3.60 per share) worth of shares in DALN and in Oct 2024 another $150k (at $6 per share). These are big numbers but still not much compared to the share value he holds at Kimberly Clark of ~$7m. His comments in past earnings calls for DALN are also mixed:
- On being taken over because of the negative EV situation "It's important to keep in mind I have 51% of the votes [...] get us in a position where we can work this very smartly with the right pace"
- On consolidation in the industry "There is a tremendous amount of consolidation. But the quality component of content exists only with a few companies. I will spare you with my view whether that's good or bad for the country"
- "[...] there are choices as to whether we look again at share repurchase. We've done that from time to time. There are other aspects of that, that are a little tricky. We already are thinly traded that would make us even a more thinly traded."
I think ultimately, Decherd doesn't want DALN to be taken over and "gutted" by a private equity type investor. Equally, in a consolidation scenario it would have to be with some guarantees on DALN still being somewhat independent in content etc. Is Hoffman willing to provide these guarantees? Potentially.
I think the pension liability situation goes a bit back to legacy. Decherd would not trust a new owner to make the pension liability "whole" so I think that the annuitizing of the pension now may actual be an important part of timing for a sale of some kind.
On the dividend, my thinking is as follows:
- Since September 2020, the quarterly dividend has been ~$0.16 per share. Dividends were halted after the March 2024 quarter so probably $0.64 per share has been "accrued" to date. This will be thought of in the context of the special dividend. I can't see them paying less than the prior special dividend when the note receivable was paid which was $1.50. So at the very least I would expect $1.50 + $0.64 = $2.14.
Finally, one other interesting point is that Denver Smith, Carlson Ridge Capital, LLC, bought 5.6% of DALN a few months ago. They are a small hedge fund but activist in a sense. For example, back in June 2022 they issued a letter to Innovative Food Holdings demanding Board changes to unlock value. He was appointed to the Board and share price as 6x-7x since June 2022. He gave an interview recently where he commented on $DALN and mentioned for the time being he's not taken an "activist" role yet but I wouldn't be surprised to see this change.
Comments on DALN start from ~11 mins
https://www.youtube.com/watch?v=CXUwFhH2vvQ
I think the $5M in savings still happens... but print revenue ad revenue is dropping too quickly and all signs are pointing to slowing digital. I saw on the website that they are now doing 1-year digital subs for ~$50. Unless they are generating 10k sign-ups a quarter from that, which I don't think they are, this is not good. Meanwhile digital subscribers at the old $30/month continue to churn. The $5M gives them some breathing room... but that's it.
Whats your source for Decherd's $7M in Kimberly Clark? Agree with all your comments on Decherd as well.
Thanks for sharing the interview with Denver Smith. I know he was involved but I hadn't seen this.
BB