July 29, 2017 - 11:55 am
For his second purchase as head of Las Vegas Valley holding company Live Ventures, Jon Isaac learned all he needed to about his new subsidiary in a Saturday game of poker on the Strip.
Isaac sat by the CEO of a chain of movie, video game and memorabilia retail stores from Joplin, Missouri, in town for the World Series of Poker.
The two men talked. They lost track of time. The retail CEO didn’t even have plans to sell. But after a lunch, some signed agreements and $60 million in cash with a seller note, retailer Vintage Stock belonged to Live Ventures.
“We try to keep our eyes open,” Isaac said. “We try to be fair.”
Boosting the profile
Accustomed to flying under the radar, Isaac, 34, said his board has recommended he grow the profile of his holding company. The board is made of Isaac, his father and three others.
The company’s headquarters is in a suite in an office building near the intersection of Warm Springs Road and Placid Street in the southern part of the valley.
His father, Tony, occupies an office inside Live Ventures headquarters. From there, the elder Isaac operates a call center for his garbage collection company Appliance Recycling Centers of America, based in Minneapolis.
Few signs of Live Ventures’ previous life as an online marketing company with a long history in the valley exist at the headquarters.
As part of Isaac’s desire for a low profile, no signs on the front door say Live Ventures. For this story, he declined to provide a photo of himself or have one taken. Isaac said he prefers to avoid in-person confrontations should he ever anger shareholders.
Isaac invested in Live Ventures, then called LiveDeal, in 2011, saving it from a Nasdaq delisting. He became CEO the next year.
Raised in Ottawa, he cut his teeth in real estate in Southern California and traded during the day. But he aspired to reach the level of stock gurus like Warren Buffet and Henry Singleton.
In 2015, the new strategy of a Live Ventures holding company launched. Isaac seeks businesses with financials he understands, with potential for long-term growth. After that, his approach is hands-off, he said.
“We let them grow as they see fit,” he said.
LiveDeal had been launched in 2013 to connect U.S. restaurants and customers online. In 2015, Live Ventures decided to scrap a suite of online marketing products branded as Velocity Local and start buying. In December, the company finished a reverse split of its common stock, combining every six shares into one to increase earnings per share. A statement from the company at the time said the move was to encourage investment and not any order from Nasdaq.
So far, the two companies he’s bought are in industries often beaten up in analyst circles: manufacturing and retail.
He first bought Marquis Industries, a carpet and yarn product maker based in Georgia, in 2015. The agreement was valued at about $30 million. Marquis was founded in 1990.
Live Ventures’ manufacturing segment posted gross profit of $17.77 million for fiscal year 2016, according to the company’s latest annual report to the Securities and Exchange Commission.
Next was the Missouri-based retailer Vintage Stock, a deal that closed in November. Open since 1980, Vintage Stock now has about 60 stores in seven states. Ten of those stores came after the Live Ventures purchase, Vintage Stock CEO Rodney Spriggs said.
Vintage Stock posted $12.2 million in net income for calendar year 2015, according to Live Ventures filings.
Doom and gloom over retail has been overblown, Spriggs said. He said customers like to come in and see what’s new in stock.
The quick acquisition, started at a poker game, didn’t seem unusual to Spriggs, he said. He’d entertained purchase ideas in the past, but liked the freedom he’d have under Live Ventures.
Going from a privately held company to a subsidiary in a publicly traded one, Spriggs has had to get used to new accounting practices and friendly suggestions from Isaac that Sprigg open a store in the Las Vegas Valley when he’s ready.
“This is a perfect marriage,” he said. “They are really an easy-going group.”
Share of critics
In January, self-identified activist investor Richard Pearson posted an analysis on Live Ventures on the stock news website Seeking Alpha.
Pearson’s accusations included that Live Ventures uses promoters to hype its stock and that the company was low on cash.
Pearson also criticized Live Ventures auditor Anton & Chia. Live Ventures dropped the accounting firm in April and hired BDO USA.
In January, Isaac stepped down as CFO and the board hired Virland Johnson, previously a consultant, with an annual base salary of $185,000.
In 2016, Isaac’s pay included $200,000 in salary and about $13,000 in option awards. His father made about $99,000 in salary and $232,000 in option awards but stopped getting executive officer pay after April 30, 2016, instead getting $2,000 a month as a director, according to SEC filings. The article was cited as part of separate lawsuits by shareholders Keith Kolish and Martin Aranzabe filed in May and June. The complaints accuse Live Ventures of artificially inflating its share price before shareholders purchased.
Isaac has denied the charges in the lawsuit and the Seeking Alpha article as the work of short sellers.
Contact Wade Tyler Millward at email@example.com or 702-383-4602. Follow @wademillward on Twitter.