Now that Ventures (see old writeup) is trading, it seems that its price is fair and not particularly undervalued. (I don’t know if I made a mistake as to Venture’s cash balance and how the cash payment on the Motorola debt was handled. Ventures may have ended up with more cash than I thought it would.)
So last time I checked, Ventures had a liquidation value of around $643M. There are roughly 28.6M shares out Ventures outstanding (both A and B, pre-rights offering; the number may be a little off due to buybacks). Ventures at $44.85 gives a market cap of $1.56B. You can divide by 0.9375 to account for the dilution from the rights offering… this gives an adjusted market cap of $1.664B.
The difference between $1.664B and $0.643B can be thought of as the discount on Ventures’ various deferred tax liabilities. That’s a $1021M discount on $2,435M of total deferred tax liabilities. To put it another way, the market is saying that the $2,435M Ventures will have to pay in tax is worth about $1,414M right now. (Or you can say that it is similar to $1,414M in debt with a 8% interest rate due in 7.06 years. Or 6% interest rate debt due in 9.3 years.)
At $20-30 I will probably get interested in Ventures. I guess I am disappointed that it is trading so high. This memo to Liberty Interactive employees suggested a trading price of $20 for LVNTA shares (“20.0 LVNTA Market Price post-distribution”). Damn you efficient markets.