Buy A Company Selling Land For Double the Market Cap
In issue number one of “Weird OTC Stocks” I highlighted a company with a single luxury hotel trading at an 18-cap and sitting on 5,500 excess acres of land. In issue number two I highlighted a real estate company that is going through strategic alternatives and a billionaire Israeli who is buying shares via tender offer. In issue number three of “Weird OTC Stocks” I am highlighting a company that is selling all of their land operations, for more than double the market cap.
Here is the high level thesis:
The company has a market cap of just $14 million. There is $532k of cash and $816k of debt for an enterprise value of just $14.4 million.
The company has historically been a sleepy generational family owned company. In good years the company would pay out dividends and in bad years they would squeak by.
The core business has gotten weaker every year as individuals pivot the business online instead of in-person. The company offset these headwinds by raising price, which worked for a while.
Over the years urban development has sprawled closer and closer to the company’s core operations. Today, urban development is right next door to the operations and the owned land the company owns is now extremely valuable.
In October of 2024, the company listed their operating asset, which includes significant real estate, for sale. The listing price is $27 million.
The stock is up 40% since the announcement of the potential sale, but remains largely “hidden” from the rest of the market and should still have some juice to the upside if a sale is transacted.
Assuming a fully burdened tax impact on the sale, the company could have 48% upside should the sale go through.
In addition, the company owns an additional 80 acres of land that is being marketed for sale that could be worth $3-6 million, fully taxed burdened valuation.
Should both asset sales occur, the company is likely to return all capital to investors, for over 70% upside from the current valuation.
A local newspaper article recently wrote that local real estate professionals are already looking at the key asset with interest. I suspect an asset sale could happen anytime.
This is a timely find. The company is selling off all of their operations and a buyer at the current valuation has a large margin of safety. The market is largely unaware of these asset sales and there is potential for a double in short order.
Let’s dig in.