There are some investors who invest in U.S.-listed stocks that are trading below their liquidation values because they believe they can make huge margins of return out of these stocks after the market has reappraised the share prices to near or above the liquidation value.
Should the company have financial problems leading to insolvency, these shareholders would, in theory, still be able to benefit from the liquidation value, which will most likely be higher than the acquisition price. The liquidation value of these so-called net current asset value stocks is calculated as "current assets minus total liabilities."
Thus, short-term investors could be interested in the following three companies, as their stock prices are trading below their net current asset value per share (NCAVPS).
Savara Inc
The first stock short-term investors could be interested in is Savara Inc. (SVRA, Financial), an Austin, Texas-based biotech developer of orphan drugs for lung diseases.
The stock was trading at a price of $1.30 per share at close on Thursday, which stands below the net current asset value per share of $1.43 as of the March 2021 quarter.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength and 1 out of 10 to its profitability.
After a 37.32% decrease that happened over the past year, the stock now has a market capitalization of $149.14 million and a 52-week range of $0.99 to $3.58.
NEA Management Company, LLC is leading the group of the company's top fund holders with 21.25% of shares outstanding. The investment company is followed by Bain Capital Life Sciences Investors, LLC with 10.23% and Adage Capital Partners GP LLC with 6.42%.
On Wall Street, as of July, sell-side analysts recommend a median rating of buy and an average price target of $4 per share for the stock.
Galecto Inc
The second stock short-term investors could be interested in is Galecto Inc (GLTO, Financial), a Copenhagen, Denmark-based clinical-stage biotech developer of therapies for the treatment of severe fibrotic lung diseases, myelofibrosis, cancer and fibrosis.
The stock was trading at a price of $4.30 per share at close on Thursday, standing below the net current asset value per share of $4.40 as of the March 2021 quarter.
GuruFocus assigned a score of 7 out of 10 to the company's financial strength.
After a 71.53% decrease that occurred over the past year, the stock now has a market capitalization of $107.87 million and a 52-week range of $4.06 to $17.99.
Orbimed Advisors LLC is the leader amid the company's top fund holders with 16.20% of shares outstanding, followed by Novo A/S with 9.89% and Cormorant Asset Management, LLC with 8.51%.
On Wall Street, as of July, sell side analysts recommend a median rating of buy for this stock with an average target price of $14.75 per share.
Document Security Systems Inc
The third stock short term investors could be interested in is Document Security Systems Inc (DSS, Financial), a Victor, New York-based manufacturer, marketer and seller of printed materials as well as packaging and security printing solutions.
The stock was trading at a price of $1.50 per share at close on Thursday, which is still below the net current asset value per share of $1.71 as of the March 2021 quarter.
GuruFocus assigned a score of 7 out of 10 to the company's financial strength and 2 out of 10 to its profitability.
Following a 79.30% decline that occurred over the past year, the market capitalization is now $104.09 million and the 52-week range is $1.50 to $10.55.
BlackRock Inc. is the company's top fund holder with 1.90% of shares outstanding. The asset management firm is followed by Vanguard Group Inc with 1.72% and by Geode Capital Management, LLC with 0.64%.
On Wall Street, as of July, one sell side analyst recommends a rating of buy with a target price of $14 per share for the stock.
Disclosure: I have no positions in any securities mentioned.
