A quick update on one of the few ideas that worked for me this year, LMP Automotive (LMPX) ($80MM market cap) announced on Monday that they have sold most of their dealerships and will be asking shareholders to approve a plan of liquidation. In the press release (oddly, no 8-K was filed), management put out an estimate of $115-$126MM, which on ~11 million shares outstanding equates to $10.49-$11.49 per share in distributions (liquidation estimates are typically conservative). The asset sale is scheduled to close in October, yet as of today shares trade for just $7.50/share. Following the asset sale, by my count, LMPX will have only one new car dealership (Bachman-Benard Chevrolet-Buick-GMC-Cadillac in TN, LMPX paid $7.5MM for it in 2021) plus less than a handful of unbranded used car dealerships remaining to sell, which should be a small part of the total enterprise value. If approved, I'm guessing a large distribution could be made before year end that would return most if not all the current share price, leaving a stub that may take time to wind down.
There are still a number of red flags around LMPX, the company is restating earnings and behind on their financials, they recently fired their CFO, and they seem to have limited oversight (whether it be truly independent board members or strong shareholders) of CEO Sam Tawfik (who is also now the interim CFO). On the other hand, Tawfik does own 35% of the shares and has been repeatedly emphasizing via business update press releases (here and also here) that the share price doesn't reflect the private market value of the company's assets. Getting approval for the liquidation shouldn't be an issue, since Tawfik owns 35%, getting over the 50% mark shouldn't be a problem even with a largely retail shareholder base. The major remaining risk is the asset sale closing, we don't have much disclosure about the buyer at this point, but going back to the original thesis, car dealerships are rather fungible and if the buyer falls through, I'm sure there's one behind them willing to transact at near similar terms.
Disclosure: I own shares of LMPX
