The Coming of "Value Base" Hostilities Spell Cash For Shareholders
Most companies do it regularly.
This one prefers to do it when nobody's watching.
Others are at it brazenly if fleetingly.
The "it" is building value for shareholders, ignoring the "street", the chat-rooms, the desires of impatient traders, the doomsayers, and the edgy shareholders.
As for the first, well there haven't been much of that lately, crisis and all, as for the second, well I have been writing about concentrating on the small gems, expert in their fields, the stock market be damned, and as the third they spurt and as quickly as they appeared the value built on hype is gone.
I like small publicly traded company that have been amazingly ignored by the investment banking community because it suited them well.
Rather than concentrate on short term results, these companies set about becoming the world's foremost companies in their industry with product conceptions trading the world over.
Then horrors of horrors it happens, swiftly and unexpected a letter arrives expressing serious interest in acquiring a control position in the company at $ 1.
50 per share.
Management is on overtime.
Two press releases later we know that there is no ambiguity in the effort to fairly and properly consider the offer.
We also know that we'll get more news and it's likely to suggest an increase in price.
What we must know also is that management will dispense news on a "has to" basis and through minimal sufficient media.
Does this example of an attempt to absorb a thriving small but publicly traded company with no control block say something about the shifting landscape of the post crisis-world? Are acquirers trying harder to find the gems in the backdrop? Investment bankers were always too high-minded to consider this particular company, and as finally happens to all of them, until a near shareholder's mutiny at an annual meeting compelling the creation of a communication cell to consider the interface with the investment community, management interest for the shares is strictly limited to keeping their nose on their business, creating value, off balance sheet value such as brand value, intellectual property, distribution network etc.
These companies have generally done it all, and have done it well: witness in the case of the example, a starting offer at $ 1.
50 a share when the stock was trading at a dime! The company in my example, like most of its ilk did its part to ensure its focus on business by preserving its anonymity status in the investment community and it is likely that it will instinctively do all it can to downplay its exposure even now.
Management heretofore has been firm in its conviction that a control position would inevitably impact upon the company's ability to develop creative conceptions, it did all it could to avoid addressing the point that it's market cap grossly underestimated its true value (by about 20:1!) To those that argued that high stock value was a symbol of economic virility it convincingly countered its world-wide renown, its award winning product conceptions, its reputation and the envy of its colossal competitors.
Problem is that it has done its job too well, and created value that can not longer be fully ignored.
This marks the coming of "value based hostilities".
The example Company is worth at best guess about $ 2.
50 to $ 3.
00 a share when taken as a whole.
It trades at under 20 cents trading recently on respectable volume.
It is these kind of gems that, post crisis are and should be the targets of the largess of behemoths able to buy market share.
The time has come for the stock price of these companies to reflect their standing in the industrial community, and compressing the release of news through the pinhole of a needle is not going to be easy.
Investors are still obviously unaware of these special situations or arguably, are giving management's traditional reputations for incredible creativity to preserve its independence too much credit.
Recent trading in the example company was at 16.
5 cents per share which suggests that traders believe that the probability of a closing is only about 10%.
There have been other acquisition rumors in the past but this one comes with the drum of solid cash at ten times the current trading price, and that's just for openers.
The stock market is not what it was, but the risk reward is spelled n the likes of small "Current Information" rated companies, who have made it an objective to stay under the radar.
This one prefers to do it when nobody's watching.
Others are at it brazenly if fleetingly.
The "it" is building value for shareholders, ignoring the "street", the chat-rooms, the desires of impatient traders, the doomsayers, and the edgy shareholders.
As for the first, well there haven't been much of that lately, crisis and all, as for the second, well I have been writing about concentrating on the small gems, expert in their fields, the stock market be damned, and as the third they spurt and as quickly as they appeared the value built on hype is gone.
I like small publicly traded company that have been amazingly ignored by the investment banking community because it suited them well.
Rather than concentrate on short term results, these companies set about becoming the world's foremost companies in their industry with product conceptions trading the world over.
Then horrors of horrors it happens, swiftly and unexpected a letter arrives expressing serious interest in acquiring a control position in the company at $ 1.
50 per share.
Management is on overtime.
Two press releases later we know that there is no ambiguity in the effort to fairly and properly consider the offer.
We also know that we'll get more news and it's likely to suggest an increase in price.
What we must know also is that management will dispense news on a "has to" basis and through minimal sufficient media.
Does this example of an attempt to absorb a thriving small but publicly traded company with no control block say something about the shifting landscape of the post crisis-world? Are acquirers trying harder to find the gems in the backdrop? Investment bankers were always too high-minded to consider this particular company, and as finally happens to all of them, until a near shareholder's mutiny at an annual meeting compelling the creation of a communication cell to consider the interface with the investment community, management interest for the shares is strictly limited to keeping their nose on their business, creating value, off balance sheet value such as brand value, intellectual property, distribution network etc.
These companies have generally done it all, and have done it well: witness in the case of the example, a starting offer at $ 1.
50 a share when the stock was trading at a dime! The company in my example, like most of its ilk did its part to ensure its focus on business by preserving its anonymity status in the investment community and it is likely that it will instinctively do all it can to downplay its exposure even now.
Management heretofore has been firm in its conviction that a control position would inevitably impact upon the company's ability to develop creative conceptions, it did all it could to avoid addressing the point that it's market cap grossly underestimated its true value (by about 20:1!) To those that argued that high stock value was a symbol of economic virility it convincingly countered its world-wide renown, its award winning product conceptions, its reputation and the envy of its colossal competitors.
Problem is that it has done its job too well, and created value that can not longer be fully ignored.
This marks the coming of "value based hostilities".
The example Company is worth at best guess about $ 2.
50 to $ 3.
00 a share when taken as a whole.
It trades at under 20 cents trading recently on respectable volume.
It is these kind of gems that, post crisis are and should be the targets of the largess of behemoths able to buy market share.
The time has come for the stock price of these companies to reflect their standing in the industrial community, and compressing the release of news through the pinhole of a needle is not going to be easy.
Investors are still obviously unaware of these special situations or arguably, are giving management's traditional reputations for incredible creativity to preserve its independence too much credit.
Recent trading in the example company was at 16.
5 cents per share which suggests that traders believe that the probability of a closing is only about 10%.
There have been other acquisition rumors in the past but this one comes with the drum of solid cash at ten times the current trading price, and that's just for openers.
The stock market is not what it was, but the risk reward is spelled n the likes of small "Current Information" rated companies, who have made it an objective to stay under the radar.