I've been following Senvest Capital for a few years now, since I first saw it at Oddball Stocks. I think the current opportunity is rather large.
As of the company's latest financials, book value per share was $221, whereas the stock currently trades for just $155.
But wait, there's more. The company provides monthly return updates for its hedge funds, and it has been knocking it out of the park in the last few months. From October to December (that is, for the period since the company's quarterly financials where that $221 book value comes from), the company's flagship fund returned another 16%!
Furthermore, the number of shares within the fund also appears to have grown in the double-digits as investors have apparently been buying into the fund, meaning more fees for the company.
Finally, note that you're buying into the corporation in Canadian dollars. But most of thecompany's holdings are in the US, and there has been quite a bit of movement on that front. Since the end of December, the US dollar has appreciated another 7% or so against the Canadian dollar. You wouldn't know it by looking at Senvest's share price, however!
Of course, all this doesn't mean the company's book value is up by these exact amounts, as there will be bonuses and fees accruing to the managers. But overall this looks like a great opportunity to partner with some outstanding capital stewards at a big discount to book value.
If I have one criticism of these guys, however, it's that they are not aggressive enough with their share repurchases. It worries me a little bit that guys who I'm touting as good capital allocators are apparently blind to a hugely accretive capital allocation opportunity. But obviously their incentives are not just with shareholders here, as they are likely trying to grow their fund while producing returns, not shrink it.
Disclosure: Author has a long position in shares of SEC
Senvest Capital: Deep Value + Growth
Jan 23, 2015
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