Retail Holdings (RHDGF) is a well known stock in value circles with a simple story, and because of that I’m going to keep this post short. The company owns a majority stake in Sewko Holdings that has operating subsidiaries in Sri Lanka, Thailand, India, Pakistan and Bangladesh (selling home appliances, consumer electronics, sewing machines and other products). Because these operating subsidiaries are all publicly listed the value of Sewko Holdings can easily be determined. Besides the publicly listed companies there is also some net cash at the various holding companies and a note receivable:
As you can see the company is trading at a sizable discount, and the good news is that there is a catalyst on the (far) horizon for this discount to close since the company wants to liquidate, but only at a good price. Last year Retail Holdings wanted to do an IPO in Singapore, but this plan was shelved because it didn’t think it could realize fair value. In the mean time Retail Holdings pays out generous dividends and with the CEO and his wife owning 25.7% of the company I’m confident that they will try to maximize shareholder value.
There is a lot more that can be said about Retail Holdings but since not a whole lot has changed the past years I recommend you check out these posts on OTC Adventures (post 1, post 2 and post 3) and this post from WertArt Capital. Note that the discount that the author of the WertArt Capital blog applies to account for the license fee that Retail Holdings pays for the use of the Singer trademark is not appropriate. The operating subsidiaries also pay royalties to the parent company to use the trademark so this is already reflected in the market value of the various operating companies. It might actually have a small positive value since Retail Holdings has also licensed the trademark to a couple unrelated companies operating in Malaysia and Australia.
Author is long Retail Holdings NV