I saw that KKR had chucked out perhaps 25% of the equity of Pets At Home (PETS) a few days ago. I thought no more about it. But I have now had a chance to skim the figures. They are astonishing. The market capitalisation at 280p is of the order of £1.4bn and if Merrill are to be believed EPS for the year to March 2016 should be around 15.6p. Tangible net asset value per share is minus 30p. Inspection of the website reveals nothing patented and a bull dog pup trying to mount the left ear of, presumably, its mother. Talk about hope value.
*****
It’s just a thought but Private and Commercial Finance (PCF) is about to receive a banking licence (which is the right to take deposits from the public – it being ruled that the public should never be allowed to decide for itself so to make sure that regulators can be paid to go on pretending to do worthwhile work). This licensing might cost PCF a million or two on compliance. But one wonders what is the value of the licence? Tungsten (TUNG) is said by its supporters to value its banking licence at £40m. Even if these chaps are all on magic mushrooms there is the clear hint that PCF has hidden value – it is only capitalised at 20p at £11m with tangible net asset value exceeding this figure. Added to which the business is bonging along.
*****
Here’s a comment from China, reported by CNBC and attributed to a villager: “….it is easier for a villager to make money in the stock market than in farming.” An author goes on to mention that this is in contrast to the observation under Communism “why should farmers grow rice when the State provides it free?” The Chinese are often curiously fatalistic and prone to gambling. So, to many ordinary Chinese, it must seem entirely sensible to fling money at a lunatically overvalued stock market. However, before we here go all hoity-toity, when the Chinese market and thus its economy tanks (as both surely will) we should bear in mind that we are also going to get a real shock.
*****
Book review: I recall recommending Richard Davenport-Hines’s An English Affair (which covers the Profumo resignation) perhaps a year or so ago. Anyway, I bumped into him yesterday evening when he was speaking in a local bookshop about his newly published A Universal Man, The Seven Lives of John Maynard Keynes. It’s four hundred plus pages and, insofar as I can tell from a brief dipping exercise, a terrific read. No doubt the marketing men already offer it on a discount basis on Amazon. Well worth £20 or less after the marketing men’s reductions.