Last year I wrote up H&R Block with the basic thesis that the company's tax business alone is worth about $21 per share and that while the other business lines (investment services, corporate tax, mortgage) are difficult to value, they are worth something.
Today, Cerebus Capital validated my thesis by agreeing to buy HRB's Option One Mortgage for about $900 million, or $2.79 per share, meaning that the value is approximately $900 million more than last night's stock price implied.
Today the stock is up about $.80 per share, implying that there is still more upside to today's price of $22.61. I sold my HRB shares towards the end of 2006, but if I owned them today I think I would be willing to sell at about $24 and walk away.
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