Q: While I have enjoyed a nice return with LAS.a, my question is what’s the rational for keeping this a public company. The volume is nonexistent and they don’t seem to need the market to access capital. I’m not holding with the assumption that it goes private but it would obviously be a nice payday.
5i Research Answer:
LAS does not issues, and even its recent acquisition was all cash. It gets a low valuation and only three analysts cover it. Stock can still be used as a form of compensation to attract employees, and it does have debt. One day it may decide to pay off the debt with equity, but we doubt it. It does cost money to be public, in addition to sharing the cash flow to the public via the 2.4% dividend. Based on 12-month cash flow, the company could pay for itself with its own cash flow in about 7 years. At north of $1B, the public costs though would not be onerous, and management may just like the cache that comes with being public, or are keeping it as an 'option' for any future activities with the company.