Thalassa Holdings - THAL Stream Log

Wow. How to grab defeat from the jaws of victory. Of course I'm being unfair. Kudos to the owner for steering the company through a very difficult time and to a successful deal. However, as suspected the intention is not to return cash to shareholders but continue as an investment company. The LSR experience does not inspire faith that he has the midas touch. Market clearly concurs with the share marginally down on what should be a joyous day. Theoretical SOTP NAV according to today's RNS is 144p. I am not saying that the owner doesn't have some cunning re-investment plan up his sleeve. But I will happily watch this from the sidelines. I'm now happily out (below where it could be if mgmt were more shareholder friendly but that's life). I wish all remaining shareholders the best of luck!

One final thought. I do find it interesting that all of the shares that have been bought back over the last 24M are being kept in Treasury rather than cancelled. You would think the best way to close the discount to SOTP intrinsic value would be the former. The fact management are not suggests they want to retain firepower for new acquisitions. Now cards on table, THAL is a very small component of my overall portfolio and as I have previously stated there is significant value here based on SOTP, and why I remain a holder. However, management do owe it to be straight with shareholders. If the vision is to create a Berkshire Hathaway type vehicle lets please here it. Otherwise the founder should really do the decent thing and play out his vision in "private" having taken out minorities at a fair price

Would just add that I always thought THAL's strategy here slightly bizarre. Personally I prefer if management (in any company) focuses on operations and returns surplus capital to shareholders to redeploy as they see fit. And its doubly so when management are buying minority positions in another plc which said investors can access. Our founding shareholder has clearly been reading too much Warren Buffet . I guess it's all part of the "charm" of the very unique investment that is THAL. But couldn't agree more that we need to understand the vision here once the deal on the table (hopefully) closes. If the vision is to create an investment vehicle with random stakes that needs to be spelled out. Personally I would prefer a wind down...

Frankers70. The two RNS from September 2016 reveal that THAL spent £3.6m on 10.438m shares in LSR and £2.05m on another 6.225m shares in LSR. The first RNS indicates that an initial batch of 2.43m shares were acquired for an undisclosed amount. Assuming that these shares were acquired at a similar price to the 10.438m shares would imply a total spend of c. £6.5m or a blended in price of 34p per share. At today's LSE share price THAL are down roughly 10% on their investment. And no dividends have been received in the interim. However, like THAL, LSR is itself undervalued relative to NAV. According to the latter's H1 results NAV is 43p. So there is hope that as the wind down of LSR's portfolio continues this gap will close

Exciting news this morning re. the offer for WGP and subsidiaries. $20m is equivalent to c.71p per share. The earn out is worth another 35p. And that's excluding that value of THAL's stake in LSR, which is worth another 33.5p at current market prices. Very crudely that raises the SOTP to c. 140p. And that's before taking into account THAL's residual stake in ARL post deal. Plus the 11.5p of cash on balance sheet. Of course nothing is certain until the ink is dry. But it if does go ahead then there is substantial incremental value here. Nice to see the share pop at time of writing of writing above 80p. But there is a lot more to come if this completes...

I have to say that I find the share price / market reaction a little perplexing. Market cap right now is c. £13m or c. 60p a share. However, a crude Sum of the Parts analysis suggests meaningful upside. Firstly there is net cash of $7.7m. Based on current FX / Shares outstanding that's roughly 28.5p a share. Secondly there is THAL's 23.3% odd stake in LSR, which based on its current market cap is worth £6m or roughly 27.5p per share. Even if you write off the investment in mining to zero that implies value of roughly 56p per share. And that's BEFORE you factor in the operating business which generated $4m last year. Even using a very low multiple of 3x would imply at least another 40p on top. So all in THAL should be worth at least 100p. Now I appreciate the various issues that the market may have with this stock not least the rather eccentric management style and cyclical / bombed out core sector. I for one am hanging on here. There is interesting value upside in the mid-term...

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