Institutional Investors

Tau – Vote No On Giveaway Sale

Just received a rather disappointing RNS from TAU.

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Q2 hedge fund letters, conference, scoops etc


mohamed_hassan / Pixabay

To summarize they hold about $1m Cash and Stopharm – a Kazakhstan pharmacy.

They are suspended as they couldnt publish their results – being unable to value Stopharm.

The recent RNS has stated the offer is $1.1m post costs.  Giving a total value of Tau of about $2.1m or 4.2c per share, maybe a touch less.  I paid 5.4c per share so I am looking at a c22% loss.

I have a bit of a problem with this – Stopharm has assets worth $43m (according to the RNS, TAU owns 40.35%.  The RNS implies a value of about $3m for all of Stopharm.

According to Tau’s annual report Stopharm made $227k in 2015, $1.1m in 2016, 901k June 2017 which became a $230k profit at the FY.

My preference would be to either stay listed and wait for stopharm to grow or to delist and wait for a buyer to avoid listing costs.  I am not a fan of what appears to practically be giving Stopharm away.

There is money to be made here – Stopharm is worth more than this – if we hold out we can probably get a better offer and I am prepared to take the risk.  Apparently shareholders will get a chance to vote on the disposal and I suggest we vote with a resounding no.  I suspect a better offer may be forthcoming.

Article by Rob Mahan, Deep Value Investments Blog


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