Quindell - Number Crunching

My portfolio still currently contains long positions in Quindell and I have no licence to give financial advice, etc.


Let us assume the following point - the current share price is at exactly £1.30.

• This means that Quindell's market capitalisation equals £576m

• The Slater and Gordon Deal is valued at £640m, with "up to" £500m being possibly returned to shareholders.

Let us now take away the value of this potential capital return form the company's valuation at £1.30.

• £576m-£500m =£76m

• Now, we know that Quindell is going to use some of the proceeds to clear or reduce their levels of debt (around £50m - off the top of my head) from the £140m left over; this then gives a cash in the bank figure of around £90m.

• Therefore, if you buy shares at £1.30 you can effectively arbitrage the difference between the cash they will likely have in the bank and the market capitalisation post the capital return.

For example:

• At £1.30 (minus the £500m) Quindell has a market cap of £76m with no debt

• This market cap then equates to a share price of £0.1727.

• If you only value the cash in the bank (£90m or £0.20 per share) - you literally exclude valuing telematic insurance - you then have the potential upside of:

0.20/0.1727 = 15.8% upside.

Most importantly, this is the figures you get WITHOUT valuing the remaining divisions of the company!

Enjoy,

The Masked Stock Trader