MQC-- 40% discount to NAV

L

Longhorns

Millennium India Acquisition Company Inc. Announces Net Asset Value Per Share
Monday March 3, 3:51 pm ET


NEW YORK, March 3 /PRNewswire-FirstCall/ -- Millennium India Acquisition Company Inc. (hereafter "MIAC" or the "Company") (Amex: MQC - News) today announced that it had determined the Net Asset Value ("NAV") per share of the Company to be $9.91, as of March 3. This is the first time MIAC has announced a net asset value per share. MIAC currently intends to announce a net asset value no less than once each calendar quarter.

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MQC trading $5.70. Anyone know why there would be such a massive discount to the NAV?
 
Originally, this was a blank check company, i.e. a company with a boatload of cash and no operations of its own, looking to acquire or invest in some other public or private company with operations.

A couple months ago they acquired an interest in a couple Indian securities firms (SMC Global Securities and SAM Global Securities). Now, having committed that cash, they're basically a closed-end fund. CEFs often trade at discounts to their net asset values, for a variety of reasons (and non-reasons).

The current discount to NAV is indeed pretty wide for a CEF, but I'd do a little research on those investment firms they bought into before concluding there's something interesting here. Keep in mind that neither of those firms are publically traded, even in India, so the figures MQC states as fair value are good faith numbers based on their own internal accounting. Of course, they are not going to say that they're worth less than what they just paid. Given the current turmoil in financials in general and in emerging markets, I think you have to discount them pretty heavily.
 
Foreign investors drive up single-country funds to premiums during bull markets and to discounts during bear markets because of a limited supply of shares.
 
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