Should a Holdco Discount Apply to this Canadian Company?

Business and finance folks have been accused of “physics envy” before because of their incessant search for universal and unbreakable laws that can explain market behaviour. Some investors have a deep desire for formulas with precise inputs and outputs. Yet, they are also okay with defying the laws of mathematics. For example, business “synergies” suggest that 1+1=3! There is some sense to this if there are cost savings by combining two companies for instance. In this Insight piece, we will explore perhaps another mathematical anomaly in the markets – why sometimes you can buy a dollar for 70 cents.