RE: Currently 'worth' 19.12p per share (extra £2.2 mil received)31 Dec 2021 14:51
Good to see an active thread on this. I’ve got a very large position here relative to my overall portfolio so interested to read alternative views.
On the face of it the substantial discount to cash makes this looks a no brainier investment. I’d guess the fact that it looks too good to be true is one reason investors are put off or at least start looking a gift horse in the mouth. Maybe the other is the woeful track record of Stobart even if that is history now. However, I’m guessing the major reason is the relationship with DBAY as both investment adviser/manager and largest shareholder looks odd at first sight and worries that there are conflicts of interest or worse a future stitch up. Finally there is uncertainty about what will be the outer for the share to be priced at fair value.
It would make sense for the Board to start buying back the shares at current prices as this will further increase the NAV and should close the current discount but given that they haven’t so far suggests they want to hang on to all the cash for prospective investment though with new execs on the Board maybe this will come up on the agenda.
DBay as investment manager has a typical private equity 2 and 20 arrangement for AUM and disposal so nothing to get alarmed about there and they don’t get that 2% fee on the cash.
Given the track record of DBAY (and it’s founder Laxey) for making value based acquisitions at discounted prices I’m assuming that whatever they buy will stand up well on value metrics. This means there will effectively be a double discount on the acquired company for shareholders who have bought in at the current price because of the significant discount to cash.
In short I can’t picture a situation for investors where this doesn’t play out positively for patient investors who buy in at the current level but welcome alternative views.