Monday, June 18, 2007

Why I bought Kaiser Group Holdings (and wish I hadn't)

On May 5th, I bought 19 shares of Kaiser Group Holdings because of this preliminary proxy. I paid $26.50 a share in hopes getting cashed out at $36 a share. As of this 8-K, I will be forced to sell for much less than that. Today's closing price was $26.85, so I don't foresee making a profit on this position. I broke my rule of waiting for a definitive proxy, so I only have myself to blame.

According to Eric J. Fox and Eric Schleien, Kaiser Group is trading below NCAV. I get a liquidation value of about $33 a share, much of it in cash. Unfortunately, it's hard to know what management intends to do with that cash. Going private seemed like a reasonable choice for all the usual reasons—especially since there's no real operating business here. Since the company was unable to get the deal done over the last few years, it's hard to believe shareholders will get relief anytime soon.

No comments: