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Added a touch to Rasmala.

They have just released 2016 results.  They were not good, in most ways, but there is still opportunity here.

They seem to be sub/scale losing money.  In addition they invest in ridiculous things like Diamondcorp – a diamond miner – with predictable results.

Overall NTAV has fallen from 92 to 77m – or 15%.

Fund performance has been mixed, slight net redemptions.  They still have nearly $1bn under management.  Apparently it is influenced quite a bit by currency moves and there was a 58% collapse in the Egyptian pound.  On a more positive note I will have to look into researching exotic currencies more – there are opportunities there.

They say:

“The AIM listing is under review and the Board is assessing whether the Alternative Investment Market is the most optimal venue for Rasmala. All options are being considered, including remaining in London whilst also looking at Dubai as a potential listing venue.

 

They are investing in commercial UK Property – having invested £24.4m  They also bought a stake in a business developing corporate apartments.  This is ridiculous – given the discount to NAV of their own shares why invest in anything else? This is too common among managements and is a result of investors letting them get away with far too much….  This might be warehoused stock for a future fund launch.  Right now its on the balance sheet and I dont like it.

http://rasmala.com/2017/02/rasmala-set-launch-aed-1-billion-real-estate-fund-2017/

Now on to the positives – they still have £77m of assets, trading at a market cap of £31m – opportunity of a doubling there.  Plus the AUM should be valued at something – say 1% of AUM – or £7.7m – although some of the assets are needed to support the asset management business.

They say:

The Board is reviewing options for making further capital distribution to our shareholders, as we are unable to deploy excess capital in the short term. The business is in a stronger position today to access debt and equity capital when required and this gives the Board more flexibility when considering distributions to shareholders. We anticipate shareholder distributions of approximately £20 million in 2017.

If they return £20m of cash, and the market price falls to £11m – you then have assets worth £57m trading at £11m.  A nice 5/1 return, again excluding the value in the asset management business.  What I expect to happen (and what I have observed usually happening in these situations) is they return £20m, the price falls a bit but less than you would expect so you get a better return.  I recon likely price after paying the cash is a £25m market cap – so if you invest today you are up 45% before the end of 2017.  This is of course a near-complete guess…

Still my biggest holding at 12% of the portfolio.

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