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23 October 2019 | Buy

Purchased shares in Simonds Grp Ltd (SIO)

Today we bought a small stake in a unique opportunity that will play out over the next week or two. Simonds Group is a Victorian housebuilder that was listed in 2014 for $1.76 by Gary Simonds who founded the company 60 years ago.

A string of events saw the share price fall to 15 cents earlier in the year. Subsequently, Gary Simonds and the Roche Family have launched a privatisation bid at 40 cents. We purchased shares today at 40.5c.

Approximately 30% of the company is held by Hedge funds and competitors who have bought in at around 40c. These are unlikely to accept the offer at 40c (but will likely accept an offer higher than 50c). The scheme meeting is due on Tuesday and we expect a higher offer to be made before then.

We have comfort that the founders who have the best knowledge of the company are signaling that they feel it is cheap and are making the offer