Whopper Investments
Deep Value, special situations, event-driven, arbitrage

ALJ Regional Holdings' New Acquisition Unlocks Value

Upfront note: I am long ALJJ. ALJJ is a thinly traded microcap which is only appropriate for investors with long-term time horizons. Please use limit orders and do your own research on the stock.

On Friday, ALJ Regional Holdings (OTCPK:ALJJ) announced it was making an acquisition for $53m. This was not an insignificant announcement, as the company's market cap before the announcement was merely $22m. The market clearly loved the acquisition, sending the shares up from the low $0.80s range to $1.05 by Friday's close.

But my contention is the market has significantly underrated the value created by this acquisition. I believe there are numerous reasons for this undervaluation, but the main reason is that ALJJ did not...

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