The timing of this note coincides, sadly, with another delisting of a “popular” small cap.
Balwin Properties, which develops secure residential precincts, might — to some punters — not quite fit the description of popular. Certainly, the share was much interrogated in the market, with some starkly different views on the company’s prospects and value.
Ultimately, Balwin lagged its NAV by a derisory margin, which was bound to trigger action by investors/shareholders more intimate with the company’s operational strengths. Cue the owner managers with, interestingly, the Public Investment Corporation — which manages state employees’ pension savings — in tow.
To be fair, punters who played Balwin in a short-term game will be delighted at the outcome. The buyout offer was pitched at 435c a share — a level last seen in mid-2021. Indeed, the offer represents a 23.15% premium to the 30-day volume-weighted average price (VWAP), 26% to the 60-day VWAP, almost 35% to the 90-day VWAP and more than 40% to the 180-day VWAP.
I don’t think too many punters — notwithstanding Balwin’s much higher NAV number — are going to quibble too vigorously. Around 63% of the shares subject to the buyout scheme have given irrevocable support, including boutique asset manager Abax Investments (which holds a chunky stake).
My initial reaction — typically mercenary — was to have a closer look at Calgro M3, a similar business with an extra angle or two, as well as a hefty discount offered on the last stated NAV.
Then again, there must be a dozen or more underappreciated — perhaps misunderstood — small-cap stocks that warrant attention as potential “special situation” plays.
Let me rattle off a handful of possibilities and see if anything transpires in the medium term. Here goes: Insimbi, South Ocean Holdings, Adcorp, Deneb, York Timbers, Trellidor, Nutun, Crookes Brothers, Aveng, Italtile and Huge.
DYOR, of course.
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