Yuanxi Zhang
Long/short equity, value, special situations

Charm Communications: A Safe Deal With 34.0% Annualized Return

Recommendation: Long Charm Communications (NASDAQ:CHRM) at $4.47

Target Price: $4.65

Thesis

We believe Charm Communications is likely to close the go-private deal by late September. The buyer consortium owns shares representing 68.7% of total votes, enabling the buyer consortium to obtain the requisite shareholder approval. The go-private deal values Charm Communication at a deep discount compared with public-traded comparables and precedent transactions, so the downside is limited. Dissatisfied with the offer price, the second largest shareholder may negotiate a higher offer price for minority shareholders, providing optionality in this situation. As a result of these factors, we recommend a long position in the stock.

Businesses overview

Charm Communications is a leading advertising agency group in China that offers...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details