Jeroen Bos, manager of The Deep Value Investments Fund (GB00B79XM025), explains why he likes PilatMedia Global (PGB), which is listed on the Alternative Investment Market (Aim). The company provides software for linear, on-demand and interactive delivery of video, radio and non-airtime media over any platform.
"All that I buy is extremely cheap on a balance sheet basis," he says. "Pilat Media Global, for example, was bought at a rock-bottom price (around 29p) less than a year ago but we foresaw clearly defined potential for a market re-rating at some stage in the future."
This share now trades at around 48.5p.
"This is an interesting company which provides technology very much in demand but nothing had happened to its share price. This share is not good as a value investment now by my way of doing things but it will continue to do well if it can sign further contracts. I am not going to sell it immediately because more good news might come out. There is still value in terms of its potential earnings."
Mr Bos uses an investment approach called pure deep value investing which focuses on stocks unloved and unwanted in the market. More specifically he looks for companies where the market cap has sunk to a level significantly below what he calls the net net value of the assets on the balance sheet, taking into account all actual and potential liabilities. Typically, deep value stocks are purchased at a discount to the value of the cash held on the balance sheet, thereby creating what he terms his margin of safety.
Read our interview with Mr Bos on his investment approach
"All this strategy requires is time for market sentiment to come back round and re-rate these stocks or time for some form of corporate action to emerge, for example a bid approach or management shake-out," he adds.
Investors Chronicle rated Pilat Media Global a recovery Buy last August. Read the tip
