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The motivation for purchasing Northamber’s (LSE:NAR) shares two years ago was to benefit from the obvious path for the directors to take, namely the gradual run down of the business, releasing cash from property, inventory and receivables.
That would result in at least a doubling of money invested in the shares because it held net current assets much greater than MCap. And there was another amount of money roughly equivalent to the MCap in easily marketable property.
(See earlier posts: 19th – 27th Nov 2014, 13th Dec 2014, 18th & 19th March, 8th – 10th Sept, 23rd Oct) (I’m grateful to Graham Neary, a subscriber and fellow shareholder in Northamber, for helping me to write this post – and agreeing to be associated with it).
Two years on, net current asset value, NCAV, has fallen to £12,338,000 (before my usual downward adjustment to inventory and receivables numbers to conservatively allow for failure to realise the stated BS value in the “liquidation by stealth”). However, the value tied up in property has probably risen given the rise in property around London over the two years. Thus the MCap is probably around one-half of the value of the cash that could be released on a liquidation of the firm.
So, why is the management team not following the script?
Hope of rescuing the operating business has been rekindled with the arrival of Alexander Phillips, the son of the 61.23% shareholder and chairman, David Phillips.
Alexander has been busy changing the mix of products sold and revitalising the sales effort. This is bearing some fruit, e.g. sales in the year to end June 2015 were 4.1% higher……..
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