Editor’s note: This article was first published in June 2014; the reported CVC takeover bid at €0.38 a share, the possible delisting and the share price it discusses reflect that time, and Deoleo’s situation has changed completely since. This June 2014 trade is kept as a historical record. It is not investment advice.
I have just sold my Deoleo shares, which made up a very small part of my investment portfolio, and I did it very reluctantly. When we advised buying Deoleo, it was because we considered it a company that was badly undervalued by the market and had great potential. The thing is, the company still has a lot of potential, but…
They say that when you see the rats leaving the ship, it is time to abandon it. In this case I am getting out because I have seen the rats getting on, and those rats do not respect the company’s retail investors. According to Expansión, the British fund CVC is about to launch a takeover bid for 100% of Deoleo at €0.38 a share.
The mere fact that, a few weeks ago, it showed interest in delisting this company from the stock exchange is enough to make me lose all interest in staying in it. So, given that my shares were bought at an average price of €0.275, I prefer to take my profits and look for other investment opportunities. They may end up not delisting it, or they may; but when in doubt, I prefer to get out.
The problem with a delisting, even if a generous price were paid, is this: investors like us who bought near the bottom could still come out ahead, but investors who bought at high prices and held on to their shares, waiting for a recovery and trusting the company, could be brushed aside to serve the interests of a few large investors.
I like to be in companies that look for ways to make money for their shareholders, not ones that make money by screwing their shareholders.
And it’s a pity, because Deoleo was a great company with a long way still to run.
Featured image: Badagnani, CC BY 3.0, via Wikimedia Commons.
