The Shares Researcher

In mid-2022, Agios Pharmaceuticals (NASDAQ:AGIO) was mentioned on this blog as kind of a special situation. It was explained that the company was roughly available at its cash value. Some of the value described seems to have materialized now and the stock increased from $17.60 to around $33.00. Because of many other excellent opportunities, this might be a good moment to cash in and realize the profit of almost 90% - congratulations!

Intro When is enough enough? Since Bayer closed the acquisition of Monsanto in 2018, the company hasn’t been the same. Bayer incurred huge litigation costs associated with the takeover, a lot of trust and reputation has been lost and the share price fell from more than €100 per share to below €30 currently. A debacle. Bayer generates around €50bn in revenues, of which 50% is from crop science, 38% from pharma and the remaining 12% from consumer health.   Valuation The big elephant in the room are the litigation costs and hence free cash flow is impacted by litigation pay-outs and also one-time costs for transformation to reorganize the business. Bayer currently trades below book value, showing a P/B of 0.85. Just recently, the company basically suspended its dividend (they still pay out a small minimum dividend which is marginal) for the next three years. Adjusted for the litigation effect, Bayer is still expected to generate an EPS of around €5-6, which translates ...

Intro Hong Kong Ferry Holdings is mainly engaged in property development and investment. As the name says, they also operate a ferry business and has expanded into the medical field. Major sources of income are currently rental income from properties and interest income on the cash reserves. Due to the large cash reserves, the company paid out a special dividend for its 100 th anniversary in 2023 of HK$1 per share besides its ordinary dividend. Warning: this is – again – a very illiquid stock and hence not suited for everybody.   Valuation The balance sheet as of mid-2023 can be summarized as follows: HK$3.5bn of non-current assets (mainly investment properties) HK$1.8bn of inventories (mainly properties in development) HK$1.8bn of cash With no financial debt, this leaves equity of HK$6.9bn. Compared to the market cap of HK$1.6bn, the P/B ratio stands at 0.23.   What’s next? At the current stock price, it is possible to buy this 100-year-old comp...