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K1 Ventures Ltd (K01)

|Includes: K1 Ventures Ltd. (KOVTF)

Another blogger wrote about k1 Ventures Ltd (K01) recently and that caught my eye so I went to take a look as I was rather interested to find out more. When I told ACCICB about this stock, his first question was the daily trading volume and the current price. I think it being a penny stock didn't interest him but I think it could be a good stock to hold as after all, not everybody, myself included, has that much money to invest in stocks.

K01 is an investment company and their current investments are in the sectors of education (Knowledge Universe Holdings, LLC and K12 Inc) and financial services (Guggenheim Capital, LLC and ChrysCapital, LLC) as they have recently divested their automotive retail investment (China Auto) via an IPO on the HKSE.

For a company that makes it's revenue through investments, it would be key to scrutinize their track record as that would be a good gauge for the potential of their continued success. However, their revenue and dividends is lumpy due to the nature of the business, which means that this is ruled out as a trading stock but a counter that I have to hold for a while before I see gains in my investment.

Imagine my surprise when I started reading and saw a LKY lookalike staring back at me and I realized that his brother Lee Suan Yew is an Independent Director. It comes as no surprise then that the majority shareholder is Temasek through its stake in Keppel Corp, followed by the current Executive Director Steven Jay Green through his stake in Greenstreet Partners L.P. and Green Family Foundation, Inc.

I like the fact that the management is rock solid given that Steven has been there for past a decade and that they have zero debt. But I also question whether zero debt is a good thing for such a firm but I reckon that they will have no issue when it comes to bank borrowing should they need to take this step for future investments.

It was interesting to note in the 2014 annual report that they have discharged Steven and Jeffrey from their roles of CEO and CFO respectively and all along they have been providing consultancy and management services to K01. I wonder whether they are taking this partnership a notch slower or there is something up in the air which we do not know.

I was surprised to find out in their recent Q2 2015 results circular that they have no intention to make any acquisitions as they have pretty much sold most of their investments. I would have thought they have an acquisitions pipeline to replace divested investments so I'm scratching my head on this as I wonder where the growth would come from? If that's the case, it probably means the stock price will just stagnate which is not pleasing to my eye.

They have recently announced dividends of 1.5 cents per share but the question of what their strategy will be is still unknown. Perhaps they hold their cards close to their hearts but that also means a step in the dark for shareholders like you and I.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: This blog post was written on Jan 2015