This is a simple idea. You have a company trading at a pretty big discount to NAV. Also, you have non-voting shares trading at a larger than normal discount to the voting shares. The CEO (who owns a pretty big chunk of this company) has stated that he is aware of the discount and will continue to buy back shares.
One would think that even the mention of the CEO noticing the discount would close the window. I think liquidity is playing a part here as neither shares (voting and non) are liquid enough for big money to get involved. Also, the NAV hasn’t rebounded like the overall equity markets. I think there is some worry about the CEO’s recent poor performance. I’m not smart enough to know if he has actually done a bad job. I am just buying at a discount to assets with an CEO who has skin in the game.
I apologize for the messy chart. You can see that in 2006 and 2007 the shares traded at a premium to NAV. As the shares were at a premium, more were issued. The shares eventually moved into a discount. The discount to NAV is now as high as is was in late 2008 and early 2009. The CEO has focused on buying back shares.
Obviously there are risks. The value of the holdings of Urbana could drop and take away the discount. There are major competitive pressures on the stock exchanges. But this isn’t an earnings story, this is an asset story. There are several write-ups already available. The numbers are from Friday March 25th, so they might be a little different now.
I am taking a position in the non-voting shares.
Disclosure: Long URB.A