Activist Investments in Asia

Dec 20, 2008 by Felix

Activist investing! Perhaps luck was not on your side during the last 12-months; you may not be in a sufficiently liquid position today to take advantage of these opportunities. However, if you are, then these are the types of opportunities that would make a rational investor weak-knee’d in normal times (if only to have one opportunity—but here are ten!)

These opportunities are not for everyone. However if you are a corporate player seeking to make strategic acquisitions, high net worth individual with staying power, or a family offices seeking fund strategies that will work across the next cycle—these concepts may be interesting for you. Deploying a selective activist agenda would accelerate returns and add extra value to these scenarios. A common theme linking most of these opportunities is that you are generally buying in at a significant discount to net cash; you are buying $1.00 in cash for as little as 10 cents on the margin! A majority of these examples are also minority owned—it means that with sufficient capital, activism can work. You can push an agenda to improve minority shareholder performance thru increased dividend payments, stock buy-backs, better project returns, etc.

1. Property Company

Net cash & Liquid assets of US$50m +
Property Portfolio of US$70m; NAV US$140m
Peak market cap US$190m, now US$8m!
2012 Target Market Cap US$90m > 1000% return…
Activist Play: Buy 30% over six months for US$8m; unfold
activist strategy; 2 year returns +400%

2. Property Company
Net cash of US$200m + Property Portfolio of US$300m;
NAV US$600m
Peak market cap US$1.3bn, now US$40m!
2012 Target Market Cap US$500m > 1000% return…
Activist Play: Buy 30% over six months for US$22m; unfold
activist strategy; 2 year returns +400%

3. Property Company
Net cash, shares & receivables US$60m +
Properties of US$10m; NAV US$100m
Peak market cap US$400m, now US$8m!
2012 Target Market Cap US$90m > 1000% return…
Activist Play: Buy 30% over six months for US$7m; unfold
activist strategy; 2 year returns +400%

4. Textile Company
Net cash US$65m + 2009-2012 EBITDA range US$10-30m; NAV US$160m
Peak market cap US$160m, now US$14m!
2012 Target Market Cap US$150m > 1000% return…
Activist Play: Buy 30% over six months for US$12m; unfold activist strategy; 2
year returns +400%

5. Chemical Company
PE 1.3x 2008 + EPS growth of 150% to 2012 ; Dividend Yld >25%
Peak market cap US$125m, now US$38m!
2012 Target Market Cap US$420m > 1000% return…
Activist Play: Buy 25% over six months for US$18m; unfold activist strategy; 2
year returns +400%

6. Coal Company
DCF valuation US$300m; assuming coal prices fall 40% from current levels;
2012 P/CF 0.5x
Peak market cap US$50m, now US$5m!
2012 Target Market Cap US$150m > 1000% return (building in 50% dilution)
Activist Play: Buy 30% over six months for US$5m; unfold activist strategy; 2
year returns +400%

7. Cash Box Company
Net cash of US$35m + Resource Concessions ; NAV US$80m
Peak market cap US$100m, now US$4.0m!
2012 Target Market Cap US$45m > 1000% return…
Activist Play: Buy 30% over six months for US$5m; unfold activist strategy; 2
year returns +400%

8. Gaming Company
PE 2009 0.5x ; DCF value range US$175m; Dividend Yld 50%
Peak market cap US$500m, now US$13m!
2012 Target Market Cap US$150m > 1000% return…
Activist Play: Buy 30% over six months for US$8m; unfold activist strategy; 2
year returns +500%

9. Building Materials Company
PE 2008 0.8x ; PE 2012 0.5x ; 2012 Dividend Yld 100%
Peak market cap US$35m, now US$9m!
2012 Target Market Cap US$100m > 1000% return…
Activist Play: Buy 30% over six months for US$6m; unfold activist strategy; 2
year returns +400%

10. Power Producer Company
PE 2008 1.6x ; PE 2012 0.5x; 2012
Peak market cap US$2.7bn, now US$65m!
2012 Target Market Cap US$1.3bn > 1000% return…
Activist Play: Buy 25% over six months for US$35m; unfold activist strategy; 2
year returns +400%

If you are interested in any of these opportunities, contact me at felix@felixsim.com.