Global Sources Ltd. (Bermuda) Up 48.96% Overnight


One of the stocks I added to the TAM Deep Value Stock Portfolio last month was Global Sources Ltd. (Bermuda) (NASDAQ:GSOL).

Global Sources Ltd. is a business-to-business (B2B) media company that provides information and integrated marketing services, with a particular focus on the Greater China market.

I wrote about the purchase in my Month Six Update when it was trading at $8.25. So, it was a nice surprise when I checked the portfolio overnight to find the following:

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Global Sources Ltd jumped 48.96% yesterday and is now up 116.73% since the purchase. The stock is now the highest performing stock in the portfolio followed by Bridgepoint Education Inc (NYSE:BPI), which is up 112% since its purchase.

The reason for yesterday’s gain was that the company announced that it has entered into an Agreement and Plan of Amalgamation (the “Amalgamation Agreement”) with Expo Holdings I Ltd. (“Parent”) and Expo Holdings II Ltd. (“Amalgamation Sub”), a wholly-owned subsidiary of Parent, pursuant to which Amalgamation Sub and the Company will be amalgamated and continue as an exempted company limited by shares registered under the laws of Bermuda (the “Amalgamated Company”), which will become a wholly-owned subsidiary of Parent (the “Amalgamation”).

The Terms of the Agreement

Subject to the terms and conditions set forth in the Amalgamation Agreement, at the effective time of the Amalgamation, each issued and outstanding common share of the Company (each “Share”) will be automatically cancelled and converted into the right to receive an amount equal to US$18.00 (the “Amalgamation Consideration”) in cash, without interest. The Amalgamation Consideration represents a premium of 50.0% over the Company’s closing price of US$12.00 per Share on May 22, 2017, the last trading day prior to the date that the Company entered into the Amalgamation Agreement, and a premium of 72.65% to the volume-weighted average closing prices of the Shares during the 30 trading days prior to May 22, 2017.

The Acquirer’s Multiple Strategy

While these sorts of overnight gains are not typical in our Deep Value Stock Screens, it does highlight what can happen when you follow an evidence based strategy, like the one at The Acquirer’s Multiple, that focuses on finding undervalued stocks using The Acquirer’s Multiple®. The Acquirer’s Multiple®, founded by Tobias Carlisle, is the valuation ratio financial acquirers use to find attractive takeover candidates.

You can read the full press release on the Global Sources Ltd transaction at PR Newswire here.

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The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates. It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization. The Acquirer’s Multiple® is calculated as follows: Enterprise Value / Operating Earnings* It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations. Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up. Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC. He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law. Articles written for Seeking Alpha are provided by the team of analysts at, home of The Acquirer's Multiple Deep Value Stock Screener. All metrics use trailing twelve month or most recent quarter data. * The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”

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