Market's view on Argo Group
Published on April 2024
- ARGO’s current situation is described as a deep value play, with a notable discrepancy between NAV per share (39.5p) and share price (7.5p). The financial stability of ARGO is acknowledged despite challenges, including a significant loan to Novi Biznes Poglyady LLC tied to a retail shopping centre in Odessa, Ukraine, which complicates the valuation due to auditors’ inability to obtain an independent fair value assessment.
- Historical context elaborates on ARGO’s foundation by Andreas Rialas and its peak management of $882M AUM in 2007 before its acquisition by Absolute Capital Management. Post-acquisition, issues arose due to questionable investments leading to significant corporate restructuring and ARGO re-becoming an independent entity by 2008.
- There are concerns about the transparency and complexity of ARGO’s assets, particularly with large portions of assets tied up in loans to related parties and investments managed by ARGO itself. The dominance of the Rialas brothers as shareholders and their influence over potential strategic decisions such as delisting is noted.
- The investment potential of ARGO is considered to hinge significantly on the management of its assets and recovery of outstanding fees, which could substantially increase its NAV. Efforts to increase AUM and the optimistic outlook of the board regarding growth opportunities are highlighted.
- Other discussions indicate confusion among some participants between ARGO and Argo Blockchain, leading to clarifications about ARGO’s focus on global emerging markets rather than cryptocurrency.