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Corporate Action Possibilities

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WickedLester
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Corporate Action Possibilities

#446274

Postby WickedLester » September 29th, 2021, 1:43 pm

One thing I sometimes do is invest in companies where I hope and think that corporate action could release significant value for shareholders. Of course there has to be an investment rationale for it, but then you hope that corporate action will crystalise that value in a reasonable timeframe thus providing an attractive return in the not too distant future.

Here are some that I have bought on this basis, in some cases I have posted about them before but if anyone has any other ideas i'd be happy to hear about them.

CIP Merchant Capital (CIP)

This is an investment trust trading at a very significant discount to NAV. It's performance has been lamentable but looking at their portfolio there is nothing in there that looks too dreadful to me. They have also recently realised a couple of investments at a decent premium so maybe the investment managers are not as hopeless as past performance suggests.

The interest comes from CFE a Luxembourg based investor who have built up a near 30% stake and recently launched a highly opportunistic bid for the rest which was rebuffed. I don't believe they will be passive for long and may offer a reasonable premium for the shares they don't own.

Driver Group (DRV)

These are a property consultants. The shares don't look bad value to me anyway and they pay a modest dividend and have significant net cash on a strong balance sheet.

The interest for me comes in the form of AB Traction a Swedish Investor who built up a strategic stake in Waterman and one other similar company who's name escapes me before both were sold to trade buyers for a significant premium. They have built a near on 20% stake here and I think they will also look to realise value by forcing a sale of Driver (assuming the other institutional shareholders go along with it).

Northern Bear (NTBR)

These are primarily a roofing contractor that has been quite hard hit by the pandemic but remains profitable and has an acceptable balance sheet. It's not currently paying a dividend but it has in the past and will probably return to it in the future.

The interest here is from one Jeff Baryshnik, an American who tendered for 30% of the shares at a price significantly higher than the current one (he now owns over 25% of the shares. I think the price was 72p but I can't remember exactly.

He is sitting on a substantial loss at the moment and I don't think he will remain idle in trying to turn that into a profit or may launch an opportunistic bid for the rest (he has previously said he doesn't intend to bid but things can change). I may have to wait until trading improves again but I can see the possibility of corporate action here.

Pebble Beach Systems (PEB)

I've already started a thread about these so I won't go on too much. Kestrel Partners have built a near 30% stake here and I had some success following them into another company which was sold for a large premium. The balance sheet here is poor but if the company can keep performing for just 2 more years and generating loads of cash it will be in a far better shape and I believe Kestrel will then force a trade sale.

Synectics (SNX)

These primarily are involved in CCTV systems and the company was very badly hit by COVID as two of its largest markets. O&G and Casinos, felt the brunt. But I believe it is a quality company and with new reference sites such as the City of London validating their products I think it will recover well in time.

The interest here for me comes in the shape of Whitehall Associated who have built up a near 30% stake. I don't quite know what their rationale is, as they are based in a tax haven and there is not much public information about them. I am hoping that once again they will either bid for the rest or force a trade sale, preferably once trading improves as in the case of Indigo Vision. I believe the company is fundamentally worth a good deal more in normal times and hence have been buying more now the price has fallen.

Walker Crips (WCW)

I have also started a thread on these before now so i'll keep this brief. One Hua Min Lim has built a 29% stake here and there is lots of action in the Wealth Management sphere which suggests this could be worth quite a lot more to a trade buyer. I am hoping Mr Lim either bids for it or forces a sale. Either way much of the price is currentl;y backed by net cash and the business itself is only commanding a small premium.

I hope this is of interest to some of you and as ever comments and criticism and further ideas welcome.

WickedLester
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Re: Corporate Action Possibilities

#473253

Postby WickedLester » January 15th, 2022, 10:47 am

CIP Merchant Capital (CIP)

This is an investment trust trading at a very significant discount to NAV. It's performance has been lamentable but looking at their portfolio there is nothing in there that looks too dreadful to me. They have also recently realised a couple of investments at a decent premium so maybe the investment managers are not as hopeless as past performance suggests.

The interest comes from CFE a Luxembourg based investor who have built up a near 30% stake and recently launched a highly opportunistic bid for the rest which was rebuffed. I don't believe they will be passive for long and may offer a reasonable premium for the shares they don't own.


Well CFE have made another move after going over the 30% threshold and are now making a mandatory bid at 55p. I believe this is too low and will vote against it with my shares. I would accept 65p a share, that would be a decent profit for me and still leave something for CFE.

I hope the offer doesn't go through.


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