AMY A £5m shell with Bobby the Bull in for free

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Armour (LSE: AMR)

4.5p (4.25p-4.75p)

Mkt Cap £4.26m

Next Results Finals December

Shells are created when the original business plan is no longer supported.  Armour, a mini-conglomerate decided that its rating and prospects were so low that the Chairman, a seasoned entrepreneur decided to sell off or close down the three/four unrelated businesses. The process has come to an end when the disposal of Armour Home and Armour Hong Kong was announced in August. Pro-forma the group will have no debt, a £1.0 million loan outstanding  paying 10% interest , and approximately £4.0 million of cash-so if we were generous that would give around £5m of assets which is more than the current price and  allows no value for the Aim Shell or the goodwill premium for  Bob Morton, the chairman.

An Aim listed vehicle is arguable worth up to £300k. Armour’s  so give and take a bit the market cap is around the current intrinsic value. Goodwill, like beauty it in the eye of beholder sometimes a shell can be worth many times its intrinsic value.

Bob Morton is  70 could have retired as his personal fortune is  around £200m and he is  on the Board of many companies eg. Port Communications and Servoca etc. Bob holds 31% of  AMR shares.   The very outline plan is to become an investing company, specialising in the technology sector, for which we can assume that some tax losses can be carried over.

Trading Strategy

The finals are to be announced in December which is likely to high-light the opportunity. There are, however 1,933 shareholders so there is a long list with few shares each which can depress a raising price. In the best theatrical tradition … break a leg!

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