Last year I bought some shares in a private equity company (IPE) because it was trading at a discount to it's float price of $1.00 when it was largely sitting on cash in the bank plus some general stock market investments. Since the general market had gone up since it's IPO it had a book value above $1.00, so it seemed like a sure thing. So far, so good, and I've made a bit of money with the stock now trading at around $1.05.
The odd thing is that I also bought some options on this stock, which entitle purchase of the stock at $1.00. The options expire in October, so they should still have some time value, and with the stock now trending up they should be worth at least the stock price - $1.00. However, IPEO is still trading well below the price I would expect, at around 2.5c/3.0c. I already have 54,000 of these options, but I think I'll buy another parcel, just in case the underlying stock keeps going up towards $1.10 or above, which should push to options to around 10c.
We'll see how it turns out.
Copyright Enough Wealth 2007
Looking at the NTA there's plenty of value left in IPE and with the switchover from listed equities to private equity over the past year I reckon it's a sound investment. Plus the bonus of being able to register interest in any IPOs that are brought to market!
ReplyDeleteCheers
Paul