Cambium Global (TREE) is currently trading at a discount of 40% to latest NAV, a fact that is as concerning to the company as to its shareholders.
The company is very easy to understand. On the one side of the balance sheet are shareholder funds and some (manageable) debt. On the other is timber plantations.
I came across this share from a Merryn Somerset Webb article some time back, and also through the fact that it forms part of Aberdeen Assets Management Diversified Growth fund as an uncorrelated asset class (although it has not behaved as such).
Timber prices have fallen in recent years and so has the share price. Timber has many uses, but a main one is for USA house construction - so recent poor performance is understandable. The market is presumably pricing in further spiralling falls in timber prices, or does not believe the professional valuations - I can see no other logical explanation for the discrepancy between sp and NAV.
Now one of the arguments in favour of timber is that if prices are low you simply delay harvesting and let the timber grow in value 'on the stump'. So what is the company doing?
Well the management came under direct attack from shareholders - egm requisition etc. The company response was to instigate a full review of operations to maximise shareholder value, all options on the table including a liquidation of the company.
That review is due at any time now, with a backstop of the end of November. My guess is for an orderly liquidation of assets over time returning value through dividends, with a final wind up at some point. This would avoid a fire sale, and allow an orderly realisation of value. Depending on timber prices (or more correctly demand for/price of timber plantations) the returns maybe higher (but probably lower) than current NAV, but even so there looks like an opportunity for a 20% minimum return here in the next twelve months or less). The story is fairly easy to follow through the RNS's, and the company has a reasonable website.
There are of course other shares out there trading at a discount to NAV, but the reason for posting now is that there is a potential outer to the value in the next few weeks.
I would be interested in any comments on this rough and ready analysis.
Disclosure - I hold.