AEP currently trading sub $2.00. AEP now puts out a monthly Net...

AEP currently trading sub $2.00. AEP now puts out a monthly Net Assets statement and as at 31 December they were worth $4.65 on a marked to market basis ($5.20 marked to market today!!!). You will see that there are five main categories to their assets;

Investment in listed company IBA Health ($1.67 per share) taking today’s IBA price this is now worth $2.22 per share
And a loan to IBA Health ($0.67 per share)
Cash ($0.75 per share)
Investment in Signature Security ($0.74 per share)
Investment in Baycorp ($0.50 per share)
realiseable investments and other ($0.32 per share)


Total Net asset backing at December was $4.65 per share (and is $5.20 per share if you adjust for IBA’s current share price) versus current market price sub $2.00!. Thus AEP is trading at a discount to net assets of 63%, or trading at a discount to net assets ex cash 73%. This is an extraordinary discount which cannot last forever . There is however an AEP stock overhang as ANZ control some 24% of AEP (being security held for a failed loan/guarantee with the old Allco Finance Group).In addition to this 11% is now in the AFG liquidator's hands. Stock overhangs depress price but I like them because there is immediate upside when overhang removed.

Company going to annouince outcome of UBS strategic review at half year release later this month. Obviously ANZ and AFG liquidator pushing for wind up, and with 35% between them the have some say! Plus I don't think holders will complain in receiving $5.20 of value for a $2 share. Surely they did not need UBS to consider this!!!