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Skyline Champion (SKY) Hedge Fund Dumps Shares, Value Declines

May 1st, 2019 Comments off

 

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Sankaty Advisors Llc decreased its stake in Skyline Champion Corporation (SKY) by 29.6% based on its latest 2018Q4 regulatory filing with the SEC. Sankaty Advisors Llc sold 2.01 million shares as the company’s stock declined 5.55% while stock markets rallied. The hedge fund held 4.79M shares of the homebuilding company at the end of 2018Q4, valued at $70.32M, down from 6.80M at the end of the previous reported quarter. Sankaty Advisors Llc who had been investing in Skyline Champion Corporation for a number of months, seems to be less bullish one the $1.15B market cap company,” per Crypto Coins Tribune.

 

That investment group/hedge fund is not alone. Typos are in the original of what follows.

  • It has been reported that multiple insider activity took place at Skyline Champion Corporation (SKY),” said GV Times. BAIN CAPITAL CREDIT MEMBER, LL sold 4,787,131 shares in transaction occurred on 2019/03/05.”
  • On 2019/03/05 MAK CAPITAL ONE LLC, at SKY, dumped 1,500,000 shares at an average price of $20.21 per share. The selling total is valued at $22,032,847,” per that same source, which also reported the following.
  • CENTERBRIDGE CAPITAL PARTNERS had divested 4,313,071 shares through a trade on 2019/03/05.”

Obviously, there are buyers, not just sellers, of SKY.

But the graphic below tells an important tale of the ticker tape.  The Daily Business News on MHProNews has selected that same date as the SEC letter to Cavco Industries was announced as the arbitrary date for that arrow.  That said, while Cavco’s woes may or may not impact others, there are reasons that GV believes help explain their decline.

 

SkylineChampionSKYvsCavcoIndustriesManufacturedHousingIndustryProductionFactoryPreFabModularMHProNews2019-04-30_1422

As of the date and time shown, 4-30-2019 at 14:22 ET.

 

SKY “is trading at rather expensive levels at just over 2.85x price/book and 1.06x price/sales. Compared to others, Skyline Champion Corporation is in a different league with regards to profitability, having net margins of -6.1%. To put some perspective around this, the industry’s average net margin is 6.67%. SKY’s ROE is -22.1%, which is also considerably worse than the industry’s ROE of 15.57%. It’s also very liquid in the near term, with a current ratio of 1.5. The stock has a debt/capital of 0.25.”

The Post Analyst said, “Skyline Champion Corporation Revenue for the most recent quarter grew by -1.15% from the last quarter, totaling $351.36 million.”

All of this has to be considered in the light of the affordable housing crisis, and the historic underperformance of the industry. Who says the industry has serious upside? Skyline Champion.  They say the long-term average annually has been some 224,000 new homes, but for the last 12 years, HUD Code manufactured home shipments have failed to top 100,000. What’s going on?

 

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In 1998, manufactured homes (MH) outsold RVs by some 3 to 2. In 2017, RVs outsold MHs by some 5 to 1. RVs recovered far more quickly from 2008. The facts raise questions. One, is the effectiveness of MHI as the post-production or ‘umbrella’ association in the country. The other question is more sobering. Has Buffett-Berkshire “Moat” strategies kept manufactured home production at historically low levels to allow a few big boy brands to consolidate others at a discounted ‘value’ by MHI insiders?

 

There’s more to these factoids.  Skyline Champion has utilized a combination of MHI, MHVillage, MHInsider, and ManufacturedHomes at various times in the last year, and yet the firm is still struggling with their numbers.  Notice: as a disclaimer, while MHProNews/MHLivingNews and ManufacturedHomes have done some projects jointly in the past, we have never been jointly owned.

 

The problem if months of at least 6 months of overall industry decline in sales during an affordable housing crisis need to be traced back to issues that industry expert and publisher L. A. ‘Tony’ Kovach has repeatedly made in recent years.  Namely that pretty pictures, or sharp videos are not at the heart of the industry’s challenges.

 

LATonyKovachHenryFordQuotesPrettyPicturesAchieveGoalsDailyBusinessNewsProNews

 

The Skyline-Champion video that follows is elegant work.  Watch it, but then look at the data that follows.

 

 

But the reality is that problematic videos often get more views than positive ones like the one above.

 

SkylineChampionSKYvideoViewsManufacturedHomeProNews2019-04-30_1630

 

Retail Shoppers Insights

In the days ahead, a report based upon an actual retail customer review of their shopping experience at a Skyline Champion owned “Titan” sales center is anticipated, the result of a news tip from a prospective cash buyer.  Watch for it.  If you aren’t already on our industry leading emailed news list, via the link below.

That’s this morning’s manufactured home “Industry News, Tips, and Views Pros Can Use,” © where “We Provide, You Decide.”  © ## (News, analysis, and commentary.)

 

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SoheylaKovachDailyBusinessNewsMHProNewsMHLivingNewsSubmitted by Soheyla Kovach to the Daily Business News for MHProNews.com. Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

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