Q: PNP has shot up again. In previous questions, it sounds like you have some reservations about this holding company. What are some of the risks that could possibly occur that could be troublesome? I bought 3 months ago at 12.50 and it’s at 21.16 now.
5i Research Answer:
We like the company and admire its management and strategy. It is just that close to 90% of the stock is controlled by management and four entities. This makes it illiquid, and any buyer has to essentially 'pay up' to get any stock. This is great when things are going well, but can be devastating in a downturn when sellers try to get out. Thus, we have to be cautious on entry prices and investors need a long time frame here. The stock is up 301% in the past year. Earnings are also heavily influenced by asset monetization. If no deals are done, earnings will drop sharply and investors need to be aware of this.