It is commonplace for investment holding companies to trade at a discount to the value of their underlying assets. This discount is usually around 20% to 30% depending on the assets held. Efforts are often made to “unlock” this value into the hands of shareholders by “unbundling” the assets directly into the hands of those shareholders. Private investors can sometimes score a windfall by buying into an investment holding company which is trading at a significant discount and then benefiting from their efforts to release or unlock the value.
Naspers (NPN) has been increasingly undervalued in terms of its underlying assets for many years. For example, it has been recently estimated that the company’s shares are now trading at a 42% discount to the value of its indirect 31% holding of Tencent – the Chinese internet and social media giant. That discount has widened sharply in recent months as the Tencent share price on the Shenzhen stock exchange in China has risen by almost 30%. Read More