A lot of value bloggers have a problem with the management of Urbana. I don’t. But I do have a problem with the price of the portfolio that will be left after this merger. If you look at the stocks that make up the bulk of Urbana’s portfolio – which will be CBOE (CBOE) and some amount of Intercontinental Exchange (ICE) – these are pricey stocks.
Still, Urbana’s discount to net asset value was recently about 50%. It is a stock worth watching because the discount to NAV is often big and the portfolio is easy to understand. But the underlying assets are not something I’m interested in.
My favorite holding companies to invest in are situations where I like the underlying assets and think they are reasonably priced and then I get a discount to NAV. At Urbana, I think the discount to NAV is the only attraction.
But if you want to invest in securities exchanges, Urbana is the place to start.