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Marwyn in the money

The closed-end investment company is a smart way to play the bid approach for Europe's largest car auction operator BCA Marketplace.
June 12, 2018

I made a pretty strong case last week to buy shares in Marwyn Value Investors (MVI:148p), a closed-end investment company listed on the Specialist Fund Market of the London Stock Exchange (‘Marwyn buying opportunity’, 4 Jun 2018).

The company’s share price has risen by 12 per cent since then helped in no small part by the 21 per cent share price rally in Europe's largest car auction operator BCA Marketplace (BCA:231p), which has just received an unsolicited bid approach from private equity group Apax. Bearing this in mind, analysts at brokerage Zeus Capital have a net present value of £2.3bn, or 258p a share, on the equity of BCA using a discounted cash flow model. That’s well in excess of the 200p initial rejected offer from Apax, and highlights the type of premium that’s going to be required for a successful takeover. It could be really good news for Marwyn shareholders.

Marking its holdings to market value, I reckon Marwyn now has a spot net asset value (NAV) of £154m, or 218p a share, of which the holding in BCA accounts for £59m, and net cash held by the funds it invests in accounts for a further £42.4m. Combined, this means that cash and the BCA stake back up almost all of Marwyn’s £104m market capitalisation, leaving the £28.7m stake in  Zegona Communications (ZEG:123p), an investor in the European telecoms sector, and £22m-worth of holdings in three London Stock Exchange listed cash shells in the price for free.

Trading on a 31 per cent discount to my 218p a share estimate of spot NAV, and with BCA now in play, Marwyn’s undervalued and high-yielding shares offer a smart way of playing this unfolding takeover situation. Buy.

 

■ Simon Thompson's new book Successful Stock Picking Strategies was published on 15 March and can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 to place an order. It is being sold through no other source and is priced at £16.95 plus £2.95 postage and packaging. 

Simon's second book Stock Picking for Profit has now been reprinted and is available to purchase online at www.ypdbooks.com for £16.95, plus £2.95 postage and packaging, or by telephoning YPDBooks on 01904 431 213 to place an order.