One need to ask why the money is not being put to better use? Cash could be there because management does not know how best to deploy it, missing out on investment opportunities and in some ways can be said to be inefficient.
Having so much cash is expensive in the sense that when cash is sitting there idling, there would be opportunity cost, measured by the difference between the interest earned on leaving it in the bank and price paid having the cash measured by the company’s cost of capital. That said, I am not implying that companies should invest in a new project just for the sake of not holding onto too much cash. Management should be discipline in its spending, spending when opportunity arises and keeping cash when it views that there are no opportunities around. However, for Lion AsiaPac, the huge amount of cash has been sitting there has not just been a year or two but several years.
To sum it up, I believe that while investing in Lion AsiaPac definitely gives you the safety that you are buying a company that is undervalued with a extremely huge margin of safety, one has to note that such excess cash tells you something about management. I have sold my whole stake in Lion AsiaPac and realised the losses as a lesson learnt.
Disclosure: The author is no longer invested in Lion AsiaPac