Tieton Capital Management

4700 Tieton Drive, Suite C
Yakima, WA  98908
(509) 965-6488

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December 21,2020

December 21, 2020 By Lora Leavenworth

Purchased Texas Capital Bancshares (TCBI):

  • Highly respected Dallas, Texas based business bank
  • Limited branch network relative to asset size
  • Texas economy, and Dallas metro specifically, remains one of most vibrant in nation
  • Company refocusing after couple years of losing their way
  • Problem loans falling, even in shadow of COVID Recession, as bank refocuses
  • Believe may have excess reserves for estimated COVID Recession losses
  • Stock price down nearly 60% from 2018 peak when purchased
  • Trading around 70% of book value and approximately 6x normalized earnings when purchased

Added to Geospace Technologies (GEOS):

  • Debt-free pioneering developer of seismic equipment for oil & gas industry and burgeoning border security market
  • Stock price under pressure during COVID’s weight on market
  • Stock price down with prospect for additional oil and gas reservoir monitoring orders improving while border security contract renewal likely drawing closer
  • Trading approximately half of book value at time of purchase

Trimmed Green Brick Partners (GRBK):

  • Quality return on capital focused homebuilder with low leverage
  • Operate in high population growth and housing growth markets – primarily Dallas & Atlanta
  • Direct beneficiary of housing shortage caused by lower interest rates and preference to own a home during pandemic
  • Management team effectively executing
  • Stock price up nearly 100% this year
  • Second time this year took money off table to redeploy to companies with higher forecasted upside

 

Filed Under: Portfolio Change Updates

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