A Case of Price/Value Non-Compliance

A potential break-up situation offering ~65% - 130%+ upside.

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Value Situations is NOT investment advice and the author is not an investment advisor.

All content on this website and in the newsletter, and all other communication and correspondence from its author, is for informational and educational purposes only and should not in any circumstances, whether express or implied, be considered to be advice of an investment, legal or any other nature.  Please carry out your own research and due diligence.

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“… you were sleeping the big sleep, you were not bothered by things like that.”

The Big Sleep, Raymond Chandler.

In this issue of the newsletter, I present an interesting UK-listed equity situation that is trading at a deep discount to both its public peers and its private market / break-up value based on recent M&A transaction evidence. More interesting still is the recent news that management are exploring a possible break-up of the business.

The subject company is in an unglamourous sector but has a fundamentally attractive business model, high insider ownership and a highly competent management team. Moreover, management are well incentivised to pursue a sale or other break-up event to realise value now after a disappointing share price performance over the past 12 months.

As the opening quote alludes to, the market appears to be asleep to the opportunity here and is overlooking the fundamental value on offer. My analysis indicates this situation is also a highly asymmetric one, with no apparent downside at the current share price given the resiliency and break-up value of the underlying business.

This latest idea is …