US investment fund specialist Blueshore Global Equity has told MCV that it believes retailer GAME is a tremendous investment prospect – even if it does enter administration.
Blueshore recently acquired an eight per cent stake in GAME Group and tonight told MCV that the market is failing to recognise the true value of the company.
“We purchase shares in companies that we believe are undervalued – we've been watching GAME for around a year,” Blueshore's Harsha Gowda told MCV tonight. “There's a lot of excitement now about a possible acquisition but that really wasn't the reason we invested.
“The fact is that GAME has a very viable long-term business model for the next five to ten years. It just needs to ride out the current downturn in the console cycle.
“GAME has a huge number of assets. It even owns its Basingstoke HQ which itself is extremely valuable. The market isn't considering these factors properly. Even if a bidder secured a purchase of the entire chain for £1 we still see the opportunity to make a significant profit. And should administration happen there's still money to be made at the current share price.
“GAME stock is certainly worth far more than it's currently valued at.”
Gowda would not be drawn on GAME's potential value or the outcome of a possible bidding war, but did tell MCV that if Walmart were to acquire GAME for just 12p per share as has been rumoured it would represent “ridiculously good value” for the US firm.
He did also not rule out the possibility of acquiring further shares in GAME Group.
UPDATE: The text has been amended to reflect the fact that Gowda was referring to a company buyout for £1, not a £1 per share purchase.