Here’s a list of ideas I’ve talked about on this blog that could be relevant today.
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kobex minerals CVE:KXM
Kingsway Financial’s activist battle with Kobex Capital
(KXM is an illiquid Canadian stock with a market cap of $26M.)
Kingsway Financial’s plan:
- Buy back shares because this company trades below NAV- roughly seventy cents a share in NAV trading at 50-55 cents currently.
- Cut director’s salaries to $10k/person.
- Not issue options below intrinsic value. On August 19, 2015 Kobex issued options at $0.55/share.
The incumbents’ plan:
- Waste shareholder money entrenching themselves against Kingsway Financial.
Kobex Capital: A pile of cash, trading at a discount, with an impending catalyst
(KXM is an illiquid Canadian stock with a market cap of $26M.)
Kobex’s liquidation value is in the ballpark of 70 cents/share and currently trades at 55 cents/share.
Kingsway Financial Services is going activist on Kobex Capital. This makes me like the stock a little more as the catalyst of activism should raise the internal rate of return on a position in the stock. However, I’m a little wary of activist investing mainly because management teams often like to fight activists with shareholder money. The legal fees and any severance payments will likely reduce the value that’s left for shareholders.
Kobex Capital: Insider buying continues
Kobex Capital (formerly Kobex Minerals) has a market cap of $23M and is traded on the TSX Venture. It is a pile of cash (and 1 stock) trading at a very obvious discount to liquidation value. I’ve written up the company in the past. Paul van Eeden continues to buy shares of the company via Cranberry Capital, which is a joint venture between van Eeden and Altius Minerals. It’s possible that the end game is a liquidation of the company if the share price continues to be depressed. This is because Altius Minerals may eventually wish to withdraw money from Cranberry Capital to pay down its debt.
I think what will happen is that van Eeden will continue to buy shares of the company on the open market. If the share price stays low, I think that a liquidation will eventually happen because it will be easy money for Cranberry. If the share price goes up, then investors can flip their shares for a profit.
*Disclosure: I am long KXM.
Kobex Minerals (CVE:KXM)
Kobex Minerals is an illiquid $23.75M company that trades for less than cash. The shares currently trade at around $0.52/$0.54 while the company has around $0.74/share in cash. The company is currently buying back shares.
New management has taken control of the company. They are turning the company into an investment company. The CEO is Philip Du Toit (29 years old) and the Chairman is Paul van Eeden. I think highly of Paul van Eeden and think that this company is in reasonably good hands.
