Recent purchases of beaten down Pumpkin Patch Ltd [PPL.NZ] stock by Jan Cameron, the former owner of the Kathmandu Ltd [KMD.NZ] outdoor chain and Rod Duke, the majority owner of retailer Briscoe Group have got me to the point of more than idle speculation.
At the risk of getting the borax poked at myself, here goes.
If an individual is going to make a takeover play for an asset of any class, when is the best time to buy?
When nobody else is interested and when the asset is selling below its usual market price or true value.
I would argue that the little Pumpkin is well undervalued, to the extent that I bought some more recently at NZ$1.53.
Its potential is huge and its value lies in its so far proven record and its very strong brand and the ability to exploit that brand for growth and customer loyalty.
In the good times last year the schizo "Mr Market" valued the company at almost 5 bucks per share but as of today the share price is below $1.50.
Cameron and Duke both recently bought the bulk of their holdings at around the $1.50 mark. Duke holds almost 10% and Cameron just over 6%.
At today's share price the approx 166 million shares in PPL could be purchased for around $250 million dollars. A very high premium would be needed for a full bid because many investors have bought shares at well above $1.50 and Maurice Prendergast, the CEO and Sally Synnott, the founder together own 20 million shares and they have a long term view of their company.
But everyone has their price.
Both Duke and Jan Cameron certainly have the means to be able to afford such a purchase.Duke, supposedly worth a minimum of NZ$254 million and Cameron thought to be worth around $300 million.
Given this recent flurry of buying activity by both these high profile retail identities and the current low share price of Pumpkin Patch, if the company was going to be a target for a takeover, now is the most likely time for that to happen.
Disclosure I own PPL shares in the Share Investor Portfolio.
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