Crystal Amber is a closed fund (investment trust) based in Guernsey and AIM listed (CRSL.L) led by Richard Bernstein.
I have listed to Richard speaking and have a lot of time for him. I think there is a place for activist investors, shaking up comatose management and reminding them that their shareholders own the company. I’m a little more circumspect about short sellers though I think Wirecard proved that hey can also be a force for good in outing fraud too, so we should listen to them.
So why Crystal Amber and why now? I was listening to an excellent PI World interview with Richard Crow, know as Cockney Rebel, and he mentioned seeing value in De La Rue (DLAR:L), the bank note printer. I recalled that CRSL is a significant holder of DLAR, with a 15.5% percent share of DLAR making it the largest single holding in CRSL. This prompted me to take a look at CRSL and I was struck by its latest NAV of 117.9p per share vs a share price of 76p at close on Friday. That’s a yawning gap and one which has been widening since 2018, when the shares were trading at around NAV.
This led me down the path of thinking, what would Richard Bernstein do? Clearly this is an under performing company, its shares down from north of £2 early last year and not reflecting the inherent value of the business (NAV).
I reckon Richard would build a meaningful stake, and engage with management asking how there were going to close that valuation gap. Absent a good answer, the sensible course would be for the shareholders to insist the fund be liquidated to out the value.
Whilst I find the idea of the activist being subject to a dose of their own medicine rather amusing, I suspect Richard may not see the funny side. There would also be a few challenges, the float outside of major shareholders and instis is small maybe 25%. I suspect the management would be fairly nifty and fending off an attack too!
It does make me think that there is deep value there both in the trust holding decent chunks of some companies that may well fare reasonably in the coming months and years (DLAR, REDD, etc.) plus the opportunity to close the NAV gap adds a near 50% upside potential on top.
All it would need is an activist to turn its gaze in CRSL’s direction… Ahh…
I’d welcome others’ perspectives.