There are some investors who buy U.S.-listed equities that are trading below their liquidation value because they believe they can profit remarkably from their investments after the market has reassessed the share prices to near or above the liquidation value.
Should the company fail, these shareholders would, in theory, still be able to conclude the investment transaction with a positive balance due to a difference between the liquidation value and the purchasing price.
The liquidation value of these so-called net-net working capital stocks is calculated as "cash and short-term investments plus 75% of accounts receivable plus 50% of inventory, minus total liabilities."
Thus, short-term investors may be interested in the below companies, as their stocks' prices are standing below their net-net working capital.
PMV Pharmaceuticals Inc
The first stock short-term investors could be interested in is PMV Pharmaceuticals Inc (PMVP, Financial), a Cranbury, New Jersey-based biotechnology developer of precision oncology therapies targeting mutations in cancer.
The stock was trading at a price of $46.58 per share at close on Tuesday, standing well below the net-net working capital of $61.06.
GuruFocus assigned a score of 7 out of 10 to the company's financial strength and of 1 out of 10 to its profitability.
As a result of a 24.18% increase that occurred over the past year, the stock has a market capitalization of $2.09 billion and a 52-week range of $31.05 to $63.22.
Orbimed Advisors LLC is the leader amid the company's top fund holders with 16.37% of shares outstanding. It is followed by Interwest Venture Management Co with 14.45% and Andreas Halvorsen (Trades, Portfolio) with 5.90%.
On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $61.33 per share.
Protara Therapeutics Inc
The second stock short-term investors could be interested in is Protara Therapeutics Inc (TARA, Financial), a New York-based clinical-stage biotechnology developer of transformative treatments for rare illnesses.
The stock was trading at a price of $19.82 per share at close on Tuesday, which is significantly below the net-net working capital of $25.56.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength. With regard to profitability, the return on equity ratio (ROE), return on assets ratio (ROA) and return on the invested capital ratio (ROC) are all negative.
Following a 30.06% decline over the past year, the stock has a market capitalization of $222.22 million and a 52-week range of $15.86 to $67.08.
Opaleye Management Inc. is the leader amid the company's top fund holders with 22.82% of shares outstanding. It is followed by Deerfield Management Co with 6.98% and Ikarian Capital, LLC with 6.44%.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $45.67 per share.
Akouos Inc
The third stock short term investors could be interested in is Akouos Inc (AKUS, Financial), a Boston, Massachusetts-based biotechnology developer of precision genetic therapies to restore, improve and preserve physiologic hearing for patients worldwide.
The stock was trading at a price of $17.70 per share at close on Tuesday, which is nearly 10% below the net-net working capital of $19.51.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength and of 1 out of 10 to its profitability.
As a result of a 19.53% decrease that happened in the share price over the past year, the market capitalization now stands at $608.57 million and the 52-week range is $16.59 to $30.67.
5AM Venture Management, LLC is the leader amid the company's top fund holders with 13.40% of shares outstanding, followed by NEA Management Company, LLC with 12.51% and FMR LLC with 12.42%.
On Wall Street, the stock has a median recommendation rating of buy with an average target price of $33 per share.
Disclosure: I have no positions in any securities mentioned.
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