Reading the footnotes, a Special Situation.

National Stock Yards Company

Price: $319

Market Cap: $13.9m

Shares Outstanding: 43,612

National Stock Yards Company (NSYC) owns and operates the Oklahoma National Stock Yard and the St. Louis National Stock Yard (no longer operational, just land). NSYC owns 102 acres of land right outside Oklahoma City and 75 acres right outside downtown St. Louis, Missouri.

The company’s stock yard in Oklahoma has been deteriorating, where they were doing ~1m cows a couple years ago, and today they are getting a measly ~300k cows. It’s doing poorly and profitability has deteriorated. In early 2024, the state wanted to build a prison, and among the considered land for construction was NSYC’s land. However, the chairman, Chris Bakwin, great-grandson of the founder, did not want to sell the land and said it would hurt the economy in that area as they mentioned around $1B flows through the stockyard and employ a couple 100 people. There was concern the government was going to acquire the land through eminent domain. The government eventually decided it was going to be built somewhere else and the NSYC land remained intact.

Fast forward to October/November, in Q3 2024 report, in the footnotes, they mentioned the following “In October 2024, the Company’s Board of Directors began to explore alternative options for the Oklahoma City operations by entering into an agreement with a real estate broker. This agreement allows the broker to market the approximately 100 acres of land comprising the Oklahoma National Stock Yards property. This agreement runs through April 30, 2025.”

Yes, they are now willing to sell the property, and it looks like the market does not even care. The price tag on the property is $27,000,000. Almost double the market cap.

Oklahoma National Stockyards | Levy Strange Beffort

“We are getting tons of interest, and most of our efforts are really talking to people in Oklahoma, which is where we want new ownership to land,” Rice said.

“Rice said the listing was made in October, and there have been offers, but they are letting things settle to vet potential buyers. He said most interest has been from investors who want to keep the stockyards intact.” These came from a news outlet in Oklahoma, where the brokers are saying there has been plenty of interest on the property. However, they want to sell it to a local that will keep the legacy of the property intact so they will have to select the buyer. That’s a good position to be in when you can select the buyer. However, it may come at the expense of rejecting a higher offer by a non-local investor.

There is also one more thing that just makes me feel confident that we will make money on this investment, and it is the words from the chairman of the company. “Bakwin said as board chair for the company, his primary obligation is to its shareholders. “It’s gut-wrenching to unlink my family from this industry we essentially built,” Bakwin said. “It’s an emotional issue for me personally, but I can’t put my personal feelings above the interests of the owners of the company.”

Oklahoma National Stockyards is now for sale | KOSU

Investors want the property to be sold, and the Chairman is doing just that. Bakwin owns 10% of the company.

St. Louis Real Estate

They own 75 acres just outside of St. Louis in what used to be a stock yard. The business did not work out and the village there became a ghost town basically. The main building burnt down in the 1980s and the value of the building got written down to realizable value back then. Fast forward to today, they are marketing the property and have sold multiple parcels at very attractive prices. Below is a rough model of the value of the property based on past purchases.

I have it valued at $4,570,326 based on the average selling price per acre in the two parcels sold in 2020 and 2021. The current carrying value of that land in the books is $2.15m, and the footnotes explicitly say “St. Louis Real Estate Development Management estimates that the fair value of the Company’s St. Louis real estate is in excess of it carrying value and demolition costs, and accordingly, the carrying value of the St. Louis real estate has not been adjusted. However, the amounts the Company will ultimately realize from the sale or development of this property could differ materially from management’s current estimate.” I feel pretty confident with my estimated value of the remaining 75 acres of the St. Louis Real Estate. It’s only 2 miles away from downtown.

With that said, the risk/reward is pretty awesome. I think this is a case of heads I win; tails I don’t lose much. I have a range of estimated returns that are very compelling considering the short amount of time these returns are going to be realized in.

I’m not great with tax, but I know capital gains tax, especially LT, is taxed at 0%, 15%, or 20%. Not sure how much they’ll have to pay so my estimate might be a bit defective in that sense. Oklahoma capital gains tax is capped at 4.75%-4.95% and can be 100% deductible. Regardless of the tax rate, I think this is a very attractive opportunity and it was presented due to market inefficiencies of either people not reading the footnotes, or because the company is more than 100 years old and so small no one follows it, but nonetheless we are here to make money.

* It is worth noting that the public float is currently 2% which totals to 872 shares. Very thinly traded.

*Disclaimer: The information provided in this write-up is for informational and educational purposes only. It should not be considered as financial advice or a recommendation to buy, sell, or hold any security. The author is not a licensed financial advisor and does not purport to provide professional investment advice. The analysis presented is based on the author’s personal research and opinions, which may be subject to errors, omissions, or changes without notice. Any investment decisions should be made after conducting your own thorough research and consulting with a qualified financial professional. The author and any associated parties are not responsible for any financial or other losses incurred based on the information provided in this document. Past performance is not indicative of future results. Always consider your personal financial situation, risk tolerance, and investment objectives before making any investment decisions.