I don't get the following sentence in The Intelligent Investor book

Question

I'm a newcomer in this "Market thing", and I'm learning from books and videos. I'm currently reading "The Intelligent Investor" and I don't understand the following sentence:

In 1925, plowing through the obscure reports filed by oil pipelines with the U.S Interstate Commerce Commission, he learned that Northern Pipe Line Co. - then trading at $65 per share - held at least $80 per share in high-quality bonds. (He bought the stock, pestered its managers into raising the dividend, and came away with $110 per share three years later.)

Starting from "he learned that Northern Pipe Line Co." I don't get the logic. English is not my native language, maybe that's the problem here. Can you help me understand this? Thanks!

Answer 1

Untangling the passage:

Northern Pipe Line Co. was then trading at $65 per share.

He learned that Northern Pipe Line Co. held at least $80 per share in high-quality bonds. (That is, the company itself owned assets that, when divided by shares outstanding, had a value of at least $80.)

(This implied that the company's stock was undervalued. Even if the operating business was worth nothing, the stock should be worth at least $80 per share based on the assets the company owned.)

He bought the stock. (Knowing it was undervalued, he wanted to profit from its likely appreciation.)

He pestered its managers into raising the dividend. (As a shareholder, he let the company's management know that he would prefer that they make higher dividend payments. The company presumably could afford this because it held so much in assets. This was one way to communicate to the market that the shares could be worth a lot more. Dividends would get the attention of most shareholders, versus "obscure reports filed by oil pipelines with the U.S Interstate Commerce Commission".)

He came away with $110 per share three years later. (He sold his shares in the stock market for $110 each, after the value of the company was better recognized by the market.)