We recently purchased a stake in Combimatrix (CBMX). We haven’t shared our write-up on it but will point folks to the one done by Wes Gray. We generally agree with the write-up although we think there is substantial upside that the write-up doesn’t dwell into.
Recently Combimatrix completed one of the steps that we expected them to finish. CBMX settled a pending litigation. We were expecting the judge to rule on February 2nd. The expectation was that the company would be awarded around $30M in the settlement. The company settled the lawsuit 1/29 for a total of $25M. The settlement was unexpected although we it did clear the uncertainty and clearing ways for possible bids. It would be nice to get the +30M but there were risks that it could get dragged on or judge could rule against them.
Also recently a new activist investor joined the CBMX board. This is a good sign for investors waiting for the value of the company to be unlocked, it shows that either management is willing to look at options for unlocking value or they will get forced into it.
Overall we think the recent development are good signs of the unlocking of value that we are expecting. With the uncertainty with the litigation cleared up, we expect the acquisition offers to start coming in. The shares currently trade at a large discount to the value of the company (either split in parts or as a whole) with minimal downside. The next few months will be very interesting.