Company announced figures last week with a 66% increased on NAV and further increased after the Year end

@ 0.445p the shares are a 100% under the NAV and after the recent profit taking are ready to move forward again


We remain committed to building long term value for shareholders. We are contrarian by nature, seeking undervalued opportunities where the cost of capital remains high, as most institutions are unable or unwilling to participate. This can be a time consuming process and we pass on over ninety percent of the deals offered to us as we treat our share capital as a precious asset only to be utilised when the returns justify the dilution.
We have not invested in promoting our potential, preferring instead to wait until we have a track record which will speak for us, as shown by the recent Green Isle Hotel transaction. However, time is on our side and over the next couple of years, we expect to deliver a number of meaningful exits from the portfolio. This should lead to a re-rating of our shares as the market begins to recognise the intrinsic value of the Company.
The management team remains focused on continuing to deliver an increase in net asset value. As our market capitalisation and asset base increases, we will be able to conduct more financially meaningful transactions. We aspire to build a meaningful business grounded in real assets and capable of generating above average returns for the long term.

Major Shareholders
Desmond Holdings Limited (dup) - 152,915,718 - 22.26 %
EmVest Asset Management - 94,322,598 - 13.73 %
Praetorian Offshore Ltd - 24,000,000 - 4.05 %
directors
Mark Pajak (dup) - 58,480,300 - 8.51 %
Andrew Meikle - 56,490,005 - 8.22 %
Balbir Bindra - 19,000,000 - 2.77 %

links
ZaksTradingCafe
http://investingsidekick.com/weekend-stock-pick-craven-house-capital/

Weekend stock pick: Craven House Capital - CRV
I posted recently about how I was having more difficulty finding good investments these days. So I have been researching a few investment trusts to try and park some money and reduce my workload. By coincidence I came across an investment trust that not only seems to be making wise decisions, but that also has many attractive properties from a special situation perspective. As I mentioned in my half year results I’m very bullish on it.

I first came across this stock when reading one of Wexboy’s posts on Emerging Markets. It is a tiny investment company called Craven House Capital (AIM:CRV) which focuses on emerging and frontier markets. It has a very short history, originally being split off from an operating company in 2010. In 2011 a Hong Kong based investment company called Desmond Holdings invested a large sum in it and subsequently became the largest shareholder and the investment manager. Unfortunately the investing history of Desmond is too hard for me to find but the annual report contains some of the recent investments they have made.

Illiquid shares
One important thing to note here is that the company is a penny share, or rather it trades for 0.28p currently. Not only does this mean the bid/offer spread is enormous (30%!) but it is subject to wild swings. Take a look at the 12 month history on the LSE website. The good news is that it currently trades near its 52-week lows and near what appears to be resistance at the bottom for anyone that believes in technicals.

The stock is highly illiquid, that means you must use a limit order if you plan on buying shares. Penny shares are open to manipulation. Also don’t invest any money in this company that you aren’t prepared to leave in for a long time as selling can be just as difficult and it may take a long time for this companies true value to be recognised in the market price.

Share issues creating value for shareholders!?
Craven is constantly issuing new shares and expanding its balance sheet, to raise funds for new investments it finds. Usually that puts me off, but it currently only has £2m to invest. These share issues though are what interested me the most. Take a look at one of its recent LSE announcements. It issued 50 million new shares for a price of 1.25p each. Its not only then either, its happened frequently in the past with all its placements of new shares, and is included as a condition in the conversion of its debt to equity. If you are buying shares for 0.28p then you are making money simply with every rights issue, and there will be many more to come. I would be surprised if it doesn’t expand its balance sheet by at least a factor of 10 in the future via share issues. Remember that Desmond is the investment manager, increasing the investments under management is in its interest, and it is quite willing to do this selling shares at 1.25p.

I will also briefly mention that there are outstanding warrants, exercisable at 1.25p also, so nothing to worry about but something to consider it the price gets up there.

Investments
Its investments also appear attractive. Take a look at this latest acquisition of a distressed asset. They purchased bonds for €0.7m, being the only secured lender against a property worth at least €3.5m. The interest payments are €0.25m per annum and Craven believes it can restructure the operations to generate cash flow and then collect these interest payments. Even if it fails it will get its money back. Win win.

But this deal also highlights something that makes me even more interested in this company, and that is the financing. Desmond loans Craven the money to fund this deal, with interest payable. However, Craven can also convert this loan into shares. This presents a win-win for Craven, if the investment doesn’t make any money then Desmond gets its money back in terms of shares (priced a 1.25p!) with interest. If it does make money, it can pay back Desmond the original loan. This arrangement isn’t unique and has happened a few times in the last few years.

Unfortunately not all its investments have performed. The Company has a holding of 200,000 shares in Farm Lands of Africa which were acquired at a cost of USD$5.00 each (together with warrants) and were listed on the relevant exchange at the close of business on 30/11/12 at USD$0.60. However, Craven House’s investment in FLAF is currently held at book value of $1.55 per share. This represents a decrease of USD$690,000 in total investment value. The Company has a further holding of 517,350 shares in Farm Lands of Africa which were acquired at a cost of USD$1.55 each. No adjustment in value has been recognised.

So in total that is 717,350 shares of FLAF which should have $0.95 written off. But Craven has an anti dilution clause working in its favour and is still discussing with FLAF how many shares it will be issued to compensate for a dilution that affected the value of its holdings (that is why they still hold it at book value). In May 2012 Craven was actually sitting on a 60% profit on FLAF (which it didn’t recognise) and this subsequent fall in value is due to the subsequent merger and dilution of the shares. A director of Craven is now the CEO of FLAF so you would expect this to be resolved.

Performance Fee
I want to highlight this in particular as it is so unusual in this day and age of fixed management charges. Many of you will be familiar with the 2 and 20 rule for hedge fund charges, 2% annual charges with 20% of fund profits to the manager. Well Craven House doesn’t work like this, its terms are much better:

“the Company agreed to pay Desmond, as Investment Manager, an annual Performance Fee equal to 20% of the increase in the Net Asset Value of the Company, subject to a hurdle rate of at least 5%. In accordance with this agreement, Desmond has been awarded a performance fee of £552,368 for the financial year ending May 2012, representing 20% of the increase in the Net Asset Value per share in the Company during the year. Desmond has confirmed that this fee will be paid in shares of the company, priced at 1.25p per share”

So not only does Desmond only get paid if returns are above 5%, but they are currently being paid in shares for almost 5 times the current market price.

Cravens Value
Unlike other Investment Trusts, Craven doesn’t publish a daily Net Asset Value (NAV) which makes it hard to value it as a company (I don’t see that as an automatic negative, did Warren Buffett publish a daily NAV in his partnership days? No). In fact the latest accounts date back to November 2012. Its Net Assets at that point were £2.4m. Since then it has also raised £621k from a rights offering at 1.25p a share. That takes Net Assets to £3m. It has also realised gains in loans to other companies which were repaid but the amounts are small.

However we need to write off $681k (£448k) for the true value of FLAF. That brings Net Assets to £2.6m. According to the latest regulatory filing they have 592,695,959 shares outstanding which gives a book value of 0.44p per share. That means Craven currently trades at 64% of its fair value, with scope for an increase when (if?) it is issued new shares in FLAF. And for every new share issue and expansion of Cravens net assets at 1.25p per share, that is increasing the book value per share for current shareholders!

But, given this is a small fund we must also assess how its fixed costs affect NAV. Investment managers fees are paid in shares so will not decrease book value (they are only paid when book value per share increases by >5%). However there are also costs with being a listed company and having a board . Admin expenses were £261k in 2012. No investment management charges were included. £261k is over 10% of Net Assets in 2012 (£2.4m). This is very high and shows another reason that issuing new shares is beneficial for current shareholders. Costs wont scale much with net assets, so as net assets are increased, costs as a proportion should fall dramatically. Also remember that management is incentivised to reduce costs as a % as it makes it very hard for them to beat its 5% gain hurdle!

Conclusion
I believe this is a remarkable special situation. Buying a company for not only less than its Net Assets (calculated conservatively) but also when it is issuing new shares for 5 times the current market price. Management has stated its intention to keep issuing new shares at no less than 1.25p and even takes its fees in shares valued at 1.25p! Its recent purchase of a distressed asset shows me that they are willing to invest in the kind of situations that I myself find very attractive.

Don’t expect an easy buck. These shares have bounced between 0.2p and 0.5p for a year. The market doesn’t agree with managements valuation clearly. Who knows how long it will take until the market agrees with the 1.25p value, if at all. But in the meantime I am happy with the investments made and how they raise capital.

I have already bought shares in Craven House having 12% of my portfolio in it and intend to continue doing so up to possibly a third of my portfolio.

Buyers are still pushing the price higher now spread of 0.46 / 0.50p

a more accurate intraday movement

bought in on Friday @.475..let's see how it goes!

0.465p +0.04p

well on the up today, maybe eventualy will move forward after the recent profit

One to watch for tomorrow, there was plenty of volume last Friday

I found this

CRV - ready for upturn!!!!

http://www.cravenhousecapital.com/

"When using our shares as consideration in the acquisition, we once again issued all shares at 1.25p per Craven House share, a price significantly above our average share price during this period. This reflects the shared view we hold with those companies in which we have invested, which is that our share price has been, and remains, significantly undervalued"

"We will undertake a full IR and PR campaign at some point when the portfolio has grown to a size that warrants the expenditure. As a small team, we continue to focus on expanding the business and growing the NAV. Both the 1.25p investors and ourselves believe in the long term value of the Company and we believe the share price will eventually grow to match its real value. We are working hard to get out more news in the near future"

http://hsprod.investis.com/ir/mea/ir.jsp?page=news-item&item=1701960247934976

Highlights

o NAV of holdings increased by 49% from £3.84m to £5.73m in the six month period
o NAV has more than doubled over past 12 months
o First operating profit reported of £522,000 for the period
o Investments continue to be acquired utilising Craven House shares as currency

Current assets..

Owns 49% of Ceniako which was Independently valued at Euro 4.5m.

Owns 25% of Pressfit which will have its AIM IPO in its own good time, but lets be very conservative and say that it is floated at just £6m, that gives CRV £1.5m.

Owns 50.1% of Finishtec who have an enviable client list and are expanding, CRV current holding is worth $1m.

CRV are owed euro1.5m from the Dublin hotel deal, and are being paid interest until it is settled.

South African interests..

On the 4th November 2013, the Company acquired a 49% shareholding in a portfolio of agricultural and food processing businesses in South Africa, for a total consideration of CAD $1,960,000. This portfolio comprises a 1,017-hectare vegetable and cattle farm located in Nelspruit; the second largest vegetable dehydration factory in Africa, also in Nelspruit; and a food storage and distribution centre located in Johannesburg.

This investment provided us with an outstanding opportunity to establish an interest in food production and processing in South Africa. Craven House is currently exploring a partnership with a leading European dehydrated vegetable producer and is considering an offer from another party to purchase the distribution business.

Considering an offer..

Farm lands of Africa.

Farm Lands of Africa Inc. ("FLAF") is a green-field agribusiness operating in West Africa, which is listed on the OTC Markets in New York. On 1 August 2013, the Company completed a settlement agreement with FLAF, resulting in it receiving $60,000 cash and 20,000,000 shares in Farm Lands of Africa Ltd ("FLAL"), a BVI registered company, which owns 90% of Land and Resources (Guinea) SA ("LRG"), following FLAF breaching certain investor protection mechanisms in September 2012. Therefore, Craven House now holds a 45% stake in LRG, which has the opportunity to control various agricultural assets and operations in the Republic of Guinea, including leases over up to 110,000 hectares of arable land.

The outcome of this negotiated settlement was extremely beneficial for Craven House, with its effective holding in LRG increasing from less than 7% to 45%. This also provided Craven House with greater control exposure to the potential value of this asset going forward.

The Company continues to investigate various financing options which will enable it to unlock the potential of the agricultural assets it has access to in Guinea. Recently, these include very encouraging dialogues with development finance institutions and private agricultural investment companies.

It does looks like is ready for the upturn
A very good move this morning and forming a round bottom on the chart

Ceniako

From RNS 24th Sept 2012:

As an agricultural asset, it is forecast that healthy cash flows will be generated, whilst the opportunity for further development represents the potential for significant appreciation over time.
Given our concerns about the global economy in the short term, we are delighted to have exposure to an asset that generates a current return in a stable jurisdiction.
We determined our purchase price via an arms length valuation based on agricultural use. We are comfortable waiting until the appropriate time to develop the land or sell it at a significant premium to our acquisition price. There are not many places left in the world where ocean front land can be acquired at agricultural prices.

The round bottom is more noticeable after the further rise last Friday.
Talk of Pressfit IPO is nearing submission, is getting the attention of buyers.
Sounds like we are going to get an update very soon.

a 7.29% rise today, mind you now is on a large spread, worth keeping a watch as it has been rising for the last week


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Is going places since earlier movement, I got some

Buyers are back and share price rising

Stick with it folks!... and top up when you can! I Have! (imho & dyor)

On the way up, a few good size buys has move the MMs

spread 0.50 - 0.55p with level2 of 2 v 2

On the way up again today as some volume is showing and ahead of tomorrow's AGM

Craven House Capital (AIM: CRV) announces that it intends to cancel its quotation on the AIM and is seeking admission to the Specialist Fund Segment of the Main Market of the London Stock Exchange ("SFS"). The Board considers that the SFS represents a more mature and suitable market for the Company and intends to issue a circular to shareholders (the "Circular") today, containing a notice of a General Meeting ("GM") to be convened on 20 July 2016.

The resolutions to be put to shareholders at the GM will propose, inter alia, to cancel the Company's AIM quotation (subject to the successful admission to the SFS), to approve the migration to the SFS and to approve a simultaneous offer for a subscription of new shares to raise additional capital for the Company. Resolutions will also be proposed to adopt new Articles of Association and to undertake a share reorganisation such that the Company's shares will be redenominated in US dollars, reduced in nominal value by a small percentage and subsequently consolidated so that the shares each have a nominal value of US$1.00. The board believes that a consolidated share register and a quotation in US dollars is more suitable for international institutional and other investors and more reflective of our global portfolio, the majority of which is valued in US dollars.

If approved, it is expected that the Company's AIM quotation will be cancelled and the shares will commence trading on the SFS on 1 August 2016. A detailed timetable will be provided in the Circular.

Recent fundraising
The Company also announces that it has entered into conditional agreements with an investor for subscriptions of up to US$150 million in new ordinary shares, at 1.25p per share on a pre-consolidation basis. The Company intends that such investments would be made after the migration to the SFS over the next six months conditional on regulatory approval and execution of binding subscription agreements. There can be no guarantee that any capital investment in the Company will be made and further updates will be provided to the market in due course.

The Company has recently undertaken equity fundraisings on a private placement basis, as set out in the Company's announcements dated 17 May and 16 June 2016. The Board hopes to conclude further share issues on the same basis before the date of the GM. In the event of such further placings of shares, the Company will continue to make appropriate announcements.