Eredene Capital announced a tender offer, closing on 2 December, for up to 12% of the company’s issued shares at 10 pence per share, which is close to current NAV. I will tender 40% of my holding hoping that some shareholders make no use of tendering their shares. This tender offer will lead to a payback of at least 20% of my initially invested capital. Apart from that, the company announced the already expected delisting from the London Stock Exchange. As already discussed, I do not belive that this step is detrimental to my original investment case given that the company is in the process of selling its assets and distributing the net proceeds to shareholders and given that management’s interests are well aligned with minority shareholders. To the contrary, I plan to increase my position in case that the share price decreases before the last trading day on December 10th 2014.
Edit 12/8/2014: I was able to tender 12.09% of my shares at a price of 10 pence each. Tomorrow is the last trading day. It seems that a number of shareholders want to sell their holding by accepting a large discount to NAV. Therefore, I will increase my position by 100 bps with a limit of 4.5 pence trading a max of one third of daily volume starting from today.
City of London Investment Group has been one of the best performers this year in my portfolio. I still think that the company is modestly valued. However, given that the allocation to my portfolio has reached more than 5%, I will decrease my position by 100bps selling at the current share price starting from today. Apart from the increase in the share price, the intention of City of London Investment Group’s chairman and largest shareholder Mr. Ollif to start selling shares at 350 pence (currrent price 330 pence) could hinder further stock price appreciation. Moreover, the company recently bought a large number of shares or their Employee Share Option Plan. I am wondering why they did not make use of the lower share price level some months ago.
AO Johansen today reported Q3 2014 figures. The numbers have been better than what I expected. Management now expects the EBIT to be close to DKK 100 m for 2014. As recently outlined, I believe that the share price is trading substantially below its intrinsic value despite the difficult market environment in Denmark and the company’s complex capital structure. I will therefore increase the current allocation of this investment to my portfolio by 100bps with a share price limit of DKK 1,210 starting from today.
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