Version 2 – Why I shall reinvest capital return in Quindell

Several have asked why I haven’t considered debt in my previous blog. This update provides more information with regard to why I have recently increased my investment in this stock and will reinvest capital returns (providing sp favourable).

The EGM is on the 17th April 2015. With many Institutional Investors and private investors having indicated they intend to vote yes, the resolution with regard to the sale of part of the business to Slater and Gordon is highly likely to be passed.

With the current share price being c£1.30 this equates to a market capitalisation of £573m. With Slater and Gordon offering £640m+, this on its own equates to £1.45 per share.

The share price based on this is at least 15p undervalued ( see table in previous blog) and this also doesn’t place any value on the remainder of the business.

Anybody investing in Quindell at the current sp is basically buying into a business that values the remainder of the business at less than 0p. The remaining business comprises of;

ICE software

Quintica

Ingenie

Connected Car Solutions

Himex

Inter8

Evoji

Road Angel

Fleet Daddy

Global360net

PT Health

etc, etc, etc.

The business has c£50m debt. This hasn’t been included in the calculations as it is believed c£50m will materialise from the sale of several non core assets. This will create a neutral position.

Alternatively it might be decided by Quindell that PT Health, a business based in Canada with 100+ clinics is a non core asset. Jim Sutcliffe has stated this is a good business. If sold this business alone could realise £50m+ or if not sold will continue to contribute to revenues.

Throw this into the pot along with increased returns from the NIHL settlements in the next few years, of say £150m and it is easy to see why the remaining assets should reflect an sp higher than the current c£1.30.

Summary

Share price calculation: Slater and Gordon deal (sp £1.45) – debt (sp £0.11) + NIHL upside (sp £0.34p) + PT Health (sp £0.11) = £1.79 share price. This doesn’t factor in the value of the remaining businesses.

Share price based on this information should therefore be a minimum of £1.79.

image

It seems like a good deal to me, so I shall be reinvesting.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s