Catalyst For Sale? Check
It’s not often you find a public company with this kind of set up:
Trading significantly below tangible book value while growing shareholders equity at a high single digit rate
One of the most aggressive share repurchase plans I have ever seen — gobbled up almost 30% of the float — well below liquidation value
A well aligned management team with skin in the game, history of buying stock in the open market and an attractive change in control provision for the CEO that would let him cash out close to $3-4 million in a takeover
The company has consistently remained profitable since becoming a publicly traded corporation while also growing GAAP net income at an impressive rate
The moratorium on the company being acquired just expired. A takeover offer could occur anytime now.
With the attractive franchise, core deposit base and well aligned management team, I would be surprised to see this company still around in two years.
At least 25% annualized upside should the company be sold two years from now at a comparable valuation where peers have been taken private at
Downside risk is minimal as the company is currently trading well below liquidation value while still profitable
The best part about this set-up is the company is too small for anyone on Wall Street to care. The market cap is a low $65 million and the company recently de-listed from the NASDAQ to trade on the OTCQX market to save time and money. While other investors are worrying about what happens to Intel, how many cars Tesla will produce and if ChatGPT will send Google’s valuation to zero, you can own an attractive stake in a public company that is likely to be bought out for a premium to tangible book value while taking minimal risks to your capital as the company is trading significantly below liquidation value.
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