Q: Hi Peter, I wanted to get your thoughts on PNP. What do you think of the company overall. Can you comment on the valuation and would you consider it a buy. Also any reason for the move.
Thanks
Thanks
5i Research Answer:
We do not see anything warranting the jump that PNP has recently had. PNP is a VC and private equity firm that specializes in micro and small cap companies. It trades at 1.1x book value, 9.1x trailing earnings, and 7.6x trailing sales, all of which we consider OK for this company. The balance sheet is also fine with a bit of cash and virtually no debt. PNP is a microcap company itself which we consider risky. It is very small but we like its management and general approach to its business. Momentum is positive, but it has had 'run ups' before. We would consider it buyable with caution to its size.