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Tower Group International, L.Ş. Message Board

  • toobig2failagain toobig2failagain Oct 8, 2013 8:56 PM Flag

    Current Market Valuation Less Than Cash Value

    TWGP Can Be Bought for $252 million at the close today. A mere $152 million purchase of shares can gain a 51 percent controlling stake in a company with $258 million of cash and equivalents in the bank.

    The Enterprise Value is $625.5 million, almost 2.5 times its current valuation. With a current Book Value of $20.85 / share, a Cash Value of $4.51 / share, and PE of 3.2 on current diluted earnings ($1.37 / share), and forcasted earnings of $2.17 next year (forward PE = 2.02, there is very little to worry about this company.

    Imagine, if you can, a company paying even twice as much as the current price, maybe more, in the next few days, in order to add between $1.7 and 1.9 billion to their revenue for a mere $504 million (if they pay double the current closing price), and still get over $252 million in cash in the bargain. A controlling stake in the company (51 percent) would only cost $152 million at today's closing price, and the purchasing company can keep $252 million in cash in the bank, plus about $823 million in Net Tangible Assets.

    I see a train of buyout bids coming if this stock stays under $7.50 for more than a few days, even with the latest accounting writedown of goodwill and reserve charges. This is just an accounting trick to allow the purchasing company to walk away with a fully profitable company upon merger. It helps bring the purchasing price down to obscenely low levels for the buyout firm to make a killing on the purchase and realize the gains almost immediately in its income statements.

    I wish I had $152 million dollars to grab this steal of a company....

    Sentiment: Strong Buy

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