Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 103008 times)

Rod

  • Full Member
  • ***
  • Posts: 129
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #270 on: July 10, 2018, 10:03:36 AM »
Here is Jim Roumel's valuation of Dundee post AGM. Values Parq at 50% of carry, expects Blue Goose sale & places conservative assumptions on other assets while subtracting $41 million for corp costs & pref dividends over next 18 months. Still comes out with $4.25 per common valuation.


I attended Dundee's shareholder meeting two weeks ago and walked away with increased confidence that the board has a plan, senior executives are up to the task and Jonathan knows what he's doing and is passionate about righting this ship. I view it as a "reverse prodigal son" story, i.e. the brother has come back to fix the sins of the father.

Our conservative NAV assumption gives us a large margin of safety, in my opinion:Primary Investments:

1. Untied Hydro $65 million (40% of carrying value)
2. Blue Goose $35 million (Current mark, we believe gets sold this year)
3. Dundee Securities $13 million (50% of carrying value)
4. Dundee 360 $12 million (50% of carrying value)
5. Android $24 million (100% of carrying value)
6. Dundee Sarea $7 million (50% of carrying value)
7. Parq $50 million (50% of carrying value)
8. DPM $124 million (Current market value)
9. eCobalt $19 million (20% discount to market)
10. Other Public Equities $40 million (20% discount to market)
11. TauRx $20 million (50% of carrying value)
12. Debt Investments $25 million (25% discount)

Sum: $291 million discounted NAV vs Dundee's NAV of $588 million

Less 18 months corporate overhead of $24 million and 18 months Preferred Div of $17 million = $4.25/share

There are also significant tax loss carryforwards that should have some value.


sculpin

  • Hero Member
  • *****
  • Posts: 655
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #271 on: July 11, 2018, 06:31:24 AM »
Dundee Precious Metals Details:

Second quarter metals in concentrate produced was 48Koz Au and 8.5Mlbs Cu versus Q1/18 of 57.3Koz Au and 9.3Mlbs Cu and Q2/17 of 53.5Koz Au and 8.7Mlbs Cu.
While the quarterís gold production was weaker than Q1/18, this was expected as Q1 saw ore grades significantly higher than planned. The company noted in the release that Chelopechís gold production was still higher than expected in Q2 as a result of higher gold grades in the zones mined.
Gold production YTD looks to be trending towards the high end of guidance(165-195Koz) and copper production appears to be in line with guidance (33.7-40.4Mlbs).
At the smelter, concentrate smelted of 46.4Kt was below Q1/18 of 54.1KT and Q2/17 of 60.6Kt due to the 24 day annual shutdown.
At Krumovgrad, the forecasted CAPEX remains at $164 to $168M, compared with the original estimate of $178M.
Implications:

Mildly Positive

Despite lower gold production q/q and y/y, YTD production of 106Koz appears to be trending towards the upper end of full year guidance. While the smelterís performance was light due to the annual shutdown, the company notes that full year concentrate throughput is expected to be within guidance of 220-250Kt, therefore it should have a strong H2/18 with YTD concentrate smelted totally 102.2Kt.

Krumovgrad remains on track for a late Q4/18 startup.

DPM remains the best-value name in our Junior Producer universe and is a top pick for the quarter.

petec

  • Hero Member
  • *****
  • Posts: 1549
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #272 on: July 11, 2018, 08:36:07 AM »
I feel like the next quarter (post portfolio review) is key; the stock could drift a lot lower with no action or explode on positive action. Personally I'd:
a) sell everything not listed below and buy back liabilities cheap;
b) mature DPM and Parq and sell those (18 month timeframe)
c) focus on maximising option value at DST and United
d) Use the "new" securities business to find new options.

Until I see a plan I can't decide whether to get more excited as the price comes down, or not.

Rod

  • Full Member
  • ***
  • Posts: 129
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #273 on: July 11, 2018, 09:32:39 AM »
I feel like the next quarter (post portfolio review) is key; the stock could drift a lot lower with no action or explode on positive action. Personally I'd:
a) sell everything not listed below and buy back liabilities cheap;
b) mature DPM and Parq and sell those (18 month timeframe)
c) focus on maximising option value at DST and United
d) Use the "new" securities business to find new options.

Until I see a plan I can't decide whether to get more excited as the price comes down, or not.

I hope we see significant assets sales soon. Right now when I look at the stock I hear that screaming sound that the shot down planes make in old WWII movies.

petec

  • Hero Member
  • *****
  • Posts: 1549
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #274 on: July 11, 2018, 09:43:09 AM »
I feel like the next quarter (post portfolio review) is key; the stock could drift a lot lower with no action or explode on positive action. Personally I'd:
a) sell everything not listed below and buy back liabilities cheap;
b) mature DPM and Parq and sell those (18 month timeframe)
c) focus on maximising option value at DST and United
d) Use the "new" securities business to find new options.

Until I see a plan I can't decide whether to get more excited as the price comes down, or not.

I hope we see significant assets sales soon. Right now when I look at the stock I hear that screaming sound that the shot down planes make in old WWII movies.

The plane makes the screaming sound or the pilot? ;)

Rod

  • Full Member
  • ***
  • Posts: 129
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #275 on: July 11, 2018, 09:57:14 AM »
One question that's never been properly answered is how this disaster came about. For about 20 years Dundee had a great record of value growth under Ned Goodman et al. This culminated in the sale of Dundee Wealth to Bank of Nova Scotia. The BNS shares were sold and the investment spree began under CEO Ned leading to massive misallocation of capital. What happened to Ned?? Was this a case of hubris brought on by a very long record of success? Did Ned lose his marbles??

I guess nobody wants to ask this question on conference calls directly to Ned's sons out of fear of being rude. But surely it must be on people's minds. Does anyone have some insight into this question? Ned himself has been very low profile the last few years. Usually he is very outspoken.

doc75

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 537
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #276 on: July 11, 2018, 10:17:25 AM »
One question that's never been properly answered is how this disaster came about. For about 20 years Dundee had a great record of value growth under Ned Goodman et al. This culminated in the sale of Dundee Wealth to Bank of Nova Scotia. The BNS shares were sold and the investment spree began under CEO Ned leading to massive misallocation of capital. What happened to Ned?? Was this a case of hubris brought on by a very long record of success? Did Ned lose his marbles??

I guess nobody wants to ask this question on conference calls directly to Ned's sons out of fear of being rude. But surely it must be on people's minds. Does anyone have some insight into this question? Ned himself has been very low profile the last few years. Usually he is very outspoken.

I've wondered the same thing. 

I'm also curious why that analyst thought that Blue Goose would be sold this year.  Pure speculation, or were there hints at the AGM.

We could get see some pretty crazy pricing through the slow summer months if there is no news on the portfolio sales.  This has been the very definition of a falling knife. 

petec

  • Hero Member
  • *****
  • Posts: 1549
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #277 on: July 11, 2018, 10:52:49 AM »
My only thought on the Ned issue is that having ploughed my way through the only letter of his that I read (2014 maybe) I thought it was the most arrogant load of twaddle Iíd ever read. Expecting people to read 100 pages of your output is bad enough. But it was a diatribe against money printing and made predictions of hyperinflation. Now itís ok to speculate about that, and allocate 5% of your money to protect yourself, but any more than that and youíre grossly overestimating your likelihood of being right.

Please NB that apart from reading the above letter I know practically nothing about Ned so I may be well off the mark.

Rod

  • Full Member
  • ***
  • Posts: 129
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #278 on: July 11, 2018, 12:18:04 PM »
My only thought on the Ned issue is that having ploughed my way through the only letter of his that I read (2014 maybe) I thought it was the most arrogant load of twaddle I’d ever read. Expecting people to read 100 pages of your output is bad enough. But it was a diatribe against money printing and made predictions of hyperinflation. Now it’s ok to speculate about that, and allocate 5% of your money to protect yourself, but any more than that and you’re grossly overestimating your likelihood of being right.

Please NB that apart from reading the above letter I know practically nothing about Ned so I may be well off the mark.

I think Ned's letters got more grandiose as time went by. But to be fair, I don't think he ever made any risky bets on extreme scenarios through Dundee. The investments seem to have been made more to benefit from a tail wind of inflation in areas such as real estate and natural resources. The various investments that were made strike me as what you might get if you gave a teenager $1 Billion and asked him to buy some "stuff" he thought would be good. The theme seems to be "investing is easy".

It's hard to understand why Dundee thought that they were the right ones to launch an organic food brand (Blue Goose), or invest in oil exploration in Chad. Why did they buy into Union Group when they can't even verify what the company owns anymore? Dundee 360 has never seemed more than a shell that they were writing down almost immediately after buying it. And Parq Vancouver, which could be successful, is a real estate development, something I don't think Dundee has any experience in.

Dundee's past successes have been in wealth management and mining. I don't think it's a coincidence that these are the two areas that David and Jonathan Goodman have been focusing the company's future on. At the very least it shows a return to sensible capital allocation.

The only notable success in recent years has been the growth and spinoff of Dream Unlimited. When you include the value of that company Dundee's results improve from awful to merely bad.
« Last Edit: July 11, 2018, 12:27:22 PM by Rod »

Rod

  • Full Member
  • ***
  • Posts: 129
Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #279 on: July 11, 2018, 01:11:02 PM »
I feel like the next quarter (post portfolio review) is key; the stock could drift a lot lower with no action or explode on positive action. Personally I'd:
a) sell everything not listed below and buy back liabilities cheap;
b) mature DPM and Parq and sell those (18 month timeframe)
c) focus on maximising option value at DST and United
d) Use the "new" securities business to find new options.

Until I see a plan I can't decide whether to get more excited as the price comes down, or not.

I would like to see them sell off everything outside of mining and wealth management. Those are the two areas where the Goodmans have expertise and past success. With the money raised they could first redeem the E prefs then launch significant and ongoing buybacks of the B and D prefs as well as the common. Then gradually move into making new investments in the mining sector as well as expand related asset management.