In this monthly newsletter edition, I am sharing intriguing special situation opportunities that have caught my interest over the past month.
Here is what you will find in this post:
- Elevation Oncology (ELEV) – Strategic Review/Activist Pressure
- Prime Meridian Holding (PMHG) – Merger Arbitrage
- Natural Resource Partners (NRP) – Increased Dividend Payouts
- Enzo Biochem (ENZ/ENZB) – Segment Sale + NOLs Monetization
- Mural Oncology (MURA) – Potential Liquidation
- +3 other opportunities published on SSI
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Elevation Oncology (ELEV) – Strategic Review/Activist Pressure
ELEV is yet another busted biopharma liquidation play with 20–50%+ upside. What’s particularly interesting here is that the stock is being targeted by both Tang Capital and BML, who together own an 18% stake.
BML alone owns 10% of the stock and filed a 13D a few days ago, calling for an immediate liquidation or a reverse merger with a substantial portion of capital returned to shareholders. In the same letter, the fund estimated the liquidation value at $0.60/share, or about a 57% upside from current levels.
However, there’s a caveat to that estimate: it’s only realizable with an immediate liquidation or a halt to ongoing activities, ideally within the next few months. Using more conservative estimates on my end, the upside is around 20% if liquidation occurs over the next six months.
Given the activist pressure, I wouldn’t be surprised if liquidation discussions begin sooner rather than later. Additionally, management’s moves since the end of March seem to point toward a reasonably high probability of eventual liquidation over other alternatives. ELEV’s most advanced asset failed back in March. Shortly after, the company discontinued its development, announced a 70% reduction in workforce, and the Chief Medical Officer departed with a change-of-control provision in his contract. The company also initiated a strategic review.
The 70% RIF and departure of the CMO are the most positive developments here. The CMO, who owned just 1.1% of the stock and was earning $500k annually, stepping down seems highly positive for the thesis. Whether it was his decision or not, this move suggests the board is at least somewhat shareholder-friendly. Insiders generally own 7.5% of the stock; however, given the small-cap nature of ELEV, the relative payout is not as compelling as the potential salary benefits insiders would receive from ongoing operations. Additionally, the board is staggered, which always adds an additional layer of risk to these setups.
Prime Meridian Holding (PMHG) – Merger Arbitrage
This is a classical acquisition of a community bank by a credit union with a 20% spread.
Florida-focused community bank PMHG is being acquired by MIDFLORIDA Credit Union for $58.50/share in cash. Closing is expected in 2026. The transaction requires both shareholder and regulatory approvals. Shareholder approval is highly likely given management’s sizable 25% ownership stake. Approval from the remaining shareholders is unlikely to present any issues, considering the offer represents a substantial 102% premium to pre-announcement levels and a generous 1.8x P/TBV valuation, above the 1.5x average multiple for similarly sized Atlantic Coast bank acquisitions over the past year.
As always, the key risk to closing lies in regulatory approval. Antitrust risk appears minimal, given PMHG’s small size and limited market share in the counties it operates in, with geographic overlap limited to just one branch. However, there is still a risk of opposition from regulators due to the recent pushback against credit union acquisitions of banks, with several such transactions having been terminated in recent years.
The most relevant example is the terminated acquisition of AFBI by APCU, where the target was similar in size and branch count to PMHG. Other recently terminated mergers include VyStar Credit Union’s acquisition of HSBI (terminated in 2022), GreenState Credit Union’s acquisition of Premier Bank (2022), and Royal Credit Union’s acquisition of Lake Area Bank (2022).
One of the arguments against these transactions is that credit unions are exempt from federal taxes. When a credit union acquires a bank, the acquired assets and income become tax-exempt. This has raised concerns from regulators and banking trade groups that advocate for small, independent community banks, which are left at a competitive disadvantage. Additionally, credit unions are exempt from the Community Reinvestment Act (CRA), which requires banks to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods. This has been one of the FDIC’s primary concerns since new merger guidelines were issued last year.
That said, in March 2025, the FDIC board approved a proposal to rescind the 2024 policy statement on bank mergers and reinstate the prior, more lenient policy. So, FDIC risk should be somewhat limited here.
It’s worth noting that the reasons behind the pushback on deals like AFBI and HSBI, and which specific regulators opposed them, have not been disclosed. In contrast, the Lake Area Bank and Premier Bank deals were both blocked by state regulators, due to laws in those states that do not permit credit union acquisitions of banks. There are six such states, but Florida is not one of them, and that’s where PMHG operates.
In fact, as of June 2024, there have been 16 credit union acquisitions of Florida-based banks since 2015, the highest number among all U.S. states. This includes two acquisitions in Florida completed by MIDFLORIDA Credit Union itself (buyer here), though both were announced in 2019. So while the state-level decision-making process remains opaque, betting on a deal closing in Florida seems safer than in most other states.
Of course, the downside here is significant, around 37%, so the risk/reward profile isn’t ideal. But the closing probability seems quite high.
Natural Resource Partners (NRP) – Increased Dividend Payouts
NRP is a cheap coal royalty business (80% metallurgical coal) that has been on a deleveraging path for the past 10 years. The company is likely to pay off its remaining debt this year and begin paying dividends. Considering it trades at less than 4.5x FCF (excluding its stake in the soda ash business), the initiation of dividend payouts should serve as a meaningful catalyst.
As an MLP, the company is expected to distribute all or most of its distributable cash flow to shareholders. This was the case prior to 2015–16, before leverage issues created by the previous management became apparent and the dividend had to be cut. Now, in 2023 and 2024, with a significant portion of the debt already repaid, the company has increased its distribution and paid out around $70m, equivalent to a ~5% dividend yield at current prices. Once the debt is fully paid off, the company should be able to distribute at least $177m equivalent of normalized distributable FCF, which would translate to a ~13% dividend yield, clearly too high for a company of this quality.
This estimate is based on $150m in normalized FCF (vs. $220–230m last year) in the coal roylty business, a level the company has rarely fallen below. For instance, during weak met coal pricing years (2015–16 and 2019), distributable cash flow from the coal business ranged between $187m and $214m, so $150m appears to be a conservative assumption. Adding about $55m in normalized distributable cash flow from the soda ash business and subtracting ~$32m in corporate costs, you arrive at a total of $177m.
Once the debt is fully paid off this year, I find it unlikely the company will continue trading at a 13% yield on norm. distributable FCF. A more reasonable valuation would imply a 9–10% yield, which suggests 30–40% upside as dividend payouts increase.
Finally, insiders own nearly 25% of the stock, so they’re well-incentivized to pursue buybacks or significantly higher dividend payouts.
Enzo Biochem (ENZ/ENZB) – Segment Sell + NOLs Monetization
ENZ is one of the most frustrating special situations I have looked into over the last two years. Yet the ongoing liquidation/sale thesis might finally be coming to an end with a potential 60%+ upside.
A few days ago, the company announced a review of strategic alternatives after receiving multiple inbound expressions of interest. In January, the company settled its ransomware attack-related class action, removing a meaningful overhang. Then, the company voluntarily delisted from the Nasdaq to the OTC, which put significant pressure on the stock price.
The review of strategic alternatives amid inbound interest following these events looks interesting. There’s a good chance the company gets sold outright, or alternatively, they may sell the operating business and return most of the cash to shareholders while attempting to monetize the remaining NOLs. At this point, the whole process is being orchestrated by Bradley Radoff, a small-cap activist who has been on the board for at least two years and is now one of the largest shareholders.
Most of the current stock price is covered by net cash and the value of two properties owned by the company in New York ($15m at $250/sqft). This leaves the operating business, with $30m in revenue and 40–50% gross margins, basically for free. While the business has historically been highly volatile and barely profitable at the operating level, for the right buyer, a sale at just 0.5x sales could be quite enticing. With the sale of the business at those levels, we could see 60%+ upside.
Whether it’s the litigation overhang or management’s efforts to stabilize the current operating business, it’s clear that both the activist and the new management have mismanaged the company. I wouldn’t be surprised if things continue to go sideways.
That said, Radoff has a decent reputation in the small-cap activist space and owns 10% of the stock, so further screw-ups are likely going to be limited. Aside from Radoff, there are 3–4 large investors with a combined 25–30% ownership who should be able to put pressure on the board and keep them in check, at least at this point, with any justification for not selling the company now largely gone.
Mural Oncology (MURA) – Potential Liquidation
MURA is yet another busted biopharma with around 30% upside to conservative liquidation value estimates.
The company discontinued its Phase 3 asset development in March. Just two weeks later, it halted all other clinical trials and announced a 90% RIF.
At this point, MURA is effectively a clean cash shell with a high likelihood of an eventual liquidation. It’s also worth noting that Soleus Capital has established a 6.3% stake in the company following the restructuring announcement. This is the same fund that has been pushing another busted biopharma, EPIX, to liquidate over the past few months.
Insider ownership is minimal, so management is clearly incentivized to keep the company going. However, the board is not staggered, which provides more leeway for activist involvement. I would not be surprised to see BML or Tang join in on the party here.
Quick back-of-the-envelope math gets me to a net cash level of around $81m (or ~$4.80/share) as of the end of Q1. This includes subtraction of:
- Full Q1 cash burn in line with Q4 levels,
- Full lease liability,
- Accrued expenses, and
- RIF-related restructuring costs.
To arrive at the liquidation value, I’m assuming:
- An additional $10m in cash burn over the next two quarters (reasonable given the halt in R&D and 90% RIF),
- Plus ~$5m for miscellaneous liquidation expenses.
That implies roughly $3.5/share in liquidation value vs. a current share price of around $2.6/share. If you want to be super conservative and assume $10m in misc. liquidation expenses, you’re still looking at ~20% upside.
3 other ideas posted on SSI during April
If you’re a special situations investor seeking actionable insights, be sure to follow me on X/Twitter and consider upgrading your SSI subscription.
The 3 opportunities listed below have been posted on SSI during April (for paying subscribers only):
- Potential buyout with a credible buyer, management willing to sell, and a major shareholder supporting the transaction.
- Spanish version of tender offer with an odd-lot provision and a potential €500 “low-risk” upside.
- Buyout with a CVR that is highly likely to pay out.
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