Why Pendrell Corporation (PCOA) Stock is a Compelling Investment Case
Arquitos Capital recently released its Q2 2020 Investor Letter, a copy of which you can download here. The fund posted a return of -7.6% for the second quarter (net of fees), underperforming its benchmark, the S&P 500 Index which returned 20.5% in the same quarter. You should check out Arquitos Capital's top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Arquitos Capital highlighted a few stocks and Pendrell Corp (OTCMKTS:PCOA) is one of them. Pendrell Corp (OTCMKTS:PCOA) is engaged in the business of licensing and selling intellectual property rights to others. Year-to-date, Pendrell Corp (OTCMKTS:PCOA) stock lost 36.7%. Here is what Arquitos Capital said:
"We also have a unique position in a company named Pendrell. Pendrell deregistered from the SEC several years ago and did a reverse stock split to make it more difficult for new shareholders to buy into the company. The current ask to buy a share of stock is $153,000, for example. There are 757 shares currently outstanding, with the company actively buying back shares this year.
Pendrell has significant tax assets and a talented, experienced management team led by telecommunications legend Craig McCaw. Bill Gates is also an owner through one of his investment entities.
Historically, the company collected royalties on intellectual property. Today, they are looking to deploy their cash and take advantage of interesting investment opportunities. Just recently they announced the sponsorship of a special purpose acquisition company, or SPAC. These entities have come back in favor very recently as the IPO market has gotten more difficult.
Sponsors benefit greatly. The SPAC, which recently filed its S-1 registrations statement with the SEC, is named Holicity. This SPAC seeks to raise $250 million. A Pendrell subsidiary would own 20% of Holicity.
Pendrell trades significantly below its liquidation value even without accounting for new investments that it has been making. It has taken a few years, but they now appear to be actively and aggressively looking to create value for the company and shareholders. I am excited to have Arquitos ride along and would be interested in acquiring more shares as our AUM allows. Pendrell is currently a bit more than 10% of our portfolio."
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Our calculations showed that Pendrell Corp (OTCMKTS:PCOA) isn't ranked among the 30 most popular stocks among hedge funds.
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Disclosure: None. This article is originally published at Insider Monkey.