Oxbridge Re Holdings Limited (NASDAQ: OXBR, $OXBR) is in rally mode. And rightfully so. This reinsurance solutions provider and disruptive technologies investment company is more than making its case as one of the most undervalued companies on the NASDAQ. And the evidence provided is overwhelming, with the sum of its parts justifying a book-value share price of over $15.45, more than 194% higher than its current $5.20 price*. (* share price on 5/31/22, 4:00pm EST)
That proposition may have helped ignite a rally on Friday, with OXBR surging more than5%. But the better news for those long the stock is that the gains on Friday appear to have been a precursor for better things to come, with OXBR adding an additional 5% to its price on Tuesday. Still, despite the combined roughly 10% move over two days, the near and long-term proposition in OXBR has never looked better. And more gains are likely.
Why so bullish? Because OXBR has the tangible evidence to support the bullish thesis. In other words, getting to $15.45 isn't speculative, it's built into the asset portfolio today. It's just a matter of OXBR exposing that value, which is inherent to its current 49.6% ownership stake in Oxbridge Acquisition Corp (NASDAQ: OXAC, $OXAC), a $145.48 million company making substantial investments into disruptive technologies, including companies in the blockchain, insurtech, and artificial intelligence sectors.
A Sum Of Its Parts Justifies 210% Upside
Moreover, that stake alone does more than expose a massive investment opportunity, it justifies investment consideration as well as a call to action. In fact, for those liking to invest in under-the-radar opportunities, OXBR is ripe for the taking. Why? Because OXBR's 49.6% ownership in Oxbridge Acquisition ($OXAC), valued at $145.19 million today based on OXAC's current $10.04 share price, plus OXBR's cash-on-hand and other interests, and then divided by the roughly 5.78 million OXBR shares outstanding, supports a $15.45 OXBR share price. But, the more excellent news is that there's more to like.
Even at $15.45, OXBR's price may still be undervalued and fall appreciably short of closing the disconnect between that price and the value inherent to its other business interests and its cash-rich, debt-free balance sheet. Actually, factoring in the totality of assets and interests support investors arguing for and able to justify a price closer to $19, noting that there is significant inherent value in OXBR's other existing interests. And keep in mind that while investors are well-entitled to argue for triple-digit percentage gains based on the value of current assets, many expect the best is yet to come. Hence, even the lofty targets modeled may not fully reflect the opportunity at hand.
The OXBR Bulls Are Ready To Run
Frankly, it's hard not to be decidedly bullish, a sentiment stemming from OXBR and OXAC being better positioned than at any time in their history for unprecedented growth. And weak broader markets may not impede the speed. Instead, while recent volatility in the capital markets may have negatively impacted OXBR's investment portfolio in Q1, the near and longer-term value proposition has never looked better. Again, that's not an overzealous bullish assumption. It's supported by the company being ideally positioned to capitalize on revenue-generating opportunities through its core business and investment in Oxbridge Acquisition Corp., a combination that could transform the size and scope of OXBR in 2022. Better still, from an investor's perspective, share prices should follow that lead.
There are reasons to think that will happen. From a capital structure perspective, OXBR's low float of about 5.78 million shares and roughly $5 million in cash make the company stock ripe to rally. Not only that, as a Cayman Islands-based company, OXBR's income benefits from substantial tax advantages. In other words, revenues and investment gains can fall faster toward the bottom line. And with growth across several revenue streams expected in Q2 and the remainder of 2022, while its 52-week high of $7.13 may be in the near-term crosshairs, it's a likely conservative target for where the stock may reach later this year.
Activist investor David Lazar may think so. He holds a roughly 8% interest in OXBR, which puts current and prospective investors in excellent company. Why? Because Lazar is no stranger to success. Moreover, in this case, with Lazar and his investment fund specializing in reverse mergers and other event-driven opportunities, history may repeat. If so, investors may want to buckle up for an exciting ride. Here's what could happen.
History Could Repeat At Oxbridge Re
Lazar owned close to 9.9% of the holding company IKONICS ($IKNX). And he did at a time when things were pretty quiet. But, that didn't last long after his arrival. Soon after, IKNX announced a deal to merge with Terawulf, a transaction that sent IKNX stock soaring from $4.00 to $44.00, which now supports the surviving $WULF's current $315 million valuation. It's fair game to expect a similar story at OXBR.
Actually, the stories parallel nicely. Like IKNX at the time, OXBR has been quiet, its stock churning between the $4.80 -$5.00 mark. But, similar to what happened at IKNX, chatter from OXBR is starting to make its way to the wires. And investors should pay attention, especially to other similarities to Lazar's prior investment.
Along with earnings from Q1, OXBR announced its expanded mission to monetize blockchain and digital asset opportunities. And here's the better news- with its nearly 50% stake in Oxbridge Acquisition, a SPAC actively looking to acquire companies in the blockchain, crypto, or Artificial Intelligence space, new and potentially massive revenue streams, or the addition of value-enhancing assets, are probably already in play. That's more likely than not. In addition, investors get a rare opportunity to invest alongside Lazar on the ground floor of the opportunity. And with his history of success, investors may be wise to take advantage.
Oxbridge Re Is A Company In Motion
Actually, comments made during OXBR's latest earnings call should inspire doing so sooner than later. In fact, news, some of which could be imminent, could do more than tighten a valuation gap; it could put potentially exponential gains into play. In addition, investors would be buying into a company that hedges its investments, helping mitigate the downside risk during turbulent markets.
Not only that, OXBR has positioned itself to benefit from multiple shots on revenue-generating goals by investing close to 50% of its equity through its reinsurance subsidiary. Again, they invest smartly. Between its reinsurance contracts and investments through OAC Sponsor Limited, Oxbridge Re as a lead investor, laid off a good portion of the risk capital to other investors in the sponsor and, in some cases, made money on the exchange.
Thus, despite Oxbridge Re contributing only about 34.7% of the risk capital, that resulted in maximizing its earnings potential by owning approximately 49.6% and 63.1% of the sponsor's ordinary shares and preferred shares. Additional benefit can accrue through the Class B shares and private placement warrants respective to the SPAC. In other words, they made a great deal and set themselves for massive upside while mitigating risk.
Better still, those considering the investment opportunity or those looking to average in can take comfort knowing that OXBR is better positioned than ever to capitalize on and maximize current, near, and longer-term ambitions. And with activist investors on board, expect those ambitions to turn into dollars, which is always good news when plugged into a price/sales valuation equation.
Bottom Line- OXBR Is Positioned For A Massive 2022
Indeed, investment decisions are easier to make when the "bottom line" proposition is simple to understand. It's made even better when the company assets justify a much higher valuation. Oxbridge Re Holdings checks those boxes and, frankly, at $5.20 a share, presents more than an attractive proposition; it's a compelling one.
Best of all, it doesn't take a calculator to realize that its stake in OXAC alone justifies a price above the $15 level. Furthermore, because both OXBR and OXAC have the cash to spend, even in the face of broader market weakness, they can inevitably benefit in the longer term by being opportunistic and able to gain control of other accretive assets at more aggressive prices.
Thus, with OXBR doing the right things in the right sectors at the right time and having a balance sheet and investments capable of expediting its mission, even the weak markets can't derail the OXBR mission. And that strength in times of weakness makes investment interest in OXBR more than warranted; it also makes it too good to ignore.
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