Just received a rather disappointing RNS from TAU.
[timeless]
Q2 hedge fund letters, conference, scoops etc
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
