A Discount to NAV of 26.8% Opportunity
Written Aug 26, 2020 by Tom Linzmeier, editor LivingOffTheMarket.com
- Great second quarter with a strong beginning to the third quarter.
- Discount to $2.70 asset value of 26.8%
- Insider buying
- Talented new board member added
- Organic growth in assets and new AUM contribution as two growth drivers of assets.
TURN has three recently acquired public companies that are discussed in the Letter to Shareholders linked here. They are interesting as individual company investments for your consideration in addition to being portfolio companies of TURN. You can get a good understanding of how TURN operates in reading the stories and opportunities TURN management sees in this Q2 letter. The companies are:
- Potbelly (PBPB) $4.11
- Sonim Technologies Inc. (SONM) $0.91
- TheMaven, Inc. (MVEN) $0.73
What we love about TURN, as many of you know, is that TURN’s management are activist shareholders in their portfolio companies. They take a “real” role in making things happen in partnership with portfolio company management, rather than being passive investors. This has had a strong and positive impact on the growth in asset value at TURN. This is also beginning to attract the attention of institutional investors. This will benefit shareholders as an additional growth in assets under management (AUM).
We recommend you read the Letter to Shareholders, for the update on TURN. You might consider the low-priced portfolio companies mentioned above as individual positions as well.
Our feeling on TURN, under Kevin Rendino, is that TURN is a true, buy and hold for a decade or more position. It is unique in its activist / portfolio company approach to investing. There is very low “Company” risk as it does not use debt and is a portfolio of 25 plus or minus companies. We believe you have potential for a Ten X return on your money over a ten-year period. Buy weakness and sell partial positions on rallies when at or near asset valuation. You can trade this stock, but this is a true buy and dollar cost average into company. In time it would appear that TURN will pay a dividend as a shareholder friendly move. Since 2016, when he started at TURN, Rendino himself, has been buying shares actively in the open market. His position is now 922,616 share of 31 million shares outstanding. 2.9% of the company. That’s a pretty good number for a non-founder of a company. It does not appear he is done buying and that is a commitment a shareholder likes to see.
Buy on a consistent basis with the bigger buys being on price weakness as in March of this year. Fear is often our biggest enemy. With this company there is little to fear other than general market movement. We are saying, general market movement downwards, for long term investors, can be your greatest ally in building wealth. TURN can be one of your tools of opportunity in such situations.
Recent News Headlines:
I: Aug 10, 180 Degree Capital Corp. Reports +27.4% Growth and $2.70 Per Share NAV as of June 30, 2020, and Developments From Q3 2020
- Second quarter Letter to Shareholders linked here
In this 2Q 2020 newsletter, Rendino talks about their activist role when adding a company to their portfolio. They are not afraid of smaller companies under $100 million in revenue. This have been an area of opportunity for more than a decade. The trend in the market has been to ETF’s and Algorithm Trading. If you are not in an ETF you can easily be left in a backwater – value or no value. Algo trading requires liquidity which also can leave some smaller stock in a backwater vacuum.
II: Aug 26, 2020 Insider Buying at 180 Degree Capital:
Kevin Rendino filed a Form 4 with the SEC on Wednesday, August 26.
The insider bought 22,300 shares of 180 Degree Capital Inc (TURN) at an average price of $1.92. After the transaction, the executive’s stake in 180 Degree Capital Inc. moved to 922,616 shares. 180 Degree Capital was trading 1.8% higher from the previous closing price.
III: Aug 10, 2020 180 Degree Capital Corp. announced the appointment of Tonia L. Pankopf to its Board of Directors
180 Degree Capital Corp. (TURN) (“180” and the “Company”), today announced the appointment of Tonia L. Pankopf to its Board of Directors. With Ms. Pankopf’s appointment, 180’s Board has six members, four of whom are independent. Ms. Pankopf replaces Charles E. Ramsey, who retired from 180’s Board this year after 18 years of service.
- Stats, Charts, News and Insider activity linked here
- Technical Opinion from StockTA linked here
- 180 Degree Capital website linked here
Where Value meets Buy Signals!
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