Scherzer & Co AG (DE:PZSG) is a listed asset holding company, focusing on equity investments. PZS invests in special situations, small and micro caps and value stocks, chiefly in Germany. PZS has a dual investment approach: it acquires stocks that are in takeover situations, buy-outs or similar capital restructuring situations and ‘mispriced’ value stocks with a perceived valuation floor due to high asset values, net cash positions or strong major shareholders. This approach has been successful in the past five years.
Value for shareholders
PZS invests in special situations, where it can offer its holdings to potential acquirers. Extracting value involves a long-term strategy. We suggest that the current market environment supports such a strategy, as M&A activities benefit from robust earnings and low interest rates. PZS aims to boost capital appreciation and uses leverage when deemed appropriate. The group has achieved a 14% CAGR of NAV/share in the past five years. In addition, PZS has paid a dividend of €0.05 since 2014.
Potential NAV kicker
Over the years, PZS has built up a portfolio of so-called extra compensatory claims (ECS), representing potential additional payments to shareholders, based on court claims following squeeze-outs and other actions such as inter-company agreements. These additional claims are based on an original tender value of approximately €95m. While the outcome of such claims is uncertain, this tendered value could be a base for a potentially strong ‘equity kicker’ to PZS shareholders.
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