target priced $22 dollar, page-66

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29/03/22

09:15

Post #: 60482506
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Originally posted by joewolf: ↑

Hi Sall123

Great model saved me doing one again. A few years ago and up until the MLT Acquisition SOL did a structured value and portfolio. Before that you had to try and piece the picture together yourself.

I built a similar model a few years back but now with all the changes it has become a bit of a dogs breakfast. It was more to view the arbitrage on value between BKW and SOL. Your model is pretty accurate. My issues are more with what is a fair value for the opportunities that exist here. Your model is pretty tight and clean. I noticed that SOL did not highlight its own valuation per share. They used to and this year BKW did pointing out its gap between share price and value.

These are my issues and I have no idea what to do with valuation in regard to them.

Some of the components especially in the Private equity and emerging company portfolio are not valued at fair value: So for example Round Oak was being groomed for listing. They pulled it because they could drive more value out of it holding it as a private company. That must be a fairly large undervaluation on its own. They would have at least doubled their valuation had they listed it. If as I see it they are going to allocate more to this section and become a breeding ground for companies that would be a huge plus for me. Ampcontrol has been around a long time and seems to be successful. I think over a decade ago SOL had an associate that had a private equity slant and in my opinion was a dog - I think Amp Control came from that stable. However given their recent past I think the companies in there look pretty good and I would have expected a premium for a good private equity emerging company portfolio. The market does not agree and one of their investments BTI trades at a fairly heavy discount to its NTA.

The next issue must be the rehabilitated land that now forms part of The Agriculture division. They don't flesh it out but it is a lot more than just the land they have rehabilitated - it did include a few years ago a stake in a Olive company and a few other investments as well.

None of these are material but together with the real value of Pengana and a few other things I would have expected that Sol would at least trade around 10% above value for not having a 1% plus fee etc.

So If I look at it my fair value is around $28.00 but want to buy around $25 to $26.

The difficulty for me is that I am far more excited by BKW as I think that there is a lot of hidden value there and as they say their underlying value is $28 - How they have surpassed SOL I don't know but think it must be TPG. plus the price paid for MLT. Personally I think they overpaid it is however a great deal to create a hybrid LIC. All in all I own both BKW and SOL but think value could be building in BKW faster than SOL.

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I didn't pay a lot of attention but I think it was Morningstar released a price target for SOL yesterday of $30.60. Someone may be able to confirm the report and detail. I use SOL as part of a diversity strategy for retirement income that also includes Balanced and High Growth super accounts. It seems to perform very well like that

SOL Price at posting: $28.45 Sentiment: Buy Disclosure: Held
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0 Great analysis

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