Sell Gravitas Education

December 11, 2023

GEHI: $12.75

Original Recommendation Price: $10.02*

Return: +27%

* Adjusted for 2:1 stock split

Summary

I’m closing out my BUY recommendation for GEHI and recommending selling shares. I originally recommended the stock at a split-adjusted price of $10.02. In about a month and a half, shares have rallied +27% and now trade in the middle of my fair value range. As such, I’m going to book the win and redeploy profits into higher conviction ideas.

Additional Details

GEHI will merge its business with Netdragon’s education business. In conjunction with that transaction, it will pay a special dividend of $5.628 to legacy GEHI shareholders.

Based on comparable company analysis, I believe the new merged company is worth $7.50 per share. Add in the expected dividend of $5.628, and the stock is worth $13.12.

Today, GEHI is trading relatively close to fair value. As such, I’m going to book my profit and redeploy proceeds into higher conviction ideas.

Disclosure/Disclaimer:

Rich Howe owns shares of GEHI but intends to sell them. All expressions of opinion are subject to change without notice. All published emails/articles/correspondence is provided for informational purposes. We do not warrant the completeness or accuracy of this content. Please do your own due diligence and consult with an investment adviser before buying or selling any stock mentioned on www.stockspinoffinvesting.com.