Congrats are in order for Paul T.. His microcap stock pitch he made on GeoInvestng’s Pro Portal has risen 44.32%.
On August 23, 2023 Paul made his first ever appearance on our Investor Insights Skull Session platform. Paul, a part time special situations investor who writes for the Value in Special Situations Substack, introduced Maj to a UK based company, Kinovoa, PLC. (KINO.L) (OOTC:BILBF).
Part of his thesis revolved around the potential of a hostile takeover due the stock’s very low valuation – one of the lowest in the industry.
To summarized Paul’s pitch on the company:
“…a UK-based business with a market capitalization of around £26-28 million and an enterprise value of about £32 million. The company specializes in IT services and installations related to buildings, such as sprinklers, heating boilers, solar panels, and electrical vehicle chargers.
Paul discusses the company’s recent history of poor capital allocation, which led to financial difficulties and near bankruptcy. The business was subsequently restructured, and a new CEO took charge. Paul is optimistic about the CEO’s approach to capital allocation, emphasizing that he focuses on profitability and valuations rather than just pursuing revenue growth. Paul believes that the company has growth potential through both organic growth and mergers and acquisitions. He praises the CEO’s approach to realigning projects for higher returns.”
In a follow up conversation with with us, Paul said he believes there’s more room to go:
“Thanks Maj, I still think we’re early and most we’ve seen was just multiple expansion, but good is soon to come.”
On September 1, Paul tweeted an in-depth investment case and valuation for Kinovo.
In the tweet, he highlighted his convictions of the stock:
“I believe that the current non-binding offer of 56p/share undervalues the business significantly and is an attempt to rip current shareholders off.
Any offer below 130p/share doesn’t value the businesses long-term potential. Tim Scott shared in his most recent RNS that he’s willing to frighten current shareholders.
I believe that we – the shareholder, will leave a lot of money on the table if we accept any future offer and have to be cautious not to accept a low offer.”
He went on to lay out 4 different scenarios for Kinovo on how organic growth, M&A and expansions will help the company reach his price target.
- Scenario 1: Organic Growth + Return of Capital (dividends/buybacks) – GBp 119/share
- Scenario 2: Organic Growth + Acquisitions at 5x EBITA / 6,67x ANI – Price Target: GBp 131/share
- Scenario 3: Organic Growth + M&A + Multiple Expansion – Price Target: GBp 176/share
- Scenario 4: Organic Growth + 2x DCB Liability – Price Target: GBp 113/share
When Paul originally pitched the company to GeoInvesting Premium Subscribers on August 23, 2023, the company was trading at GBp $48.50
On January 22, 2024, referencing is prior message, Paul sent out another tweet, sharing that the stock, close to GBp 70 per share, or a 44.32% peak gain after his pitch to us, it was on its way to hitting his 2024 price target:
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