Legendary Investments - Hidden value potential
Published: 03:19 03 Sep 2018 EDT
Legendary Investments (LON:LEG) creates value through privately held and pre-market investment opportunities with the potential for outsized returns. The company has a strong track record with:
- Total investments valued at of £6.2mln (from zero in 2011)
- Out of 12 investees in total, five are exhibiting multiple returns from 1.3x to 35x
- Two crystallised with exits at a multiple of the initial investment
We believe this is an interesting time to revisit the investment case, as the shares are currently trading at a discount to net asset value (NAV), which has not been the case in the past.
N.B. Legendary plans to change its name to Eight Peaks Group (LON: 8PG) in the near future.
Executive summary
The three investees that we have examined are examples of the value creation that is delivered by Legendary’s investment process, and a unique global network for sourcing deals. We believe that share price upside can be realised for Legendary Investments by:
- Events that expose or crystallise the value of the under-recognised assets. For example, additional venture capital (VC) fundraising rounds or a market listing
- A normalisation of the market capitalisation / NAV ratio back to at least 1x
Furthermore, Legendary has disclosed plans to advance the business to the next stages of its development, including additions to the board to expand the skill set and experience, and to grow the network for deal sourcing. The proposed name change to Eight Peaks underlines the intention to define a new phase in the company's development. We believe that new appointees to the board could help raise the profile of the shares and assist in eliminating the valuation discount.
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