Thursday, May 17, 2007
OSKVI NAV vs Share Price
You might not have seen this before.
I have estimated the NAV using publicly available data (see basis below). No doubt it will differ if OSKVI publishes its own NAV figure (except perhaps at the starting date at 31/12/2006), but it looks to be the right order of magnitude. Buffett quote ... "it is better to be approximately right than precisely wrong".
Share Price Observations
(see pink line)
1. Note the peaks ($2.90 10 Apr, $2.84 23 Feb) and low ($2.26 5 Mar).
2. The peak to low fall is 22%.
3. Seems irrational, since the NAV didn't even come close to the share price on 5 Mar.
(see blue line)
1. Note the peak ($4.60 23 Feb) and low ($3.77 twice - 5 Mar and yesterday)
2. Only 18% fall - proportionately stabler.
3. Still big gap between Low NAV ($3.77) vs Peak Price ($2.90), or 28% potential gain.
4. Still bigger gap between Low NAV ($3.77) vs yesterday's price ($2.40), or 54% potential gain.
(compare pink with blue line)
1. Some correlation between Price and NAV. Both peaks on Feb 23, and both lows on Mar 5. Not perfect, but close.
2. Correlation would make sense, if there was no gap between NAV and OSKVI share price. But given the huge gap, it doesn't make full sense. It suggests Mr Market doesn't really know how to value OSKVI, due to largely inefficient market.
3. As noted before, closed end funds rarely (almost never?) trade at such a large discount for such a long period. Eventually, the investment community and investing public will discover the mispricing, and blogs like this and others will come up to reduce the information gap.
4. Just a couple of days ago, AMANMFB announces a proposal to shareholders to buy back a limited amount of its shares at 97% NAV. Note the discount is only 3%, not 28% to 54% potential gains above.
5. Since 31/12/06, several OSKVI's holdings has taken a significant price beating:
- Green Packet fell 27% from $5.75 peak (23-26 Feb) to $4.22 low (yesterday).
- MNC fell 37% from $0.295 peak (19 Jan) to $0.185 low (yesterday) - 37% fall.
- mTouche fell 46% from this year's high of $3.70 (8 Jan) $1.96 low (4 May), before recovering to $2.19 (yesterday).
Individually, these falls are scary. And the May effect, possible Shanghai crash rippling to the rest of the world, and other scary stories are not even here yet ...
6. Yet, OSKVI NAV didn't fall that badly, and didn't even come close to Share Price. This is due to the big starting gap, and the diversification benefits in its portfolio. When Green Packet, MNC and mTouche fell, eBworx gained 126% and Willowglen gained 38% (from 31/12/06 to yesterday).
7. Further, valuing OSKVI based on just NAV is understating its true net worth, as we get closer to the date when its China and Singapore ventures are listed. Its future venture capital business must surely be worth something too. There is no doubt in my mind that OSKVI is worth a lot more than yesterday's NAV of $3.77.
- Do read my earlier posts on OSKVI for context and additional information.
- Do read the disclaimers there also.
- As usual, use your own judgement and invest (buy, hold, sell) at your own risk.
NAV Estimation Basis
- My starting point is the data reported in the 31/12/2006 Balance Sheet and the Notes in the Accounts. This gives a calculated NAV of $594M.
- At the same date, the sum of the Market Values of its 6 listed Mesdaq counters is $444M.
- This gives a difference of $150M (=594 - 444), which I have assumed to remain constant since 31/12/06 (I believe this is not critical at this stage, since the number is relatively smaller, and the degree of under-valuation is high).
- Therefore, the fluctuations since 31/12/06 is simply due to the daily changes in share price of the 6 listed Mesdaq stocks that it owns.