Liquidations Watchlist #8
6 liquidations, 5 potential liquidations and 1 update. Investment Funds, cannabis company, software company, property trust and a land company.
With the geopolitical situation flaring up over the last few days, it's a good time to focus on the watchlists and look for tactical buys in our liquidation stocks.
The pullback in April produced some good entry points. Since then, I think the spreads on many interesting situations have gotten too narrow.
Last Sunday I put up a link in the chat for a Google Sheets version of the Master PDF. You can download this and edit it yourself. I also added a share price and discount to NAV column. I will keep updating the sheet with the latest watchlists and updates.
If you can’t figure out the chat, then send me an email or DM and I’ll send you the link. This is for subscribers only (free).
Liquidations
Premier Miton Global Renewables (LON:PMGR) invests in listed companies operating in the renewable energy and related infrastructure sectors. The companies ZDP shares (LON:PMGRZ) will be redeemed in November. The ZDP liability (£17.5m) is accumulative and is currently 50% of total assets. As redemption draws closer, the managers have said they will start liquidating assets and move to cash. Additionally the board has said they are considering options- a wind down or option to roll over. Key driver of this situation is the performance of the green energy space, which has been recovering from a multi year bear market. The current NAV is £21.5m, so odds are high this gets fully liquidated in November. I think this is an interesting situation. It gets less risky as they move to cash and redeem the ZDP. You also get upside to the green energy space and a hard time exit on getting your money back. NAV £1.20. Timeframe < 9 months.
JP Morgan Global Core Real Assets (LON:JARA) is a vehicle that invests in JP Morgan's private funds across transportation, infrastructure, real estate equity and debt. They are geographically exposed to North America 56%, Asia Pacific 26%, Europe 17%, UK 2%. In December a managed wind down was approved. In February this year, 16% of issued capital was returned. Another 35% is estimated to come back in Q3 and 30% in Q4 2025. The board indicated that Q4 2026 would be when everything is wound up. Key drivers of this situation are the performance of the underlying assets, the ability for the board to redeem investments in the funds and at what discount/timeframe. Trading at a 14% discount it's hard to get excited about this considering a potential 2 year timeframe. One to put on the list for a bigger discount. NAV £0.887. Timeframe 2 years.
Ground Rents Income Fund (LON:GRIO) owns a portfolio of residential and commercial freeholds and head leases. They own 386 individual assets in the UK. In 2023 they approved an asset realisation strategy. 96% of the portfolio is under a “Material Valuation Uncertainty Clause” due to leasehold reforms. In January, Victoria Property Holdings went public with a non-binding indicative offer at £0.34. They subsequently increased the price to £0.40. The board of GRIO rejected these offers because it undervalues the company. The key drivers of this situation are the UK government's approach to leasehold reform and how it effects assets value. If they were to liquidate asset by asset I think it will take a long time and costs will eat into your return. GRIO has been on my list for a while but I felt it was too risky with the valuation uncertainty. Now with Victoria’s bid there’s at least someone willing to put a value on the assets. Price is down over 18% since the offer- maybe Victoria will come back with a higher offer? It’s now trading at a 50% discount to NAV. I would have taken the offer at £0.40. NAV £0.527. Timeframe 4 years.
Copper Property CTL Pass Through Trust (OTCMKTS:CPPTL) is a pass through trust created out of the CH11 reorganization of JC Penney’s. They hold 121 retail properties leased to the new owners of JC Penny stores. The trust will terminate and possibly convert to a REIT on 10 December 2025. In December the whole portfolio was put up for sale with indications it’s worth over $1billion. It’s debt free and you’re currently getting a 9.2% annualised yield. As it’s a liquidating trust, the dividends are tax free at the Federal level. This will change if it converts to a REIT. Key drivers of this situation are interest rates, demand for retail assets and the performance of JC Penny. Good news is that shopping centres are having a bit of a resurgence after a decade long bear market. The $1 billion price target comes out at a 8.75% cap rate. This is a 330 bps spread over the 10 year. On a high level analysis the valuation seems reasonable. NAV $13.75. Timeframe 2 years.
Marin Software (NASDAQ:MRIN) a loss making advertising software company. They announced in April they will liquidate the company and the liquidation distribution would be between $0.00 - $0.10. On 9 June they entered into a non-binding LOI with a PE buyer to acquire the assets. No value was given on the deal. Key driver of this situation is if the software IP has any value above the current estimates. This currently trades at $0.90, way above the original liquidation value. You should get more info on the outcome of the LOI at the end of June. I’m going to wait till then. NAV $0.00 - $0.10. Timeframe < 6 months.
Starwood European Real Estate Finance (LON:SWEF) invested in a portfolio of real estate loans in the UK, Spain and Ireland. They have 6 investments left. The loans were to office, light industrial, healthcare, hospitality and life sciences properties. 78% of the portfolio is floating rate (downside capped) and benefits from inflation/interest rate increases. Key drivers to the situation is the realisation timeframe, which is expected to be 2-3 years and the recovery amount of the loans. They are paying a fully covered dividend at a 6.4% yield. I’ve had this on my list for a while but the discount was <10%. It's currently at 15% and recently got out to 18%. If it moves past 20% then it starts to look interesting. NAV $1.00. Timeframe 2-3 years.
Potential Liquidations
Cannovum Cannabis AG (ETR:27N0) was a company setup to take advantage of the German recreational cannabis market. In February, due to the newly elected government, they announced they would liquidate the subsidiary “Anbau-Allianz” and sell their partial stake in “Cannovum Health eG” (Health eG), a drop shipping company. They also said in August they would vote to remove cannabis from their name. This suggests they might not liquidate. At 500K EUR market cap I don’t see many options for them. Key drivers of this situation is what they sell the partial stake for and what they do with the cash (if there is any). The accounts are in German and it has been difficult to get information (thanks to one of my German readers for the help). Interestingly, they previously owned 100% of Health eG and it was on the books for 9.8M EUR but was then quickly written off. NAV €0.41.
CQS Natural Resources Growth and Income (LON:CYN) invests in a portfolio of mining and natural resource equities and fixed interest securities. On 28 May they announced a proposed tender offer for 100% of issued capital. If over 60% is tendered then the offer will be withdrawn and the company will liquidate. Results of the tender will be announced on 1st July. Saba, who own 29% of the fund have said they will vote to tender their shares. A recent requisition meeting failed with 98% of the votes (excluding Saba’s) voting against the resolutions, so a liquidation is not certain. Key driver of this situation is non Saba shareholders' appetite to exit or continue. The board has offered shareholders who don’t tender a 20 bps reduction in management fee and an increased dividend to 8% of NAV. This is a big jump up from the current c3% dividend yield and potential 8.7% yield at current prices. I will wait for the outcome of this. If it liquidates, you might be able to pick up a quick short term trade like LON:LFI and ASX:FPP this year. NAV £2.24.
Henderson European Trust (LON:HET) owns a portfolio of listed European “Global Champions”- pioneering companies that are leaders in there field. In February they announced a strategic review due to the resignation of the two co portfolio managers. In a recent update they said they would provide a substantial update at the HY results release at the end of June. Another one that could provide a nice short term opportunity. NAV £2.10.
Polar Capital Global Financials (LON:PCFT) invests in a global portfolio of listed securities in the financial sector. They are currently offering a 100% tender. If 67% of the issued capital tenders then they will liquidate the trust. Key driver here is dissatisfaction of shareholders. Management has sweetened the prospects for continuation by lowering management fees and increasing dividend to 4% of NAV. It currently pays a 2.3% dividend yield. There doesn’t seem to be any pressure from an activist to wind this up. Its last 2 years share price has returned 24% & 28% p.a. It last traded on a 10%+ discount in 2023. They will announce the preliminary assessment on shares tendered on the 17th June. Keep an eye out for a surprise. NAV £2.11.
Tejon Ranch (NYSE:TRC) is a diversified real estate development and agribusiness company in California. Since 2000 the share price has declined 29%. Waterboy Investing did a write up on his substack last year. In recent years there has been a growing list of activist who want the discount to NAV closed. In May, well known activist Bulldog Investors got two nominees elected to the board. Key driver is how much influence Bulldog has and are they able to convince current insiders to give up their pay packages and liquidate. Bulldog are typically CEF activists so will be interesting to see if they are successful here. NAV $25.
Updates on Previously Mentioned
Sun Residential REIT (CVE:SRES) owned two multi-family properties in the Sunbelt, USA. On 28th May unit holders approved the sale of the properties and termination of the trust. The estimated distribution in the circular was $0.0782 USD or $0.111 CAD. Since then USDCAD is down 4.5%. The completion is supposed to be around May 29 with a hard stop of 1st August. The company will announce completion along with distribution details. 90% of the liquidation amount is supposed to come back shortly after that. Key drivers of the final payout will be the actual wind up costs and when the money is transferred to CAD. Using the company’s estimates in the circular and a USDCAD rate at 14th June, the payout is reduced to $0.106 CAD. If you can pick this up <$0.10 CAD then this could be nice trade with most of your capital coming back soon after completion. NAV $0.106. Timeframe <6 months.
Conclusion
What do you think of these? Please comment below.
Thank you for reading.
Disclaimer: The content in this write-up is for informational purposes only and should not be construed as financial or investment advice All opinions expressed are my own. Please do your own research or consult with a professional before making any investment decisions.
Disclosure: I, or members of my family, hold shares in CVE:SRES and could potentially hold shares in any of the mentioned companies in the future.
I love your work and wanted to ask. What are ways to actively search and catalogue distressed manufacturing, software and aerospace companies? I was looking at the database from DailyDAC at one point. Specifically, in North America. Thank you so much. Swen told me about your blog.