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Sydnee Gatewood
Sydnee Gatewood
Articles (2467) 

David Winters Sells Largest Holding, Consolidated-Tomoka Land

The real estate company recently completed a large block share repurchase

April 12, 2019 | About:

Wintergreen Advisers leader David Winters (Trades, Portfolio) disclosed he exited his 28.71% stake in Consolidated-Tomoka Land Co. (CTO) on April 9.

Using a research-driven approach, the guru’s Mountain Lakes, New Jersey-based firm, which manages the Wintergreen Fund (Trades, Portfolio), invests in a concentrated number of undervalued securities from around the world. It occasionally will take an activist position in order to help unlock value for shareholders.

According to GuruFocus Real-Time Picks, a Premium feature, Winters sold 1.5 million shares of the Daytona Beach, Florida-based company for an average price of $59.99 per share. The trade had an -87.86% impact on the equity portfolio. It was his largest holding as of the fourth quarter.

GuruFocus estimates he gained 113% on the investment since the fourth quarter of 2010.


Wintergreen has a long history with the real estate company, having first invested in the stock in 2006. In his 2015 letter to shareholders, the guru said that while the company had sold off some of its acreage and “improved the quality of its income property portfolio” over the years, it had failed to take advantage of rising land prices during the recovery in real estate. In addition, Winters wrote he believed the company was “plagued by management issues, lack of overall vision to design and implement a development plan for the company, and the overarching real estate market that, while it was sour for a few years, provided well-run companies with the opportunity to prepare for the current upswing in the real estate market.”

These grievances, along with a proposed share offering that would have diluted the interests of shareholders, resulted in Wintergreen demanding four seats on the board of directors in 2016, a request which was denied. Following this failure, the firm renewed its calls for the company to hire an independent advisor to evaluate ways to maximize shareholder value, whether through a sale or liquidating assets. Wintergreen was eventually allowed to present its “vision for the future” of Consolidated-Tomoka to fellow shareholders at the 2017 meeting.

On April 10, Consolidated-Tomoka announced a large block share repurchase, which was separate from its existing $10 million buyback program, from its largest shareholder, who held a 28% stake. The company bought 320,741 shares, or approximately 6% of its outstanding shares, for approximately $18.4 million. The remaining 1.23 million shares were acquired by multiple other investors.

Valuation, financials and guru ownership

The real estate company, which owns over 2.3 million square feet of income properties across the U.S. as well as 5,400 acres of land in the Daytona Beach area, has a $324.56 million market cap; its shares were trading around $60 on Friday morning with a price-earnings ratio of 8.90, a price-book ratio of 1.54 and a price-sales ratio of 3.82.

The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.


On Feb. 5, the real estate company reported fourth-quarter and full-year 2018 results. For the quarter, it posted earnings of $2.17 per share on $33.2 million in revenue. It recorded earnings of $6.76 per share on $86.7 million in revenue for the full year.

The company is scheduled to report first-quarter 2019 results after the market closes on April 16.

GuruFocus rated Consolidated-Tomoka’s financial strength 4 out of 10. As a result of issuing approximately $99.7 million in new long-term debt over the last three years, the company has poor interest coverage. In addition, the Altman Z-Score of 1.84 indicates it is under some fiscal stress.

The company’s profitability and growth fared much better, scoring a 9 out of 10 rating. In addition to operating margin expansion, Consolidated-Tomoka is supported by strong returns that outperform competitors and a moderate Piotroski F-Score of 6, which suggests business conditions are stable. Despite recording a decline in revenue per share growth over the last 12 months, the real estate company still has a business predictability rank of one out of five stars. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.

Other gurus with positions in the stock as of the fourth quarter were Chuck Royce (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.

Portfolio and performance

As of the fourth quarter, the Wintergreen Fund’s $116.71 million equity portfolio, which was composed of 13 stocks, was largely invested in the real estate sector, followed by a smaller position in the consumer defensive sector.

GuruFocus data shows the fund posted a return of -19.89% in 2018, underperforming the S&P 500’s return of -5.97%.

Disclosure: No positions.

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About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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