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Back life sciences technology with a margin of safety

This cash-rich technology investment company is on a 43 per cent discount to the value of its portfolio
Back life sciences technology with a margin of safety
  • Following a major shake up at board level this company has a top team with serious credentials
  • Cash and a Nasdaq-listed stake backs up over three quarters of market capitalisation
  • Valuation uplifts are likely as portfolio businesses move into profit

Investors willing to back the new management team at this technology investment company have a hefty margin of safety built into the current entry price. Net cash and a Nasdaq-listed stake backs up over 75 per cent of the company’s current market capitalisation. That effectively leaves £21m of other assets in the price for a bargain basement £5.6m, despite the likelihood of valuation uplifts as portfolio companies move into profit. The directors are actively targeting liquidity events, which provides another likely catalyst for a narrowing of the unwarranted share price discount to the underlying value of the portfolio.

The fact that shareholders who backed the company's IPO have lost more than 90 per cent of their capital highlights the scale of the underperformance under previous management who adopted a passive approach to investing in early stage life sciences, healthcare, and technology companies. The company’s cost base was also out of sync with this passive approach.

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