There are some investors who buy U.S.-listed stocks that are trading below their liquidation values because they believe they can gain a lot from these stocks after the market has reappraised the share prices to near or above the liquidation value.
Should the company have financial problems leading to insolvency, these shareholders would, in theory, still be able to benefit from the distribution of the liquidation value, which will most likely be higher than the purchasing price. The liquidation value of these so-called net current asset value stocks is calculated as "current assets minus total liabilities."
Thus, short-term investors could be interested in the two companies listed below, as their stock prices are trading below their net current asset value per share (NCAVPS).
NextCure Inc
The first stock short-term investors could be interested in is NextCure Inc (NXTC, Financial), a Beltsville, Maryland-based clinical-stage biopharmaceutical developer of innovative treatments for cancer and other immune-related diseases.
The stock was trading at a price of $8.29 per share at close on Thursday, which stands below the net current asset value per share of $8.94 as of the June 2021 quarter.
Following a 14.2% drop that happened over the past year, the stock now has a market capitalization of $228.90 million and a 52-week range of $6.69 to $14.40.
ORBIMED ADVISORS LLC is leading the group of the company's top fund holders with 9.82% of shares outstanding, followed by Sofinnova Investments, Inc. with 9.68% and BlackRock Inc. with 4.36%.
On Wall Street, sell-side analysts recommend a median rating of overweight and an average price target of $18.75 per share for the stock.
Solid Biosciences Inc
The second stock short-term investors could be interested in is Solid Biosciences Inc (SLDB, Financial), a Cambridge, Massachusetts-based developer of therapies for severe forms of genetic muscular dystrophy.
The stock was trading at a price of $1.86 per share at close on Thursday, standing below the net current asset value per share of $2.06 as of the June 2021 quarter.
Following a 43% decrease that took place over the past year, the stock now has a market capitalization of $215.15 million and a 52-week range of $1.84 to $11.58.
PERCEPTIVE ADVISORS LLC is the leader amid the company's top fund holders with 12.16% of shares outstanding, followed by RA CAPITAL MANAGEMENT, L.P. with 11.21% and EcoR1 Capital, LLC with 8.34%.
Sell-side analysts on Wall Street recommend a median rating of hold for this stock with an average target price of $9.17 per share.
