Tags

,

Brief post on Renn Universal Growth. I bought this a couple of weeks ago. It is delisting today – so if you want some you need to do this today.

Unfortunately there is very very limited liquidity in this stock and I was considering buying more so I didnt post on it – I dislike competition intensely!

Renn is an investment trust which is winding itself up. It has a NAV of about 295 and a share price (offer) of circa 224 – so an upside of about 30%.

60% of the NAV is in various listed assets and cash – so about £1.68. Two of these are a significant percentage of the MCAP of the share in question so there is a question as to whether one should discount this or add a premium for control. I have gone with the straight market price.

I am assuming that these will go for more or less what they are on the books for – though there is an element of risk.

The wildcard is a holding called Anchorfree – this is one of the world’s most popular pieces of VPN software. It allows you to browse the internet anonymously and spoof your location – for example watching iplayer when living in China. It is the most popular in lots of app stores.

Now Anchorfree makes up 41% of the NAV. Anchorfree is privately held. This means if we assume the listed holdings go at what the market is pricing them at Anchorfree needs only to go at about half what it is in the books for to get your money back. The book value is based on what Goldman paid for a stake in 2012. Apparently since then Anchorfree has done well and Goldman are not known for overpaying. An independent valuer was appointed to look at the value of the holding who said the book value was towards the lower end of his estimate.

This means more potential upside – though there is substantial uncertainty involved.

One other note of interest is that the company suspended buybacks as if it continued it could be accused of trading on inside information. This makes me think there may be something they know but are not saying – a buyer already for Anchorfree ? Something else ? It would have to be a positive.

The company is unable to sell its other holdings without delisting as it would jeopardise its investment trust status and tax related benefits which accompany this…

I have bought a small weight – circa 5% of my portfolio.

I will wait and see what this ultimately turns out to be worth!

Advertisements