Deep value play:
CCUR sold off all of their core operating assets at the end of 2017. Since then, they have been looking to deploy cash. They recently signed a letter of intent to purchase 80% of Luxemark Capital, a merchant cash advance lender. This type of business isn't viewed upon with great reverence, but the stock price of CCUR is currently pricing the acquisition at below 0. Also, the payday lending industry faces some tailwinds, as the trump administration is looking to lift Obama era regulations which restricted who payday lenders could lend to.
CCUR is currently performing due dilligence under a period of exclusivity and has until January 30th to do so. They could easily walk away from this LOI. If they do this, I believe the stock price should at least converge to their assets held at fair value (adjusted for recent market developments) less their total liabilities. They also have a significant amount of operating losses which could be applied to a profitable company. If they have reason to believe that LuxeMark isn't profitable, I do not think they will go forward with the acquisition. An activist also has been increasing his stake since 2017. He now owns around 39% of the company and his uncle is on the board of directors. CCUR also has bought back a significant amount of stock (around 725,000 shares) since announcing their repurchase plan in March.
Two catalysts for 2019 - CCUR walks away from the deal. Luxemark capital is profitable.
Worst case scenario - Luxemark Capital isn't profitable... but the valuation of the company is already pricing this acquisition at 0.
Payday lending is very risky... but the decrease in share price of this company doesn't make sense due to the relatively small amount of cash (around 11%) they are investing in this company. They also have the option of granting up to $10 million in syndication capital to Luxemark. If this were to go to 0, the company would be trading at a slight premium to fair value assets less total liabilities.
Long CCUR