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Net-Net For Sale?

October 12, 2012 | About:
Barel Karsan

Barel Karsan

A common criticism of investing in net-nets is the lack of catalysts. Sure these companies may be undervalued, some say, but how many years will it be before that value is unlocked? But occasionally, net-nets stay net-nets even after a catalyst is encountered. TAT Technologies provides such an example today.

TAT just announced a possible change of control. TAT's majority owner appears to have racked up so much debt that it may have to give up its ownership stake in the company to help repay obligations.

Chances are, the lender wants nothing to do with the company itself, and will therefore want to sell its stake, potentially putting the whole company in play. Nothing is assured here, however. But a potential catalyst has emerged for a company trading at a 40% discount to its net current assets.

Disclosure: Author has a long position in shares of TATT

About the author:

Barel Karsan
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