Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 137496 times)

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #30 on: April 01, 2016, 09:32:32 AM »
No kidding - share price went from $13 to about $5.

"Last year was a challenging one for our company. Nevertheless, we have taken steps to improve liquidity, lower our costs and develop our wealth management business," said David Goodman, Chief Executive Officer of the Corporation.

Still they are estimating that year end value of the Company's assets are over $15 - not bad for a stock trading at only $6. Assuming one believes their valuation methodology...

The Corporation is reporting a marked-to-market value per share of approximately $15.45 at December 31, 2015, reflective of the underlying trading prices of its portfolio of securities, and after changes in the carried value of its investment in United Hydrocarbon.

http://finance.yahoo.com/news/dundee-corporation-reports-2015-fourth-231334407.html

Still believe the preferreds are the best way to play Dundee Corp.


sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #31 on: April 14, 2016, 07:01:57 PM »
From Seeking Alpha. Interesting comment from Safety...

http://seekingalpha.com/article/3965298-therapy-focus-private-companies-alzheimers-spotlight#comment-72020750

Safety in Numbers, Contributor

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Thanks for this article. I have a position in Dundee Corp ($DDEJF) common (DC.A:TSX) and preferred (DC.PR.D:TSX) and it offers interesting exposure to TauRx as they own a 4% position in the company which they valued at C$78m at year end or C$1.34 out of a stated C$15.45 NAV and a ~C$6.03 share price.

There has been some press suggesting an IPO of TauRX on the back of good data at values that are multiples of the current implied valuation on Dundee's balance sheet (i.e. more than the current market cap or EV of Dundee!). All this liquidity might do wonders for the market's perception of Dundee and not only increase the NAV significantly but also reduce the discount to NAV it trades at resulting in huge upside.

For example, this article in the WSJ (http://on.wsj.com/1qWK97o) speculates on a US$15bn IPO for TauRX which would be worth about ~C$13 to Dundee. This would take its stated NAV to about C$27 and perhaps a more traditional NAV discount of 30-40% would take the share price to somewhere between~C$16-19 vs the C$6.03 now.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #32 on: April 14, 2016, 09:43:15 PM »
Thanks for posting my SA comment Sculpin. I didn't know this thread existed until just now.

I own way more of the preferred (DC.PR.D) than the common as I too think it's a safer way to play Dundee in general but the catalyst is pretty compelling so I added some common since January.

I think that if this catalyst comes through we'll see some sort of tender offer for the preferred with the additional liquidity. I had a chance to chat with the CEO in January and came away thinking if the management team had its way they would prefer not to have the preferred or any debt left at the holding company. Obviously, this was my view so maybe he was just agreeing with me to make me go away!
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sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #33 on: April 15, 2016, 08:22:31 AM »
I have about an equal weighting in both the 5yr reset and the T-Bill floater. Surprised the yields are as high as they are with the amount of assets underlying Dundee and such a small amount of debt ahead of us in the capital structure. A monetization like you speak of in Taurx would lay any financial distress worries to rest and should see the DC prefs trade at much lower yields. How low? Perhaps 6% - this would imply a $23 price on the DC.PR.B (currently $13.50) and about $19 on the DC.PR.D (currently $12). These would be enormous capital gains to go with the healthy dividend income.

I like the fact that I will get the $1.42 annually (about 10.5% preferred dividend yield at $13.50) from the DC.PR.B until it resets in September 2019 - hopefully the 5 year bond yield is higher by then.

Dundee Securities Series 2 (DC.PR.B)      $1.422         30 Sep 19   5YR + 4.1%

I like the floater as the current yield is quite high for this type of security and it gives nice protection from a pick up in interest rates at the short end of the curve. It is currently yielding about 9.5% at $12.

Dundee Securities Series 3 (DC.PR.D)      $1.14         Floating   90Day + 4.1%

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #34 on: April 15, 2016, 05:52:25 PM »
I agree on the yields and think the Canaccord pref are in the same boat and their balance sheet is mostly cash that exceeds the preferred outstanding at par!

I'm sure you know this sculpin but for the benefit of the thread, I believe the DC.PR.D are better than the DC.PR.B if your holding period is to the reset date of September 2019 (or longer) as the issues are interconvertible at every reset date. If you factor in the capital gains on the D's (all else being equal) you get an overall return that exceeds the B's by a couple percent and its a little more tax efficient.
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sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #35 on: May 16, 2016, 12:18:02 PM »
NAV holding well & should get help from commodity rebound. From GMP....

Dundee Corporation1 BUY
DC.A-TSX

 Last:C$6.10

May 16, 2016

Target: C$12.00

Q1/16 – NAV slightly lower

Our Q1/16 undiscounted NAV/sh. is $15.29 (previously $15.77). Our NAV was
slightly lower q/q as gains in publicly traded investments were more than
offset by lower cash at the corporate level and a small decline in the carrying
value of United Hydrocarbon, which we believe may have been FX related.
The discount to NAV remains wide at ~60%. We believe that some investors
may be continuing to apply deep discounts to certain private investments.

Key updates on private investments

United Hydrocarbon (UHIC), a privately held oil and gas development and
production company focused on the Republic of Chad, suspended drilling
operations in early 2015 due to lower oil prices. Per DC.A management, UHIC
requires ~US$1 million/monthly to maintain existing properties. Management
continues to pursue a joint venture partner to restart operations when oil
prices become more favourable.

TauRX Pharmaceuticals is a privately held neuroscience company focused on
the development of drugs for Alzheimer’s disease. We continue to take a
cautious approach as we await results from phase III clinical trials. We expect
trial results to be available in Q3/16.

We believe management is using Goodman & Company, Investment Council
Inc. as a platform to build out a wealth management business. In our view,
good progress was made during the quarter, with AUM increasing to $187
million from $88 million last quarter. On the call, management noted they are
pursuing acquisitions to add immediate scale. Both AUM and distribution
acquisitions are being considered. We believe a larger deal may result in the
business being carved out into a publicly traded vehicle. As a reminder, DC.A
completed the sale of substantially all assets of Dundee Goodman Private
Wealth subsequent to the end of the quarter. Management anticipates that
deal will free up ~$40 million in liquidity, much of which will be re-allocated
to support growing the wealth management business.
Maintain BUY – NAV discount remains wide

Our undiscounted NAV is $15.29 (previously $15.77). We apply a 20%
discount to yield our price target of $12.00 (unchanged). Shares remain well
below even our most conservative NAV estimates (see figure 1 on page 3).
We maintain our BUY rating.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #36 on: June 03, 2016, 11:42:08 AM »
Good size move today, up 12.5%, ahead of the AGM on Monday afternoon.

Is anyone attending?
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gr33ngi4nt

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #37 on: June 03, 2016, 11:57:52 AM »
A really big move... can't find any news that would explain it. Are we expecting something at the AGM? Thanks in advance.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #38 on: June 03, 2016, 12:12:06 PM »
I don't think so.

I'm sure they will highlight the NAV north of $15 and of course they have a decent amount of gold and oil investments which have rallied in the past few months and weren't really reflected in the stock price.

I have also heard that TauRX will put out its phase III results on July 27 in Toronto during the Alzheimer's conference being held that week.

If you missed it or are taking profits on DC.A you might want to buy the preferred, DC.PR.D instead. Big yield and a chance for credit spread to decline as NAV discount closes.
« Last Edit: June 03, 2016, 12:19:55 PM by SafetyinNumbers »
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SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #39 on: July 14, 2016, 11:49:24 AM »
I decided to get exposure to this TauRx catalyst on July 27 by buying the August 9 calls.

I'm not much of an option buyer as usually I have no idea when the market will begin to appreciate the value that I see. However, with this being a potentially giant under the radar catalyst, I figured the downside in the equity on a negative result might be bigger than the premium paid.

I continue to own the Class D prefs as well.

Anyone else involved?

 
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