Earlier this month I sold Retail Holdings, only to quickly buy it back after I realized there was a mistake in my sheet. Since then the price of the company has increased a bit more than 6% while the underlying asset value actually declined a tiny bit. Since the discount earlier this month was just 12.7% (using a 33% discount on the non-remittance shares) these relative small movements are enough to change the story. At the moment the remaining discount is 6.01% which translates to 10.1% after the dividends have been paid. Given that there are for sure some costs at the holding company level, and that it quite possible that a fair discount on the non-remittance shares is actually higher than 33% I sold my position. There might be a bit of upside left (especially if this Seeking Alpha author is right with respects to the licence fees), but I think the Retail Holdings story has mostly played out at this point in time.
I bought my initial position a bit more than three years ago. Taking into account the dividends paid out in the meantime I generated a more than solid internal rate of return of 20.2%:
| Â Description | Date | Cash flow |
|---|---|---|
| Buy | 6/4/2014 | -18.95 |
| Dividend | 10/6/2014 | 1.00 |
| Dividend | 10/6/2015 | 1.00 |
| Dividend | 4/13/2016 | 5.00 |
| Dividend | 5/17/2017 | 2.00 |
| Sell | 10/13/2017 | 23.24 |
| IRR: | 20.21% |
Disclosure
Author has no position in Retail Holdings anymore
Thanks for the update. However, your selling pricing is shy to the company’s NAV which is set according to their latest fillings to 27.62$ even before the new earring is cumulated.
I don’t think the companies NAV is the most useful number since it doesn’t include transaction costs, accrued/and future CEO incentive fees, doesn’t account for the fact that a large part of the Singer Bangladesh share are non-remittance shares etc etc
Retail Holdings has sold off slighty to below $20. I think it’s an attractive proposition at this price if you wanted to take another look, update your model, etc.
Yes, I agree. Have already a small position again.
Are you still holding? Views from here?
I own a couple of shares again. Depends a lot how/if they can resolve the issue of their non-remittance shares in Bangladesh. If these are basically worthless you might make a little bit of money at current prices. But if these are worth at least something things could turn out very well. So it’s a bit the classic heads I don’t lose, tails I win investment IMO.
Did you see the news today? Bangladesh got sold:
“The net cash consideration to be received for the Bhold shares is approximately US$75 million, subject to certain post-closing adjustments. Approximately 54.1% of this amount is attributable to the Retail Holdings shareholders.”