FSM INVEST EXPO 2020
Asked on 15 Jan 2020
How to identify potential privatization stocks in SG? What are the tell tale signs?
Chairman/Founder is old and no one within the family is taking over the business
Companies which has a low price to free cash flow ratio
Buy undervalued/family business and gamble. Investing is all about gambling.
Look at those stocks with high ownership by the founder of the company / a particular entity. Reason-being, it is feasible for major shareholder to simply acquire the remaining of the shares and this will translate to a higher chance of success as compared to saturated ownership holdings where problems arise from unwillingness to sell of stakes within the company.
Aside from high ownership, you could also look at the value of the company. If it's consistently undervalued, some companies i.e. OSIM would rather privatise and re-list elsewhere for higher volatility, liquidity and value appreciation (figuratively and literally)
Well TBH there isn't any clear telltale signs.. Like for SMRT, ARA Asset Management, I don't think there is any clear signs. I guess for me, the closest is just looking @ related news for it, and usually if the numbers are good with potential pipeline in the future, that might be a way to approach it.
A direct answer would be that these stocks are unloved but have potential:
trading with low Price/NTA ratios, net cash, have large shareholders that are able to control the whole company
also look for share buyback activities of the above mentioned type of companies