The investment thesis for this company is simple. The company recently sold “most” of their business assets for $300 million. They now have $500 million in cash and securities. Total debt is $135 million. $365 million is leftover after all debt is paid. However, the company still holds assets in its royalty portfolio and product pipeline.  Enzon will receive royalties until 2016 on its royalty portfolio. Doing a simple discounted cash flow analysis we can conservatively estimate the value of this royalty stream until 2016. We discount this cash flow with a 10% discount rate to account for possible inflation. We come to a conservative valuation of $240 million.  So here is a simple valuation for Enzon.

$365 million+$240 million=$605 million

We now should take our valuation and divide it by shares outstanding to come up with a per share valuation.

$605 million divided by $58.5 million=$10.34

So we value the company at $10.34 a share not including the possible acceptance of the companies pipeline products. The company currently sales for $10.38 per share or $617 million on the open market. This value does not include the value of the companies product pipeline. Downside is risk is protected by cash,liquid securities,and a stable royalty portfolio. This has been one of the best investments I have found in awhile and truly advise my readers to jump on this opportunity.

Enzon Pharmaceuticals: ENZN

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