Central GoldTrust’s largest shareholder Pekin Singer Strauss Asset Management said it supports an unsolicited bid for the precious metals company launched last week by Sprott Asset Management.
Pekin Singer Strauss, a Chicago-based investment advisory service, said in a statement it also supports the effort led by hedge fund Polar Securities Inc. to close Central GoldTrust’s historical trading gap.
“Both solutions are superior to the status quo because they should significantly reduce Central GoldTrust’s current net asset value discount,” said Adam Strauss, co-chief executive officer of Pekin Singer Strauss.
Pekin Singer Strauss is the largest shareholder holder in Central GoldTrust with about 1.33 million shares or 6.9 percent of its outstanding stock, according data compiled by Bloomberg.
Sprott announced plans last week to make an unsolicited offer to buy Central GoldTrust and Silver Bullion Trust for $898 million, saying the precious-metals companies are undervalued. Under the terms of the proposal, Toronto-based Sprott would swap units of Sprott Physical Gold Trust and Sprott Physical Silver Trust for units of the two targets respectively.
The Canadian trusts, which buy and hold gold and silver, had already been under pressure from shareholder Toronto-based Polar Securities, to change how unitholders can redeem their investment.
“Sprott Physical Gold Trust, which our investors also own, already offers a physical redemption feature. Like Polar’s proxy proposals, an exchange offer with Sprott Physical Gold Trust would similarly eliminate the current net asset value discount on Central GoldTrust units,” Strauss said.