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General Category => General Discussion => Topic started by: sculpin on December 15, 2015, 03:57:11 PM

Title: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 15, 2015, 03:57:11 PM
Anyone want to admit to owning any heavily discounted resource focused conglomerates?

Well Dundee Capital (TSX - DC.A) is certainly one as is the once highly regarded Sprott Resource Corp (latest NAV $1.41, SCP mkt price $0.45) which traded at $5.75 back in 2011 when Eric Sprott's rantings on gold & financial cataclysm were more in vogue.

For those who believe there is upside in oil, ag and gold these 2 publicly traded vehicles could offer a highly leveraged vehicle to this rebound yet with a substantial margin of safety built in due to their massive discounts to recent net asset values.

According to GMP (see below) Dundee Capital has a net asset value of $16.02 as of last quarter yet trades on the TSX currently for a meager $4.90 heavily discounted Canuck bucks. This is about 30% of its calculated NAV.

As Broadview Capital writes in their latest November portfolio update...

A brutal year for smaller-cap Canadian stocks appears to be culminating in one last horrific tire-fire of a
sell-off. The confluence of tax loss selling, commodities hitting new lows and the disappearance of
liquidity has created a “no bid” environment for huge swaths of the market.


It is at this point that one must consider the trade-off between volatility and absolute return.
In plain English, this consideration is expressed as “are you willing to watch as your portfolio falls, perhaps
significantly, if you are confident it will ultimately regain those losses, and more?” As such an example,
we have been watching the equity of Dundee Corporation (DC.a:TSX)2 over the past few months. We
have seen it plummet from the mid-teens a year ago to under $8 two months ago. At that point, it
looked interesting given the potential value of the underlying assets. It’s now under $5. It may
ultimately prove to have been a great deal at $8, but certainly not a better deal than at $5 (or maybe at
$3).


Follows is the GMP note on Dundee following the Q3 release....

Dundee Corporation BUY
DC.A-TSX

November 16, 2015

Q3/15 - UHIC impairment lowers NAV

Undiscounted NAV of $16.02

As of Q3/15, our undiscounted NAV is $16.02 (previously $19.55). The decline
was due predominantly to an asset impairment at United Hydrocarbon
International Corp. (“UHIC”) that reduced the carrying value of the
investment. The carrying value of the investment in Pan African Minerals also
declined materially. Despite our reduced NAV, the discount remains wide, at
~54%. In addition to ongoing uncertainty around UHIC and Pan African, we
also believe the market continues to be cautious on a few of the other
material holding including Blue Goose Capital, Union Group International and
Dundee Securities.

UHIC remains the largest individual investment in the portfolio at $227
million or $3.87/share (previously $5.79/share). During the quarter, UHIC
recorded an impairment on its resource properties of $215 million, to reflect
the recoverable amount. As a reminder, UHIC temporarily suspended
operation in Q1/15 in response to pressure on global oil prices. We continue
to believe that some recovery on the investment is likely, although timing
remain uncertain.

Maintain BUY – Outlook still positive, optional upside remains

The UHIC impairment does not change our positive outlook for DC.A overall.
We believe this had been priced into the stock. In our view, the current share
price may still allow investors to participate in the upside of certain private
investments. We believe the investment portfolio remains diversified and
strategic and we continue to see potential for value through real estate
investments and new product initiatives such as the SPAC.

We continue to use DC.A’s carrying values of investments for our
undiscounted NAV. However, we have quantified downside risk for the NAV
by applying various discounts to the portfolio depending on the risk profile of
the investments. Our most conservative calculation, which excludes all
private resource sector investments, still results in shares trading at a ~10%
discount to NAV.

Our undiscounted NAV is $16.02 (previously $19.55). We apply a 20%
discount to yield our price target of $13.00 (previously $16.00). Shares
continue to trade below our most conservative NAV estimates. We maintain
our BUY recommendation.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: scorpioncapital on December 15, 2015, 04:39:38 PM
Add Canacord Genuity (CF) to the list. An investment bank trading at tangible book value. Usually a good price if their commodity focused client list picks up.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: intothebreach on December 15, 2015, 07:41:12 PM
I've also been long Dundee since it got chopped to half book. In addition to its vast collection of resources assets, I also view it as having an option in launching a new financial offering since Goodman's non-compete is now over, which he took the time to mention in the latest AR (if memory serves). Been wrong or early so far, slowly adding more.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on December 15, 2015, 07:58:31 PM
What about the preferred? Dundee series 3 is trading at 40% of par.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on December 16, 2015, 12:51:47 AM
Sculpin did you mean to spell it Dumbdee?!   I like it!

I did some work on this a year ago (reading the annual letter was purgatory - some serious hubris there) and am now very interested.   The problem is I found it impossible to value many of the underlying assets so you're rather reliant on accounting/cost basis being accurate.   Thoughts?

P
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 16, 2015, 07:00:15 AM
Add Canacord Genuity (CF) to the list. An investment bank trading at tangible book value. Usually a good price if their commodity focused client list picks up.

Canaccord also has a rate reset preferred share that is currently trading at $13.00 (with a par value of $25). It is currently yielding over 11% based on its current dividend of $1.44. However this  preferred resets on June 30th 2017 at the Canada 5yr bond rate plus 4.03% which given the current 5yr rate would mean a drop in the dividend to around the $1.20/annum area. Still a pretty good dividend amount if you believe in Canaccord. As well, if CF is taken over by a larger entity these prefs could rerate to a lower dividend yield or be paid off at $25. The symbol on  them is CF.PR.C on TSX.

Series C preferred shares:

YIELD: Canaccord Genuity Group (formerly Canaccord Financial) Series C preferred shares pay fixed, cumulative, preferential cash dividends payable quarterly, yielding 5.75% annually for the initial period ending June 30, 2017 ("Initial Fixed Rate Period")*
RATING: DBRS has assigned the Series C preferred shares a rating of PFD-3 (low with a negative trend).
CONVERSION DATE: After the initial period ending June 30, 2017, the dividend rate will be reset every five years at the rate equal to the 5-year Government of Canada bond yield plus 4.03%.
CONVERSION OPTION: On September 30, 2017 and on every September 30th every five years after, holders of Series C preferred shares will have the right, at their option, to convert any or all of their shares into an equal number of Cumulative Floating Rate First Preferred Series D shares.
 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Nelson on December 16, 2015, 07:43:03 AM
I've been long this one since about $11. I averaged down at $8 and then I bought the Series 3 (DC.PR.D) preferreds. Overall, it's a relatively large position, about 5% of my portfolio.

I view it as a typical Ben Graham cigar butt, especially at today's price. I'm getting energy and mining assets which are already beaten-up for 30 cents on the dollar. Even if the valuation is aggressive, the margin of safety here is huge.

Intothebreach mentioned one potential catalyst, which is the company getting back into the wealth management business again in a big way. The other is its real estate division. They have joint ventures to develop a casino on Vancouver's waterfront, along with resorts in Cuba and a big development surrounding the new Olympic site in South Korea. Remember, these guys have history in creating value in real estate through Dundee REIT which was eventually spun off into the Dream family of REITs.

Francis Chou owns a bunch of Dundee too, and at higher prices as well. I'm content to hold and collect my ~10% dividend on the preferred. I see a very small chance the whole company goes to zero.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 16, 2015, 07:57:40 AM
What about the preferred? Dundee series 3 is trading at 40% of par.

Yes the DC.PR.D is a floater yielding 90 day Tbill plus 4.1% trading at $9.60 and currently paying out $1.14 so yield is about 12%. With the amount of assets backing the Company and relatively low level of debt this should be an excellent current yield play and spectacular if you ever believe that short term interest rates will ever rise again.

The DC.PR.B is a rate reset preferred which resets at the 5 year bond plus 4.1% on 30 Sep 2019 so there is about 4 years at the current dividend level of $1.42 yielding about 11 % at the current trading price of $13. Another great opportunity if you ask me.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 16, 2015, 12:46:17 PM
I've been long this one since about $11. I averaged down at $8 and then I bought the Series 3 (DC.PR.D) preferreds. Overall, it's a relatively large position, about 5% of my portfolio.

I view it as a typical Ben Graham cigar butt, especially at today's price. I'm getting energy and mining assets which are already beaten-up for 30 cents on the dollar. Even if the valuation is aggressive, the margin of safety here is huge.

Intothebreach mentioned one potential catalyst, which is the company getting back into the wealth management business again in a big way. The other is its real estate division. They have joint ventures to develop a casino on Vancouver's waterfront, along with resorts in Cuba and a big development surrounding the new Olympic site in South Korea. Remember, these guys have history in creating value in real estate through Dundee REIT which was eventually spun off into the Dream family of REITs.

Francis Chou owns a bunch of Dundee too, and at higher prices as well. I'm content to hold and collect my ~10% dividend on the preferred. I see a very small chance the whole company goes to zero.

In my opinion, Dundee should be the poster child for the abolition of dual class share structures. Take a look at the latest management information circular & note carefully the substantial amounts paid to directors & management to put together such a complicated & poorly performing menagerie of assets. No way would this be trading at 25% of a already much reduced net asset value if there were no multi voting shares....
http://dundeecorp.com/pdf/2015-DC-Circular-FINAL.pdf

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Nelson on December 17, 2015, 09:21:03 AM
I've been long this one since about $11. I averaged down at $8 and then I bought the Series 3 (DC.PR.D) preferreds. Overall, it's a relatively large position, about 5% of my portfolio.

I view it as a typical Ben Graham cigar butt, especially at today's price. I'm getting energy and mining assets which are already beaten-up for 30 cents on the dollar. Even if the valuation is aggressive, the margin of safety here is huge.

Intothebreach mentioned one potential catalyst, which is the company getting back into the wealth management business again in a big way. The other is its real estate division. They have joint ventures to develop a casino on Vancouver's waterfront, along with resorts in Cuba and a big development surrounding the new Olympic site in South Korea. Remember, these guys have history in creating value in real estate through Dundee REIT which was eventually spun off into the Dream family of REITs.

Francis Chou owns a bunch of Dundee too, and at higher prices as well. I'm content to hold and collect my ~10% dividend on the preferred. I see a very small chance the whole company goes to zero.

In my opinion, Dundee should be the poster child for the abolition of dual class share structures. Take a look at the latest management information circular & note carefully the substantial amounts paid to directors & management to put together such a complicated & poorly performing menagerie of assets. No way would this be trading at 25% of a already much reduced net asset value if there were no multi voting shares....
http://dundeecorp.com/pdf/2015-DC-Circular-FINAL.pdf



Yeah, I'll admit there are issues there. There are a whole bunch of issues. The latest is the deal with the Series 4 preferred shares. Potato wrote about it here http://www.holypotato.net/?p=1392 but here's the gist of it.

There was a maturity coming up in June, 2016 for the Series 4 prefs. Management pretty much scoffed at it and all but told investors they'd be converting them to a new series of prefs that doesn't come due until 2019. Not only that, but it turns out once you convert to the new Series 5 preferred you'll forfeit any fractional shares you might have gotten from the conversion. I guess they kind of make up for that with a consent fee ($11 for every 100 shares I believe, might be wrong), but still. The whole thing smells a little.

Getting back to the common, the fact is you're not picking up assets at 30% of NAV if there aren't some problems. I thought 50% below NAV was a nice discount and then oil blew up. If it wasn't already a big position I'd pick up more, but I tend to get into trouble when I average down more than once.

As for the dual voting shares, I agree there are issues when a controlling family can basically do whatever they want. There's no way an activist investor is going to go in and shake things up. If they can't threaten to get the votes to change things, they have no power. But at the same time, the Goodman family owns 11 million out of the 58 million outstanding shares. Ned owns 6 million and the 4 boys own 5 million. Only 3.something million are the multiple voting shares. These guys want the share price to go up just as much as I do.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 22, 2015, 08:54:52 AM
The opportunity in certain Dumbdee rate reset preferred shares seems highly compelling. The distasteful goings on with the Pref C shares along with the drop in the market price of the common has people liquidating their positions in 2 classes of DC preferreds either in fear or to take advantage of tax losses by the 24th of December in Canada.

Dundee Preferred Series 2 - DC.PR.B - this is a 5 year rate reset at 4.1% above the Canada 5 year bond. Next rate reset is 30 Sep 2019 so a little under 4 years. Current dividend is $1.422 and the prefs are now trading at $11. So the current dividend yield until September 2019 is 13% and the par value of the shares is $25.

Dundee Preferred Series 3 - DC.PR.D - this is a floating rate pref  based on the 90 day Tbill plus 4.1%. Current dividend is $1.14 and with the shares now trading at $8.00 the yield on the floater is currently 14.25%. This series gives nice participation for those who believe interest rates will rise one day. As with the previous pref, the par value on these shares is $25. At $8 on the DC.PR.D, a potential $17 per share capital gain is a possibility given the potential for:

1. increase in confidence in the business operations and value in Dundee's portfolio
2. change in sentiment towards increased short term interest rates in Canada
3. a potential takeover or privatization of Dundee with these preferreds being redeemed at $25 par.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rasputin on December 22, 2015, 11:48:11 AM
Thanks for the preferred shares info.

I have been looking into Dundee mainly because my relative invested in TauRx (methylene blue for Alzheimer), one of Dundee's investment. 

I think a lot of the NAVs are zeroes (o&g reserves in Chad seriously?), and it's a collection of crappy asset (Dundee securities results vs Merrill lol) so I haven't pulled the trigger.  I get about $5.5 in NAV valuing their publicly traded securities + Dundee securities and 360 real estate at book value minus their corporate and dundee energy debt, zeroing everything else.

However the preferred look very interesting, I bought some series 3 shares today. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: intothebreach on December 23, 2015, 01:19:23 PM
sculpin, thanks for the info on the preferred. Just bought some Series 3.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: BG2008 on December 23, 2015, 10:42:08 PM
Sculpin,

I've been eyeing this a bit.  Yes, there's a large discount to NAV.  But if you look at the NAV, there's embedded leverage behind the NAV.  It's a bit easier with the publicly traded positions.  The private companies are very hard to figure out.  I don't think I've seen a company destroy so much value.  It seems like everything that they touch turned into a turd. 

With regard to the Canadian resets, I also don't think that $25 par is the right price.  Many of the rate reset prefers trades substantially below $25 after the reset.  Although, larger spreads +4% helps a lot. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on December 24, 2015, 07:01:09 AM
When a company is mostly investing in commodity related businesses, then its results will look ugly during the down cycle. However, from everything I have read, even if you are to make drastic cuts to their holdings and going as far as using $0 for many, the share price is still trading below NAV.

Now we are talking preferred's. So if there is any indication of value left for common shareholders then the preferred's should be trending to par over the long term. The company is obligated to continue paying the dividend at the agreed rate forever. The only way for them to stop that is to buy it back at par, make a sweat offer to holders but, at less than par or to buy them back on the stock market.

Regarding the debacle that has happened to preferred's in Canada this year, a lot of that is based on fear. Fear that interest rates will go lower and forever... And even that logic is stupid. If you take a look at a large list of these, the vast majority were trading between $20 and $25 just 9 months ago. So I suppose that back then, and during the prior years, that the dividend yield obtained by investors on these instruments was considered sufficient and attractive enough vs the risk and other income avenues out there?

Let me give an example: BCE.PR.H. This floater pays a dividend based on the Canadian Prime Rate fixed by banks. It is at 2.7% currently. So that is the privilege rate that your bank will lend money to you. The lowest rate you can obtain without offering a guarantee such as a home. If you turn around and ask them how much they will give you in interest for your funds without any holding period, it will be in the 0.5% range. So this instrument gives you the same as they charge you as income but, taxed much lower than regular interest.

The Bank of Canada has cut twice its rate this year by 0.25% each time. The banks did not fully follow and have cut their Prime Rate by 0.15% each time. The Bank of Canada rate is now 0.5%, so if they cut it to 0% and banks continue their pattern of cutting only by 0.15%, then the absolute low for the bank prime rate is 2.4%. And since banks in the past were cutting by the same percentage as the Bank of Canada (I think it was the first time ever that they didn't), will they follow at all or just cut by 0.10% next time?

Based on par of $25, that 2.4% would mean an annual distribution of $0.60. The thing trades at $13.20 for a yield of 4.55% based on that distribution. However, based on the current 2.7%, the distribution is $0.675 for a yield of 5.11%.

Where can you get that kind of income or the equivalent in interest of 7%+ after tax with near zero risk of default and with full participation or protection in any increase in interest rates?

I mean, even if you believe that interest rates will remain as is for the foreseeable future, isn't this yield way too high vs what you can get from a GIC, treasury bond or other income instrument? And in these you are locked in. Either you will lose value on any increase in interest rates or be forced to hold to maturity.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rasputin on December 31, 2015, 08:53:31 AM
News about TauRX.  Next year will be interesting.  If that $15 billion valuation hold, Dundee will make 10 times their investment. 

http://www.wsj.com/articles/singapore-developer-of-alzheimers-drug-plans-u-s-ipo-1451543494
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 31, 2015, 09:15:09 AM
News about TauRX.  Next year will be interesting.  If that $15 billion valuation hold, Dundee will make 10 times their investment. 

http://www.wsj.com/articles/singapore-developer-of-alzheimers-drug-plans-u-s-ipo-1451543494

Dundee has put in $30 million US?

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rasputin on December 31, 2015, 09:47:31 AM
yeah i think they invested $30.5 million for 1.015 million shares.  Book value was CAD 68 million as of 9/30/2015. 

There is about 23.5 million Taurx shares outstanding after latest round of financing.  Latest round of financing was at $60 per share. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on January 01, 2016, 12:02:32 PM
yeah i think they invested $30.5 million for 1.015 million shares.  Book value was CAD 68 million as of 9/30/2015. 

There is about 23.5 million Taurx shares outstanding after latest round of financing.  Latest round of financing was at $60 per share.

If they can monetize this sometime in the next year than this will solve any of their liquidity problems.

The owners of TauRx Pharmaceuticals Ltd., which counts Singapore state investment company Temasek and Southeast Asia’s largest casino operator, Genting, as investors, are looking at listing on the Nasdaq Stock Market as early as 2017 in a deal that could value the company at about $15 billion, according to people familiar with the matter.

An IPO would provide an avenue for shareholders to exit their investment in TauRx. The firm has raised $350 million to date from the likes of Temasek, the Development Bank of Singapore and the Dundee Corp. of Canada, according to its official website. Genting, a Malaysian casino-to-plantations conglomerate, is the largest shareholder with a total exposure of $120 million.


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on January 07, 2016, 12:48:17 PM
The opportunity in certain Dumbdee rate reset preferred shares seems highly compelling. The distasteful goings on with the Pref C shares along with the drop in the market price of the common has people liquidating their positions in 2 classes of DC preferreds either in fear or to take advantage of tax losses by the 24th of December in Canada.

Dundee Preferred Series 2 - DC.PR.B - this is a 5 year rate reset at 4.1% above the Canada 5 year bond. Next rate reset is 30 Sep 2019 so a little under 4 years. Current dividend is $1.422 and the prefs are now trading at $11. So the current dividend yield until September 2019 is 13% and the par value of the shares is $25.

Dundee Preferred Series 3 - DC.PR.D - this is a floating rate pref  based on the 90 day Tbill plus 4.1%. Current dividend is $1.14 and with the shares now trading at $8.00 the yield on the floater is currently 14.25%. This series gives nice participation for those who believe interest rates will rise one day. As with the previous pref, the par value on these shares is $25. At $8 on the DC.PR.D, a potential $17 per share capital gain is a possibility given the potential for:

1. increase in confidence in the business operations and value in Dundee's portfolio
2. change in sentiment towards increased short term interest rates in Canada
3. a potential takeover or privatization of Dundee with these preferreds being redeemed at $25 par.

Excellent YTD return on both of these preferreds with the DC.PR.B up 14.8% and the DC.PR.D up 16.6%. This is especially impressive given that the BMO LADDERED PREF SHARE IDX ETF is down 7.3% since the beginning of the year. Both these preferreds have further to run given how badly they fell due to tax loss & grudge selling in 2015. Any return to some positive sentiment in the overall Canadian preferred share market would definitely help as well.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: intothebreach on January 07, 2016, 03:19:00 PM
Excellent YTD return on both of these preferreds with the DC.PR.B up 14.8% and the DC.PR.D up 16.6%.

Sculpin, thanks again for pointing us out toward Dundee's preferred shares. I bought in big time, and it's fun to have something going up when pretty much everything is begin dragged with the market.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: tinhb on January 07, 2016, 06:09:32 PM
Hi sculpin, thank you for your posts. I'm just curious about your return last year since your stock picks have performed very well. If it's ok with you, can you tell us about your last year return and how do you normally size your bets on cases like Dundee?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on January 08, 2016, 07:28:27 AM
Hi sculpin, thank you for your posts. I'm just curious about your return last year since your stock picks have performed very well. If it's ok with you, can you tell us about your last year return and how do you normally size your bets on cases like Dundee?

Not a great return in 2015. Only 1.4% - too much energy holdings. Perhaps 2016 will be better with an eventual turnaround in oil and natural gas prices looking to happen sometime this year. I have no set % size allocations. I tend to accumulate positions as they drop and reduce them as they begin to get expensive - the opposite of what most traders will tell you.

I see the Series 4 preferred holders persistence has paid off.....

The Financial Post reports in its Friday, Jan. 8, edition that holders of Dundee's Series 4 preferred shares, who responded negatively to an initial proposal, have emerged victorious. The Post's Barry Critchley writes that the pref holders won because Dundee listened and changed a plan that seemed destined to be shot down at a meeting originally scheduled for Jan. 7. Put it down as a victory for shareholders and common sense, a victory reflected by the market's reaction: the prefs shares rose by 15 per cent Thursday on the news. Chief executive officer David Goodman says, "We have consulted and we responded with what we think is a win-win solution." However, the outcome -- offering better terms to the holders of the outstanding $107.04 million prefs -- raises an obvious question. How out of touch were those involved with the original proposal that seemed, through consent payments, to consider the interests of the investment advisers more than the interests of the owners of the securities. Originally, Dundee said it had received "substantial support" from representatives of "significant" holders of the prefs. Dundee's new proposal will be voted on at a Jan. 28 meeting.

http://business.financialpost.com/news/fp-street/dundee-corp-listened-and-responded-with-better-proposal-on-amending-its-preferred-shares

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on January 08, 2016, 10:23:34 PM
I am long the series 4.  Got pretty lucky with the timing.  I actually bought @$17.xx before they announced the amendment proposal, thought it was shitty but was able to sell at breakeven.  Later, the market agreed with me on the shittiness of the deal and the price dropped drastically.  I decided to buy again in mid-Dec at $14 and on the EOD the price fell to $13 (ouch).  However, at $14 I figured the YTM is 14%+ which is even higher than their perpetual issues.  Beats me why I didn't buy a lot more than I did.

Anyways, enough bragging (rest of my portfolio went down the drain today).  Here's a pretty good blog on pref shares and this article discusses the amended proposal.  The author still recommends to vote NO.

http://prefblog.com/?p=31896
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on January 09, 2016, 04:43:11 AM
http://www.cnbc.com/2016/01/08/scientists-hail-breakthrough-in-alzheimers-research.html

Is this research good news for TauRx?

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on January 15, 2016, 09:50:59 PM
A favourable mention for the Dundee pref's in Broadview's annual shareholder letter....

http://www.broadviewcapital.ca/wp-content/uploads/December-2015.pdf

Positioning and New Ideas for 2016:

It is not for lack of trying that we have not materially increased our net exposure of late. We have growing stacks of new files on both our desks. Most definitely there will be wonderful opportunities to make money from recovering stock prices from amongst these piles.
In a previous letter we mentioned Dundee Corp (DC-A), as an example of the sort of things we were looking at as a way to wade into the stock market wreckage and pull out some treasure. So far we have not bought any stock in Dundee as we have been unable to gain confidence that the value of its book is meaningfully higher than the stock price. Admittedly, we are running it through the wringer using brutally conservative assumptions.

Our work on the company led us to its balance sheet. The majority of the company’s capital structure, apart from the equity, is preferred shares (or “prefs” as they’re commonly known). This is an asset class of which we have never fully understood the appeal. At the issue price, prefs are inferior to senior debt given the lack of covenants or defined maturity and inferior to equity as you get no real upside. For your trouble you get around 5% or 6% annual return. No thank you.

Now with Dundee’s preferred shares being cut in half, we completely understand the appeal. These things are great! We are now owners of all three series of Dundee preferred shares (DC.PR.B, DC.PR.C and DC.PR.D) with yields in the double-digits. While our draconian assumptions have left us undecided as to whether or not the equity of Dundee is a bargain, there is no objective scenario under which the prefs are impaired.

The management of Dundee (or more accurately the previous management) has destroyed a great deal of value through poor investments. We are confident that under its new CEO this era has come to an end and the company will cease pouring capital into far-flung resource ventures. In order for the value of the prefs to be called into question, Dundee would have to re-double its previous efforts at chasing a failed dream across the globe. It is our firm belief that this will not happen.

We mention this investment(s) to illustrate that a) we are actually doing something even while hidden under a pile of coats and b) investing can follow an unusual path. We started with Dundee’s equity and ended up with the preferred shares as that is where our research took us. Being objective, open- minded and free of investment constraints led us to what we believe will generate a very solid return for our investors. This is not dissimilar to our investments in the distressed convertible debenture space which continues to yield some very compelling opportunities. We think the flexibility we have, both by mandate and by mentality, is a major advantage particularly in more challenging markets.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Og on January 21, 2016, 11:17:34 AM
http://finance.yahoo.com/news/euro-pacific-canada-dundee-securities-133000261.html
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on February 15, 2016, 12:40:32 PM
Copy/paste from few slides from Broadview presentation at Toronto CFA 2016 Investment Symposium.

http://www.broadviewcapital.ca/contact-us/

Our base case assumption is that Dundee will deploy an additional $116m
into cash-burning investments and we capitalize corporate expenses at $100m
Net of these assumptions we derive ~$478m of asset value to cover $237m
par value of preference shares


Goodman Family, backed by any of their well-heeled partners or friends,
decide they’re done with the public market

 If anyone has a contrarian, super-bullish view on commodities or other “hard assets”
Dundee Corp would be as good a play as any
 Prefs face value of $25 comes into play.
 More than 100% upside on Series 2 and 3 Prefs

Conclusion

 Huge dislocation in small cap stocks and rate reset preferred share
market are causing investors to overlook the risk/reward proposition
 Current dividend yields between 8% and 13%
 Worst case implied IRRs of 10% to 13% plus warrant potential
 Base Case asset coverage 2.0x
 Potential to see upwards of 100% capital appreciation should Dundee
clean up its asset base and prefs trade to 8% yield (Series 2 and 3)
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on February 15, 2016, 12:49:57 PM
ACTIVIST OPPORTUNITY

I encourage all shareholders on this board to call Lucie Prescot, the CFO, and encourage her to buyback shares. She's very friendly towards shareholders and understands value investing. The more she hears from shareholders encouraging a buyback, the more likely they'll buyback or increase their buybacks this quarter if they are already doing so.

Phone: 416.350.3388

She returns calls promptly.

Dundee should be buying back their prefs at these prices (>half off sale). Oil & some of their holdings will most likely rebound strongly at some point in the not so distant future.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on February 26, 2016, 02:30:24 PM
Some monetization on the way:

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aDC-2349361&symbol=DC&region=C

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin 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

Comments (92) |Following |Send Message

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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers 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!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin 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%
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers 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?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gr33ngi4nt 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers 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?

 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 14, 2016, 12:20:33 PM
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?

Interesting - are you certain TauRX comes out on that date?

Rebound in golds should be helping NAV as well. Own some GMP preferreds as well based on the catalyst that they will sell RichardsonGMP for some good sized dollars.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bskptkl on July 14, 2016, 12:39:09 PM
http://taurx.com/clinical-trials/
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 14, 2016, 12:48:46 PM
Thanks bskptkl.

It's interesting how much press Genting is getting on this. They are a much bigger company with a bigger stake but its much more relevant to DC because of the relative size of the stake to market cap.

http://www.theedgemarkets.com/my/article/all-eyes-gentings-taurx-wager

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bskptkl on July 14, 2016, 01:10:09 PM
Thanks bskptkl.

It's interesting how much press Genting is getting on this. They are a much bigger company with a bigger stake but its much more relevant to DC because of the relative size of the stake to market cap.

http://www.theedgemarkets.com/my/article/all-eyes-gentings-taurx-wager
They're paying a pr hack for publicity methinks.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 14, 2016, 01:23:09 PM
Yeah maybe.

I don't know anything about Malaysian equity markets. I would assume $30bn market caps makes it one of the biggest companies there so maybe some big fish small pond effect.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bbarberayr on July 16, 2016, 06:14:10 PM
I personally don't trust Dundee ever since they did something back in around 2007 which showed me that their interest was in management compensation, not helping customers.

What happened is they had a gold fund which held share in multiple companies.  They then signed an agreement extending the management contract for several years.  A few months later they decided to sell the shares and buy an operating mine and become an operating company, which was fine, but they were also required to pay out the management contract of about $30 million dollars. 

I immediately sold and have never bought or invested with Dundee since.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 16, 2016, 07:13:21 PM
I personally don't trust Dundee ever since they did something back in around 2007 which showed me that their interest was in management compensation, not helping customers.

What happened is they had a gold fund which held share in multiple companies.  They then signed an agreement extending the management contract for several years.  A few months later they decided to sell the shares and buy an operating mine and become an operating company, which was fine, but they were also required to pay out the management contract of about $30 million dollars. 

I immediately sold and have never bought or invested with Dundee since.


Yes there are definitely some warts on this Toad but that is one of the reasons that a value investor can buy:

1.Fairly well backed preferred shares in a time of NIRP yielding >10% currently and 50% to 60% of par,
2. DC common trading between 30% and 60% of NAV over the last few months.

Management self interest may at some point align with all shareholders such that the purchase at these levels has paid off extremely well.


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 17, 2016, 05:39:57 AM
I personally don't trust Dundee ever since they did something back in around 2007 which showed me that their interest was in management compensation, not helping customers.

What happened is they had a gold fund which held share in multiple companies.  They then signed an agreement extending the management contract for several years.  A few months later they decided to sell the shares and buy an operating mine and become an operating company, which was fine, but they were also required to pay out the management contract of about $30 million dollars. 

I immediately sold and have never bought or invested with Dundee since.

I think that was the formation of DPM you are referring to back in 2004. I believe they did pay out the management contract in stock but it went to Dundee Corp the parent and not to the management directly (although they own a lot of Dundee Corp). That doesn't make it better if you were a DPM shareholder but an important distinction if you are investing in Dundee Corp.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 20, 2016, 03:56:18 AM
Apparently Dundee Acquisition is close to a deal. This could be worth 50 cents to NAV.

http://www.theglobeandmail.com/report-on-business/streetwise/closing-in-on-a-deal-to-break-spacs-silence/article30998140/

TAUrx catalyst is next week as well. Could be a big week!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 27, 2016, 06:24:22 AM
Dundee (TSX-DC.A):
·         Stock may trade down today.  They own about 5% of Taurx.  TauRx (private) has a Phase 3 Alzheimer's drug candidate (a new class in development) that missed its primary endpoint = failed trial
·         Should come as no surprise as 99% of Alzheimer's drugs in development have failed
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 28, 2016, 11:26:53 AM
How much did the DC management pay for their investment in TauRx? $72mm?

Diversification away from speculative energy & mining stocks with an even more speculative shot in the dark biotech investment....

http://qz.com/744399/a-new-drug-claims-to-be-the-first-to-halt-the-dementia-of-alzheimers-but-is-it-science-or-spin/

Time to sell everything and return the proceeds to shareholders?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: scorpioncapital on July 28, 2016, 01:15:36 PM
This company has two main problems, so simple and yet I wouldn't trust a management that can't figure out something so basic...

1. Don't go for long shots and try to avoid pharma.
2. Don't invest in commodities.
3. Don't use excessive leverage.

If they did just these 3 things, they could screw up a thousand times , they'd still be ahead of where they are now and I'd forgive any of their operational blunders.

Like Buffett says, Mental Models are 80% of the battle :)


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 28, 2016, 09:38:40 PM
I think Dundee invested about 31m US in total but they did it back when the CAD was more equal to the USD.

Its been marked up because because of some equity raises at higher valuations (IFRS).

This study was negative and there might be some upside still but there will likely be another money raising round at a down valuation study to fund a monotherapy trial. It's not a write off but its disappointing for sure.

There is another potential catalyst this year from an investment in Android Industries. They have it marked at about 2x EBITDA on the books so there is potential for upside of maybe $1/share to NAV. Its equity accounted for so there has been no mark up.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 04, 2016, 02:24:48 PM
I'm curious where your numbers for Android come from. If you are right that is a good catch!

From the 2015 AR, I see EBIT of US$24.7M, or about US$5M at Dundee's 20% share. Dundee is reporting their share of net earnings as $3.6M, but that includes a one-time dilution gain due to currency movement of $1.5M. So, on-going net earnings is $2.1M. Dundee carries Android at $28M, which seems reasonable given the earnings (pe ~ 14). Am I missing something here?

Speaking of equity accounting misvaluation, I think you can double the value of Paragon Holdings to $120M because the third partner bought in at a price that represents that value. This was highlighted in an interview David Goodman gave BNN summer 2015.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 22, 2016, 12:00:16 PM
Good old Dundee - buy high sell low. I wonder how long before they are writing off these latest acquisitions?


Earlier this year, Dundee jettisoned its retail wealth management arm, Dundee Goodman Private Wealth. The division, which had around $3.5-billion in AUA, was sold to Echelon Wealth Partners Inc. for $13.5-million, which represents a valuation of approximately 0.4 per cent of assets. If Dundee ends up buying a high-net-worth asset manager, it will likely pay a significantly higher valuation.


Globe says Dundee on the prowl for growth

Dundee Corp (C:DC)
Shares Issued 55,535,173
Last Close DC.A 8/19/2016 $6.16
Monday August 22 2016 - In the News
The Globe and Mail report in its Monday, Aug. 22, edition that Dundee is planning on moving from being a seller of wealth management assets to a buyer, with executives making it clear that acquisitions are in the cards. The Globe's Niall McGee writes that Dundee has ambitions of growing assets under administration (AUA) at Goodman & Co. Investment Counsel, its high-net-worth subsidiary, more than fivefold to $1-billion. Its current AUA is $176-million. Dundee chief executive officer David Goodman says, "To move the needle the way we want to move it, we think an acquisition is the best way to go." He says the firm is looking at doing "small tuck-in" acquisitions and "something more substantial." Dundee vice-president Richard McIntyre says the firm will not rush into a deal. He says finding the right assets that are a good fit is paramount. Mr. McIntyre says: "This is a bit of a numbers game where you have to go out there and do your due diligence and do your research, and dare I say do a bit of dating. If there's compatibility there, it takes two to tango." Portfolio Management director Norman Levine says Dundee's strategy to buy makes sense if its goal is to grow quickly


http://www.pressreader.com/canada/the-globe-and-mail-bc-edition/20160822/281814283277790
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 25, 2016, 02:14:46 PM
Transaction announced today for Dundee Acquisition. Looks like a good deal to me.  Dundee corp. will back in for 20% as the sponsor of the SPAC. This is worth about $20 million to Dundee or 33 cents per share.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on November 27, 2016, 10:05:38 AM
Guess they needed a quick $38 million however they did sell close to the 52 week low....

Dundee sells 6.1M Dream Unlimited shares

Dundee Corp (C:DC)
Shares Issued 55,535,423
Last Close DC.A 11/23/2016 $6.14
Thursday November 24 2016 - News Release

Mr. John Vincic reports

DUNDEE CORPORATION SELLS SHARES IN DREAM UNLIMITED CORP.

In accordance with regulatory requirements, Dundee Corp. has sold 6.1 million Class A subordinate voting shares of Dream Unlimited Corp. Dundee continues to hold 15,536,288 Class A shares of Dream representing an approximate 19.97-per-cent interest.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on November 27, 2016, 04:46:11 PM
Guess they needed a quick $38 million however they did sell close to the 52 week low....

Dundee sells 6.1M Dream Unlimited shares

Dundee Corp (C:DC)
Shares Issued 55,535,423
Last Close DC.A 11/23/2016 $6.14
Thursday November 24 2016 - News Release

Mr. John Vincic reports

DUNDEE CORPORATION SELLS SHARES IN DREAM UNLIMITED CORP.

In accordance with regulatory requirements, Dundee Corp. has sold 6.1 million Class A subordinate voting shares of Dream Unlimited Corp. Dundee continues to hold 15,536,288 Class A shares of Dream representing an approximate 19.97-per-cent interest.

Sculpin, Thanks for providing updates on this and other preferred share issuers.  I am an owner of the Dream Unlimited Preferred (DRM.PR.A) and own it for its cash-like characteristics (redeemable, higher up in the capital structure --> low risk).  I also own Dundee Series 5 which will be redeemable in 2.5 years for similar reasons.

With this sale of Dream by Dundee, do you see any signals from the company -- Is it 1) due to liquidity concern with Dundee or 2) risk ahead for Dream (e.g. RE bubble bursting)?  My view is that unless things got really bad, the preferred shares will still likely do ok given significant amount of common equity underneath the preferred shares for each company.



Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on November 27, 2016, 05:42:40 PM
They took it down just below 20%. Was it equity accounted?

I don't even want to look it up since their MD&A and financial statements give me a headache every time I look at them! And hard to find anything profitable in there.

They may have wanted to raise some cash since they are getting tight on their revolver with a recent reduction and they invested recently into that Blue Goose.

I still own DC.PR.B and DC.PR.D due to their great yield and with more than enough net assets to cover them.

Cardboard

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on December 01, 2016, 03:30:51 PM
They took it down just below 20%. Was it equity accounted?

I don't even want to look it up since their MD&A and financial statements give me a headache every time I look at them! And hard to find anything profitable in there.

They may have wanted to raise some cash since they are getting tight on their revolver with a recent reduction and they invested recently into that Blue Goose.

I still own DC.PR.B and DC.PR.D due to their great yield and with more than enough net assets to cover them.

Cardboard

The DRM shares are valued at market. Agree with you about the preferreds. I own the Ds. They are the better value since they can be converted into the Bs in 2.5 years. Not sure the market realizes that!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on December 08, 2016, 06:13:18 AM
If any of you is interested into obtaining a high yielding security with relatively low risk, the DC.PR.B have experienced a bizarre selloff in recent days or just before the ex-dividend date on the 14. Nothing comparable in DC.PR.D, DC.PR.E or DC.A.

It pays roughly 10.6% depending on what price you may get now with an annual distribution of $1.422. Considering that these are marginable at about the same rate as liquid stocks above $2, that is a very good spread to earn on borrowed money.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 13, 2016, 01:06:37 PM
GMP - only broker that covers this as far as I know.

Will the resource recovery lead to them once again growing NAV and seeing the big discount narrow over the next year? 

Dundee   BUY
DC.A-TSX   
Last:   C$6.03
Target:   C$11.00
 
Deep discount to NAV remains
 
We are exiting a period of research restriction on Dundee Corp. (DC.A-TSX) due to an advisory role. Our updated NAV, including Q3/16 results, is now $13.52 (previously $14.88). Our NAV is lower q/q due largely to market depreciation in publicly traded shares of DRM and DPM and a lower management reported carrying value of UHIC. Despite the decline, the discount to NAV remains wide at ~55%. We believe that some investors may be continuing to apply deep discounts to the private investments.

DREAM sale eases near-term liquidity concerns

At the corporate level, DC.A’s credit line was reduced from $250 million to $125 million as part of an agreement extending the facility to March 14, 2017. At the end of Q3/16, $94 million had been drawn against the facility leaving ~$31 million available. Cash at the corporate level was ~$11 million. Subsequent to the end of the quarter, management announced the sale of 6.1 million shares of DRM at a price of $6.25 per share. The transaction added ~$38.1 million to DC.A’s existing cash balance. In our view, the DRM sale has eased near-term liquidity concerns but we still believe the balance sheet may restrict management’s flexibility going forward. Further asset sales of the liquid public investments remain a possibility.

Maintain BUY – NAV discount remains wide

UHIC remains the largest NAV contribution. In August, UHIC completed a restructuring to emerge with an essentially debt free balance sheet and with sufficient working capital to pursue an immediate goal of attracting a joint venture partner. This process remains ongoing.

In the near term, DC.A’s SPAC has scheduled a Dec. 20 vote on its proposed qualifying transaction with CHC Student Housing Corp. We would view a successful vote favourably and calculate that it could add ~$0.30-$0.40 to our DC.A NAV. Currently, we do not include the SPAC in our NAV calculation.

Our undiscounted NAV is $13.52 (previously $14.88). We apply a 20% discount to yield our price target of $11.00 (previously $12.00). We maintain our BUY rating. Please see Figure 1 for our NAV sensitivity analysis.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on December 14, 2016, 03:28:48 PM
Anyone interested in following the construction of the Parq Vancouver development should go to this link:

http://skyscraperpage.com/forum/showthread.php?t=213941&page=25

Lots of up to date pictures. Opening is scheduled for September 2017.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on January 11, 2017, 08:26:27 AM
The destruction of shareholder value in this Dundee subsidiary company has been epic. From $1.50 per share in 2007 to the current $0.03 offer price. From a multi billion $ bungled Spanish offshore natural gas storage to natural gas under Lake Erie to windmills in Africa of all things. Not sure how much DC.A has ploughed into this but it has been substantial....

Dundee Energy to review LP's strategic options

2017-01-10 20:19 ET - News Release
Shares issued 188,268,994
DEN Close 2017-01-10 C$ 0.035

Mr. Bruce Sherley reports

DUNDEE ENERGY LIMITED ANNOUNCES INITIATION OF STRATEGIC REVIEW PROCESS FOR DUNDEE ENERGY LIMITED PARTNERSHIP

Dundee Energy Ltd.'s board of directors has determined to initiate a process to identify, examine and consider a range of strategic alternatives available with respect to enhancing the value of its investment in Dundee Energy LP (DELP).

Strategic alternatives may include, but are not limited to, a debt restructuring, a sale of all or a material portion of the assets of DELP, either in one transaction or in a series of transactions, the outright sale of DELP, or business combination or other transaction involving DELP and a third party, and/or alternative financing initiatives.

Dundee Energy has engaged Dundee Capital Partners, an unrelated entity, and CW Leigh Cassidy of Whitewater Inc. as its financial advisers to advise the corporation in connection with this comprehensive review and analysis of strategic alternatives in connection with the process.

Dundee Energy has not set a definitive schedule to complete its identification, examination and consideration of strategic alternatives with respect to DELP. Given the nature of the process, the corporation does not intend to provide updates until such time as the board of directors approves a definitive transaction or strategic alternative, or otherwise determines that further disclosure is advisable. Dundee Energy cautions that there are no guarantees that the review of strategic alternatives will result in a transaction, or if a transaction is undertaken, as to its terms or timing. The strategic alternatives review process has not been initiated as a result of receiving any transaction proposal.

As previously disclosed, DELP and its lenders have been in continuing discussions regarding the reduction of DELP's borrowings. As a result of these discussions, the terms of DELP's credit facility have been amended to require that DELP reduce borrowings under its operating facilities to $55.0-million by Jan. 13, 2017. This represents a reduction of approximately $3.0-million in borrowings under DELP's operating facilities as at Dec. 31, 2016.

About Dundee Energy

Dundee Energy is a Canadian-based oil and natural gas company with a mandate to create long-term value for its shareholders through the exploration, development, production and marketing of oil and natural gas, and through other high-impact energy projects. Dundee Energy holds interests, both directly and indirectly, in the largest accumulation of producing oil and gas assets in Ontario, and, through a preferred share investment, in certain exploration and evaluation programs for oil and natural gas offshore Tunisia.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on March 02, 2017, 10:12:10 AM
DC.A closing in once again on its 52 week low. One insider actively selling over the last 2 months....


Date   Transaction
Date   Insider Name   Ownership
Type   Securities   Nature of transaction   Volume or Value   Price
Feb 6/17   Feb 6/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -400   $5.40
Feb 6/17   Feb 2/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -1,800   $5.40
Feb 6/17   Feb 1/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -15,200   $5.40
Jan 31/17   Jan 30/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -300   $5.45
Jan 30/17   Jan 27/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -5,200   $5.45
Jan 30/17   Jan 25/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -8,900   $5.59
Jan 9/17   Jan 3/17   Goodman, Daniel   Indirect Ownership   Subordinate Voting Shares Class A   10 - Disposition in the public market   -1,500   $5.95
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on March 16, 2017, 09:35:04 AM
There is a very wide gap that has now formed in expected return between DC.PR.B and DC.PR.D.

I was pointing out in early December that the DC.PR.B had really sold off and were quite attractive in the $13.50 range with a yield of 10.5%. Now they have rallied around 25% since that time and the yield has dropped to 8.5%. However, the DC.PR.D have moved up by only about 13% since that point and now still yield 8.15% which is the highest floater that I know of.

What is interesting is that if you assume conversion into the "B"'s in September 2019, the dividend distribution from the "D"'s over a 5 year period plus the appreciation to catch up to the "B"'s represents an annual yield of 12.5%.

That is a very wide spread between fixed rate reset preferreds and floaters which on my screen vary from 0.5% to 1.9% using the same math.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on March 29, 2017, 09:52:11 PM
2016 results tomorrow...

Will be interested on how the clean up of their stable of troubled investments is progressing. Perhaps the rise in the price of oil - hopefully to $60+ by this Summer - may save some of the investment in United Hydrocarbons Intl. Hard to believe that Dundee had invested a total of more than $400mm in this highly speculative exploration junior in the heart of sub Sahara Africa in the country of Chad - this amounts to over $7 per share. For perspective the DC.A current market cap is $234 million at $4/share current price.

As at September 30, 2016, the Corporation’s carrying value of its 85% interest in UHIC was $189.5 million, and was net of an
impairment of $215.2 million recognized in the third quarter of the prior year. Additional information regarding UHIC may be
accessed at www.unitedhydrocarbon.com.




Dundee Corp. senior management will host a conference call on Friday, March 31, 2017, at 10 a.m. ET, to discuss the company's fourth quarter and year-end 2016 results.

Fourth quarter and year-end 2016 results conference call and webcast

Date:  Friday, March 31, 2017

Time:  10 a.m. ET

Webcast:  at the company's website

Live call:  1-888-231-8191 or 1-647-427-7450

Replay:  1-855-859-2056 or 1-416-849-0833

Replay passcode:  87507054

Dundee plans to issue a news release containing the fourth quarter and year-end 2016 results after market close on Thursday, March 30, 2017, and will also post it to the company's website. The conference call will be archived for replay until Friday, April 7, 2017, at midnight. An archive of the audio webcast will also be available at Dundee's website.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on March 30, 2017, 10:57:31 AM
No doubt that a lot of past mistakes have been made.

With year end financials, more write-offs on their investments is a possibility. However, even after assuming drastic further write-offs, the preferreds remain well protected IMO and a very attractive security out there especially the DC.PR.D.

As of September 30, they mentioned $14.23/share of net asset value or around $900 million that would have to be eroded before par on the preferreds would be impacted.

Carboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on March 30, 2017, 11:27:35 AM
No doubt that a lot of past mistakes have been made.

With year end financials, more write-offs on their investments is a possibility. However, even after assuming drastic further write-offs, the preferreds remain well protected IMO and a very attractive security out there especially the DC.PR.D.

As of September 30, they mentioned $14.23/share of net asset value or around $900 million that would have to be eroded before par on the preferreds would be impacted.

Carboard

Agreed that the prefs are still very secure.  If oil comes back then there may be a chance the net asset value stays above $10. I believe the Taurx is a complete write-off which they have listed at $72mm. As well, the UHIC is carried at $189mm but last financing I believe was at $0.10 and they have just under 600mm shares or 85% - I would guess UHIC is worth <$60mm unless we get Brent > $60bbl by Summer - this would represent a $2/share impairment. Also Dundee Energy is most likely worthless as the Castor appeal failed - unless again oil & southern Ontario natural gas stage a remarkable price recovery soon. Many of the other investments are not strong & continue to bleed - Dundee Sustainable, Blue Goose, Agrimarine, Dundee 360 problems with Parq, on and on. Believe the debt in Dundee Energy & Blue Goose (about $100mm total) would be most likely covered by sale of those assets so total parentco debt is only about $90mm.   DC is an investment conglomerate gone very wrong & should be the poster boy for diworsification and the ills of multiple voting shares controlling publicly traded corporations.

That said the pref pricing & even the common at $4 already reflect the disaster that has been their portfolio. My guess is real NAV right now is about $7.50/share but there are a lot of unknowns to the OPMI. Have bought the common at around $4 recently. For those that believe in oil >$70 and that management & the Board of DC are turning over a new leaf then the warrants at $0.75 (Strike $6 til 30 June 2019) are an interesting levered play. All IMHO of course.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 10, 2017, 11:07:18 AM
No doubt that a lot of past mistakes have been made.

With year end financials, more write-offs on their investments is a possibility. However, even after assuming drastic further write-offs, the preferreds remain well protected IMO and a very attractive security out there especially the DC.PR.D.

As of September 30, they mentioned $14.23/share of net asset value or around $900 million that would have to be eroded before par on the preferreds would be impacted.

Carboard

Agreed that the prefs are still very secure.  If oil comes back then there may be a chance the net asset value stays above $10. I believe the Taurx is a complete write-off which they have listed at $72mm. As well, the UHIC is carried at $189mm but last financing I believe was at $0.10 and they have just under 600mm shares or 85% - I would guess UHIC is worth <$60mm unless we get Brent > $60bbl by Summer - this would represent a $2/share impairment. Also Dundee Energy is most likely worthless as the Castor appeal failed - unless again oil & southern Ontario natural gas stage a remarkable price recovery soon. Many of the other investments are not strong & continue to bleed - Dundee Sustainable, Blue Goose, Agrimarine, Dundee 360 problems with Parq, on and on. Believe the debt in Dundee Energy & Blue Goose (about $100mm total) would be most likely covered by sale of those assets so total parentco debt is only about $90mm.   DC is an investment conglomerate gone very wrong & should be the poster boy for diworsification and the ills of multiple voting shares controlling publicly traded corporations.

That said the pref pricing & even the common at $4 already reflect the disaster that has been their portfolio. My guess is real NAV right now is about $7.50/share but there are a lot of unknowns to the OPMI. Have bought the common at around $4 recently. For those that believe in oil >$70 and that management & the Board of DC are turning over a new leaf then the warrants at $0.75 (Strike $6 til 30 June 2019) are an interesting levered play. All IMHO of course.

This is a move they had to make and is not too bad in terms of moving the United project into better operating hands and securing some liquidity ($47mm Canadian). The potential upside of the payments on first oil in the respective blocks ($50mm total US $) and the royalty (below) are attractive as well....

United will retain a royalty of 10 per cent on Doba production and a 5-per-cent royalty on all block H production, payable unless the average price of Brent crude oil is less than $45 (U.S.) for a quarter.


DC.A was probably a screaming buy under $3 Cdn.


Dundee to sell United Hydrocarbon Chad to Delonex

2017-05-10 08:32 ET - News Release
Shares issued 3,598,203
DC.PR.E Close 2017-05-09 C$ 23.75

Mr. Gabriel Ollivier reports

UNITED HYDROCARBON INTERNATIONAL CORP. ENTERS INTO AGREEMENT WITH DELONEX

Dundee Corp.'s subsidiary, United Hydrocarbon International Corp. (UHIC), has entered into an agreement with Delonex Energy Ltd. pursuant to which Delonex will acquire United Hydrocarbon Chad Ltd. (UHCL), a wholly owned subsidiary of United, and the holder of United's production sharing contract (PSC) in the Republic of Chad.

Delonex will pay $35-million (U.S.) on closing of the transaction, and will pay an additional $50-million (U.S.) if first oil is achieved, including $20-million (U.S.) for first oil at Doba and $30-million (U.S.) for first oil at block H. United will retain a royalty of 10 per cent on Doba production and a 5-per-cent royalty on all block H production, payable unless the average price of Brent crude oil is less than $45 (U.S.) for a quarter.

Under the terms of the agreement, Delonex has committed $65-million (U.S.) in financing within two years of the closing date for a comprehensive exploration program for the assets in Chad, and has committed, subject to commerciality being achieved, $35-million (U.S.) for development in Doba. The exploration program will include 2-D and 3-D seismic programs and three exploration wells, representing a significant increase in activity compared with UHCL's current obligations.

The agreement will benefit Chad by ensuring the rapid exploration and development of Chad's hydrocarbon resources across the PSC and including in block H, where there has been limited activity since the mid-1970s.

Delonex is a sub-Saharan oil and gas company focused on exploration, development and production. Delonex is currently active in Ethiopia, Kenya and Mozambique and the proposed transaction in Chad is part of the company's strategy for expanding its portfolio in central and West Africa.

Delonex is led by a management team with a proven record in discovering, developing and operating world-class, on-shore basins and building and operating pipeline infrastructure. Its core leadership team previously worked together at Cairn India, where it established a recoverable resource base of 1.2 billion barrels of oil on shore in Rajasthan, India, with plateau production of about 200,000 barrels of oil per day. It also managed the successful financing and execution of integrated upstream and mid-stream development projects with a combined capital spend of over $4-billion (U.S.). The projects included development wells, processing facilities and the world's longest (about 700 kilometres) continuously heated and insulated oil pipeline with an export terminal. Delonex is backed by a group of global investors with extensive oil and gas experience, led by global private equity firm Warburg Pincus and the International Finance Corp. (a part of the World Bank group).

The transaction is subject to a number of conditions including approval from the government of Chad and UHIC shareholder approval. A special meeting of UHIC shareholders to approve the agreement is anticipated to be held by June 30, 2017.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 10, 2017, 01:44:08 PM
2016 results tomorrow...

Will be interested on how the clean up of their stable of troubled investments is progressing. Perhaps the rise in the price of oil - hopefully to $60+ by this Summer - may save some of the investment in United Hydrocarbons Intl. Hard to believe that Dundee had invested a total of more than $400mm in this highly speculative exploration junior in the heart of sub Sahara Africa in the country of Chad - this amounts to over $7 per share. For perspective the DC.A current market cap is $234 million at $4/share current price.

As at September 30, 2016, the Corporation’s carrying value of its 85% interest in UHIC was $189.5 million, and was net of an
impairment of $215.2 million recognized in the third quarter of the prior year. Additional information regarding UHIC may be
accessed at www.unitedhydrocarbon.com.



Dundee Corp. senior management will host a conference call on Friday, March 31, 2017, at 10 a.m. ET, to discuss the company's fourth quarter and year-end 2016 results.

Fourth quarter and year-end 2016 results conference call and webcast

Date:  Friday, March 31, 2017

Time:  10 a.m. ET

Webcast:  at the company's website

Live call:  1-888-231-8191 or 1-647-427-7450

Replay:  1-855-859-2056 or 1-416-849-0833

Replay passcode:  87507054

Dundee plans to issue a news release containing the fourth quarter and year-end 2016 results after market close on Thursday, March 30, 2017, and will also post it to the company's website. The conference call will be archived for replay until Friday, April 7, 2017, at midnight. An archive of the audio webcast will also be available at Dundee's website.



It is incredible the amount of wealth destruction that has taken place here in their investment in UHIC. Already wrote off $215 million and now most likely another $100+ million writeoff coming when they release Q1 on Thursday. This on an current equity market cap of $164mm.

Will be interesting to see the proxy circular this year if the Board has awarded themselves with stock options & management with either pay increases or bonuses for such great shareholder value creation....
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on May 10, 2017, 01:57:04 PM
If they discount at 2 or 3% a year the $50 M U.S. to be received over 2 to 6 years and put a lot of value on the eventual royalty, they may not write it down at all from the $230 million CAD or so (for which they own 85%).  :o

At least now someone is incentivized to develop the assets having spent $35 M U.S. upfront while Dundee was cash poor and saddled with a ton of crappy holdings.

They now need to keep on liquidating the firm. It would still trade at a big discount to NAV due to their horrible history but, I would think that it would shrink from here.

I would also hope that one or two of their many holdings will perform...

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on May 11, 2017, 04:52:42 PM
They reported a profit!!!! And higher net value per share than in December with $12.85 a share...

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aDC-2470594&symbol=DC&region=C

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 11, 2017, 05:11:00 PM
They reported a profit!!!! And higher net value per share than in December with $12.85 a share...

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aDC-2470594&symbol=DC&region=C

Cardboard

Yeah about that $12.85 per share.... Aggressive accounting if you ask me but who knows it must fall under GAAP principles. So they carry UHIC for $193mm - well we know they just got about $40mm Cdn cash for this plus upside thru payments & future royalties. If you want to be conservative I would value it at $40mm plus some amount to take into account the option value of the potential payouts & royalties. So knock off a good $150 million from their $12.85 or minus about $2.70 per share. Also Dundee Energy is carried at $22mm while the market value is maybe $1.5mm. Just saying they have nothing to crow about yet. Shares are definitely undervalued but anything over $10/share NAV is really being aggressive.

And from the MD&A they are still making highly spec investments although on a much smaller scale. My guess is DC is once again late to the marijuana madness party. Thought these guys were supposed to be value investors....

Approximately $2.0 million
of proceeds generated were reinvested into the portfolio, including an investment of $1.5 million in Nuuvera Corp., a Canadian
incorporated private company focused on medicinal cannabis opportunities.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 12, 2017, 09:01:19 AM
Commentary from the Intrepid Endurance Fund Q1...

The top detractors from Q1 performance were Dundee Corp. (ticker: DC/A CN), Syntel (ticker: SYNT), and Primero
Mining’s 5.75% Convertible Notes (CUSIP: 74164WAB2). Dundee’s performance has been abysmal, and that comment
doesn’t just apply to the stock. The company is involved in many different ventures, but almost nothing has worked
out. We attribute at least half of the unfavorable outcomes to poor decisions by management and the rest to bad luck.
Hindsight is 20/20, and our involvement in Dundee came from trying too hard to find value in an over-picked market.
Our fair value for the stock is based on asset value, in contrast to our typical discounted free cash flow valuation.
We felt comfortable with this approach because the assets were originally anchored by publicly-traded equities that
seemed reasonably valued to us on inspection. Dundee’s cash flow has been negative as the team attempted to nurture
a basket of various nascent businesses into self-sustaining enterprises. It hasn’t worked. We had chances to revisit the
investment as the situation changed and decent investments were exchanged for speculative ones. The mistake is on
me, your Portfolio Manager. We have not added to the holding in over a year and reduced our position last summer at
better prices—a small victory in an otherwise dreadful investment.

So where do we go from here? Dundee is a $3.50 stock with $12.25 of book value. That book value continues to
decline as the company’s portfolio is not generating cash flow but Dundee is incurring corporate overhead and financing
costs. Right now the market is implying that every single private company Dundee manages is worth nothing, plus
that the business burns cash at the current rate for another three years. We have urged management to sell Dundee’s
public investments to pay off bank debt and preferred stock, which would reduce cash burn by half.
If the company
then catches a break on one of its major private investments, it could mark a turning point for the company’s fortunes.
We’re not holding our breath but aren’t yet inclined to sell Dundee at today’s prices. The Fund’s weight in Dundee is
approximately 1%, so its impact on performance going forward should be more limited.

http://www.intrepidcapitalfunds.com/media/pdfs/1q17-intrepid-endurance-commentary-final-approved.PDF

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bskptkl on May 12, 2017, 09:05:37 AM
Commentary from the Intrepid Endurance Fund Q1...

The top detractors from Q1 performance were Dundee Corp. (ticker: DC/A CN), Syntel (ticker: SYNT), and Primero
Mining’s 5.75% Convertible Notes (CUSIP: 74164WAB2). Dundee’s performance has been abysmal, and that comment
doesn’t just apply to the stock. The company is involved in many different ventures, but almost nothing has worked
out. We attribute at least half of the unfavorable outcomes to poor decisions by management and the rest to bad luck.
Hindsight is 20/20, and our involvement in Dundee came from trying too hard to find value in an over-picked market.
Our fair value for the stock is based on asset value, in contrast to our typical discounted free cash flow valuation.
We felt comfortable with this approach because the assets were originally anchored by publicly-traded equities that
seemed reasonably valued to us on inspection. Dundee’s cash flow has been negative as the team attempted to nurture
a basket of various nascent businesses into self-sustaining enterprises. It hasn’t worked. We had chances to revisit the
investment as the situation changed and decent investments were exchanged for speculative ones. The mistake is on
me, your Portfolio Manager. We have not added to the holding in over a year and reduced our position last summer at
better prices—a small victory in an otherwise dreadful investment.

So where do we go from here? Dundee is a $3.50 stock with $12.25 of book value. That book value continues to
decline as the company’s portfolio is not generating cash flow but Dundee is incurring corporate overhead and financing
costs. Right now the market is implying that every single private company Dundee manages is worth nothing, plus
that the business burns cash at the current rate for another three years. We have urged management to sell Dundee’s
public investments to pay off bank debt and preferred stock, which would reduce cash burn by half.
If the company
then catches a break on one of its major private investments, it could mark a turning point for the company’s fortunes.
We’re not holding our breath but aren’t yet inclined to sell Dundee at today’s prices. The Fund’s weight in Dundee is
approximately 1%, so its impact on performance going forward should be more limited.

http://www.intrepidcapitalfunds.com/media/pdfs/1q17-intrepid-endurance-commentary-final-approved.PDF
Surprised these knuckleheads don't own preferred like I assume rest of us do. much better risk/reward than common imo.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 12, 2017, 09:14:12 AM
Commentary from the Intrepid Endurance Fund Q1...

The top detractors from Q1 performance were Dundee Corp. (ticker: DC/A CN), Syntel (ticker: SYNT), and Primero
Mining’s 5.75% Convertible Notes (CUSIP: 74164WAB2). Dundee’s performance has been abysmal, and that comment
doesn’t just apply to the stock. The company is involved in many different ventures, but almost nothing has worked
out. We attribute at least half of the unfavorable outcomes to poor decisions by management and the rest to bad luck.
Hindsight is 20/20, and our involvement in Dundee came from trying too hard to find value in an over-picked market.
Our fair value for the stock is based on asset value, in contrast to our typical discounted free cash flow valuation.
We felt comfortable with this approach because the assets were originally anchored by publicly-traded equities that
seemed reasonably valued to us on inspection. Dundee’s cash flow has been negative as the team attempted to nurture
a basket of various nascent businesses into self-sustaining enterprises. It hasn’t worked. We had chances to revisit the
investment as the situation changed and decent investments were exchanged for speculative ones. The mistake is on
me, your Portfolio Manager. We have not added to the holding in over a year and reduced our position last summer at
better prices—a small victory in an otherwise dreadful investment.

So where do we go from here? Dundee is a $3.50 stock with $12.25 of book value. That book value continues to
decline as the company’s portfolio is not generating cash flow but Dundee is incurring corporate overhead and financing
costs. Right now the market is implying that every single private company Dundee manages is worth nothing, plus
that the business burns cash at the current rate for another three years. We have urged management to sell Dundee’s
public investments to pay off bank debt and preferred stock, which would reduce cash burn by half.
If the company
then catches a break on one of its major private investments, it could mark a turning point for the company’s fortunes.
We’re not holding our breath but aren’t yet inclined to sell Dundee at today’s prices. The Fund’s weight in Dundee is
approximately 1%, so its impact on performance going forward should be more limited.

http://www.intrepidcapitalfunds.com/media/pdfs/1q17-intrepid-endurance-commentary-final-approved.PDF
Surprised these knuckleheads don't own preferred like I assume rest of us do. much better risk/reward than common imo.

Actually have bought large amount of the common between $2.85 and $4. Believe valuation here is now very compelling  with caveats of a gradual upturn in resource markets & successful completion of real estate projects over the next year.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 15, 2017, 08:12:26 AM
GMP on.....

Dundee Corporation1 BUY
DC.A-TSX

 Last:

C$3.83
May 15, 2017 ▼ Target: C$8.00

UHIC sale provides cash, royalty potential

Dundee Corp. (DC.A-TSX) reported Q1/17 results on May 11
th after the
market close.

Prior to the quarter, DC.A also announced the sale of UHIC
assets to Delonex Energy Ltd. in exchange for US$35 million cash on closing,
US$50 million cash on first oil, and a royalty stream. DC.A owns 85% of UHIC’s
equity. Delonex is a Sub-Saharan oil and gas company focused on exploration,
development and production and is currently active in Ethiopia, Kenya and
Mozambique. The deal is subject to a number of conditions including
approval from the government of Chad. DC.A management believes the
timeline for this approval is uncertain.

In our view, this announcement is positive for DC.A. Although our NAV is
reduced, we believe the market may have been assigning near nil value to the
UHIC investment. We believe the cash payable on closing would help ease
any liquidity concerns for DC.A. Our UHIC NAV contribution (previously based
on management’s carrying value) is reduced by ~$2.60. We assume the deal
will close, but conservatively include only the initial US$35 million payment in
our NAV. Payment on achievement of first oil (US$50 million) would add
~$1.00 to our NAV, plus an ongoing royalty.

Liquidity remains tight

We believe DC.A continues to manage a tight liquidity situation. The existing
$80 million credit facility has been replaced by a 365-day revolving term
credit facility with a Canadian Schedule I Chartered Bank for up to $80 million,
which offers some near term certainty on the corporate debt. Corporate debt
ended Q1/17 at $61 million and currently stands at $49 million after certain
asset sales post quarter. We believe further asset sales of the liquid public
investments remain possible for annual corporate level cash needs (interest,
dividends, op. expenses) of ~$36 million.

Maintain BUY – Parq casino remains on track

Exiting the quarter, our NAV is now $9.77 (previously $12.49). There were no
material changes in our NAV other than UHIC. The Parq Casino Resort project
in Vancouver (Paragon Holdings) remains on track to be completed and
operational by the fall of 2017. Despite the decline, the discount to NAV
remains wide at ~61%. We apply a 20% discount to yield our price target of
$8.00 (previously $10.00). We maintain our BUY rating. Please see Figure 1
for our NAV sensitivity analysis.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 19, 2017, 11:21:58 AM
Liquidity....

DUNDEE CORPORATION SELLS SHARES IN DREAM UNLIMITED CORP.

Dundee Corp. has sold 15,536,288 Class A subordinate voting shares of Dream Unlimited Corp. at a price of $6.85 per share for aggregate proceeds, net of associated costs, of approximately $106.1-million.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 18, 2017, 10:16:26 AM
Anyone still own DC.PR.B or DC.PR.D?

I've been adding to the floater, DC.PR.D, lately. With the recent change in BOC policy to a bias towards tightening, the 2 year bond yield is around 1.2% so this is is perhaps the best estimate of the 90-day t-bill rate over the next 2.5 years until the option to convert to DC.PR.B is available.

On that basis, the best estimate of average coupon on DC.PR.D is 5.3% which implies a current yield of 11% which is more than the DC.PR.B. Further, all else being equal, the $1.30 spread between the DC.PR.B and DC.PR.D should close into interconversion which would add another almost 5%/yr to the return on a relative basis.

I'm curious on people's thoughts? Compelling or too much of a bother to pick up 5%/yr?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 18, 2017, 01:32:11 PM
Anyone still own DC.PR.B or DC.PR.D?

I've been adding to the floater, DC.PR.D, lately. With the recent change in BOC policy to a bias towards tightening, the 2 year bond yield is around 1.2% so this is is perhaps the best estimate of the 90-day t-bill rate over the next 2.5 years until the option to convert to DC.PR.B is available.

On that basis, the best estimate of average coupon on DC.PR.D is 5.3% which implies a current yield of 11% which is more than the DC.PR.B. Further, all else being equal, the $1.30 spread between the DC.PR.B and DC.PR.D should close into interconversion which would add another almost 5%/yr to the return on a relative basis.

I'm curious on people's thoughts? Compelling or too much of a bother to pick up 5%/yr?

I still own the D shares. I think they are quite compelling at this price, both in absolute terms and relative to the B shares. Another advantage to the D's is that they are redeemable by the company at any time, while the B's can only be redeemed on the conversion date in fall 2019. I think Dundee will be focussed on redeeming the E shares first since they mature in 2019. And second to that probably buying back common shares and/or preferred shares in the market, and third redeeming the D's. So it may not make any effective difference.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on July 19, 2017, 12:43:48 PM
The "D"'s are more attractive than the "B"'s for the reasons you guys mentioned.

However, both are among the very few remaining attractive preferreds with a value bend.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 22, 2017, 10:44:30 AM
The B's have consistently traded at a much higher premium to the D's than some simple math would suggest is rational. Perhaps the explanation for this is simply that the B's have greater liquidity.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 22, 2017, 11:30:28 AM
I think it's just because the current yield is higher but that is starting to change with the 90-day t-bill rate creeping up. Retail investors focus on current yield because they usually don't know about the interconvertible option or how yields reset.

Look at BBD.PR.B / BBD.PR.D, investors didn't notice BBD.PR.D's yield was going up 25% last week until they announced the new coupon even though they had announced the formula a month before.

We have seen the less liquid insurance company floaters begins trading in line with their more liquid strong pairs recently as investors are looking for more floating product.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 22, 2017, 12:41:03 PM
I think it's just because the current yield is higher but that is starting to change with the 90-day t-bill rate creeping up. Retail investors focus on current yield because they usually don't know about the interconvertible option or how yields reset.

Look at BBD.PR.B / BBD.PR.D, investors didn't notice BBD.PR.D's yield was going up 25% last week until they announced the new coupon even though they had announced the formula a month before.

We have seen the less liquid insurance company floaters begins trading in line with their more liquid strong pairs recently as investors are looking for more floating product.

I agree with the comment about retail investors. But there appears to be more institutional interest in the B's than the D's. I notice that EdgePoint (the old Trimark guys) own the B but not D. I thought perhaps liquidity had something to do with it.

I've been surprised that the floaters have not reacted very quickly to the rising interest rate environment. I thought D's would move up fast. They haven't. The gap with the B's has shrunk somewhat, but that is all. I guess these are ignored securities and it is left to the retail investor who only looks at current yield like you say.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 26, 2017, 05:30:42 AM
Significant selling pressure over the last year has seen DC.A recently hit a new low of $2.58 in the last week. Looks like much of the selling has come out of the outspoken Murray Stahl from Horizon Kinetics who had sold a whopping 2mm shares up until the end of January 2017. I am sure it is their continued sales from the remaining 3 million that is in part responsible to have pounded the share price down to below $3.

Net Increase or decrease in the number or principal amount of securities, and in the eligible institutional investor’s securityholding percentage in the class of securities, since the last report filed by the eligible institutional investor under Part 4 of the early warning requirements:

There has been a net decrease of 2,078,845shares or -3.75% in the security holding percentage of Horizon Kinetics LLC (“Horizon Kinetics”) with respect to the Class A shares of Dundee Corporation (“Dundee Class A Shares”) since the last report filed under Part 4 of National Instrument 62-103.

5. Designation and number or principal amount of securities and the eligible institutional investor’s securityholding percentage in the class of securities at the end of the month for which the report is made:

Horizon Kinetics, through mutual funds, pooled funds and private client managed accounts for which its subsidiary asset managers, Kinetics Asset Management LLC and Horizon Asset Management LLC (together, the “Firms”), provide portfolio management services, exercises control or direction over 3,132,703 Dundee Class A Shares (or approximately 5.64% of the outstanding Dundee Class A Shares), as of January 31, 2017.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on July 31, 2017, 10:49:52 AM
If you guys want to take advantage of the current selling, there are a few imbeciles selling DC.PR.D and also DC.PR.B pretty hard today or into a vacuum of buyers right into the middle of the Summer.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 31, 2017, 01:09:40 PM
If you guys want to take advantage of the current selling, there are a few imbeciles selling DC.PR.D and also DC.PR.B pretty hard today or into a vacuum of buyers right into the middle of the Summer.

Cardboard

Thanks for the heads up. I picked up 200 D's. Unfortunately I'm already fully loaded so can't do more. I suspect someone has been doing a computerized arb trade between the B's and D's for some time, so the original selling pressure may have come from one class only.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on July 31, 2017, 01:19:11 PM
If you guys want to take advantage of the current selling, there are a few imbeciles selling DC.PR.D and also DC.PR.B pretty hard today or into a vacuum of buyers right into the middle of the Summer.

Cardboard

Thanks, I have added to the D's.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Artha158 on July 31, 2017, 01:26:23 PM
Thanks, added some.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 31, 2017, 06:07:02 PM
Anyone looking at the E's? They have a YTM of over 12% and are putable but obviously don't have the same capital gain potential as the Ds and Bs.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 31, 2017, 09:23:24 PM
Anyone looking at the E's? They have a YTM of over 12% and are putable but obviously don't have the same capital gain potential as the Ds and Bs.

I haven't looked at them until now. But I think, at $23, the YTM is actually about 14.7% because holders have the option to redeem 17% on Jan 31, 2018 for $25. The potential catch is that there is an embedded put option that allows the company to convert to common at the higher of $2 and 95% of trading price. So if the common was below $2 at some point over the next two years, a conversion would be negative for the holder of the E's. I think the chance of a conversion at $2 is very low, however, unless things get very desperate at Dundee.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 10, 2017, 10:54:58 AM


http://www.intrepidcapitalfunds.com/media/pdfs/fsb0.nschmidt.xf00.193745.endurance_fund_commentary.pdf


"In our Dundee mea culpa in last quarter’s letter, we wrote: “We have urged management to sell Dundee’s public investments to pay off bank debt and preferred stock, which would reduce cash burn by half. If the company then catches a break on one of its major private investments, it could mark a turning point for the company’s fortunes.” On May 10th, Dundee announced that Delonex Energy will acquire United Hydrocarbon (UHIC), Dundee’s Chad energy venture/money pit. Delonex offered $35 million at close, another $50 million when first oil is achieved, and ongoing royalties ranging from 5%-10% of production unless Brent prices fall below $45 per barrel. Dundee has been spending $12 million per year to maintain UHIC while seeking an investor, and this cash drain will disappear upon a sale. It’s not a done deal, as Dundee is currently in negotiations with the Government of Chad to renew its Production Sharing Contract. On May 19th, Dundee sold its entire remaining stake in DREAM Unlimited for CAD $106 million. The proceeds will likely be used to pay down bank debt.

The sales of UHIC and the DREAM shares were exactly the type of positive catalysts we were seeking. The market has clearly shrugged, since Dundee’s shares are back down to all-time lows. Canadian small caps have traded weak this year, which could be a factor, but we think investors will need confirmation that the Delonex transaction closes before they bid up Dundee’s shares."

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on August 11, 2017, 04:21:02 PM
The Q2 report shows that the company is in a net cash position at the corporate level after its $100M+ sale in DREAM shares and repayment of some $60M in bank revolver.  Isn't this a huge plus for the preferred given a large portion of more senior claims has been wiped out?  Or is the market still waiting for 1) the deal that plug the cash drain aka UHIC to close and 2) Parq casino for a smooth opening?

https://web.tmxmoney.com/article.php?newsid=8504637627187082&qm_symbol=DC.A
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 14, 2017, 09:57:12 AM
From GMP this morning....

Dundee Corporation1 BUY

DC.A-TSX

Last:

C$2.76

August 14, 2017 Target: C$8.00
Q2/17 - UHIC sale progressing

Undiscounted NAV $9.39

Dundee Corp. (DC.A-TSX) reported Q2/17 results on August 10th after the market close. Our NAV of $9.39 versus $9.79 previously, was slightly lower q/q largely due to a decline in the publicly traded investment portfolio. The discount to NAV remains wide at ~70%. We believe that some investors may be applying deep discounts to the private investments.

UHIC sale may close in Q3

The sale of UHIC assets continues to progress. In July, regulatory approvals for the transaction were approved from the Republic of Chad and UHIC shareholders. Certain other conditions are still required, including an extension from the Republic of Chad to the exploration period. Management now expects the transaction to close in the third quarter with an outside date by year end. GMP is advising on the UHIC transaction. In our view, this possibility of earlier closing than originally expected is positive for DC.A from a liquidity perspective. We assume the deal will close, but conservatively include only the initial US$35 million payment in our NAV (US$9.5mm to be held in escrow for three years). Payment on achievement of first oil (US$50 million) could add ~$1 to our NAV, plus an ongoing royalty.

Maintain BUY – liquidity position much improved

In our view, the DREAM sale has left the liquidity situation much improved. Net cash at the corporate level was ~$46 million exiting the quarter. With the debt paid down, annual corporate level cash needs (interest, dividends, op. expenses) are now ~$33 million. We believe this may be reduced in the coming quarters. Subsequent to the end of the quarter, DC advanced $5 million (along with $5 million from partners and $27.5 million additional debt) to fund any cost overruns and initial working capital requirements for the Parq Casino, which remains on track for a fall 2017 opening. Blue Goose also delivered a strengthened quarter of operating results.
Exiting the quarter, our NAV is now $9.39 (previously $9.79). The only material change to our NAV was the decline in public investments. The discount to NAV remains wide at ~70%. We apply a 20% discount to yield our price target of $8.00 (unchanged). We maintain our BUY rating. Please see Figure 1 for our NAV sensitivity analysis.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 14, 2017, 01:35:27 PM
Thanks for this. I'm curious why the sale of Dream Unlimited shares is treated as some sort of wonderful catalyst creating liquidity. Haven't the Dream Unlimited shares been liquid all along given this is a publicly traded company?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 14, 2017, 01:59:42 PM
Blue Goose has significant land position that is most likely not fully reflected in the value of this asset. Especially now that it is growing and becoming operationally profitable....

Blue Goose owns over 45,000 acres of farm land in British Columbia, and is a recognized consumer brand with beef, chicken, and fish products distributed to over 640 retail locations across Canada, making Blue Goose well-positioned to capitalize on the high-growth organic food market.

From the conference call...

Well our land is appreciated nicely in value so we've been very happy with the investment. And it's used primarily to graze the cattle up and house the cattle operations in BC. We've had appraisal done of it which value at approximately $100 million. In the future, I mean we're looking actively at all of our businesses to evaluate what they're worth and what our best strategic opportunity is in accessing liquidity and maximizing the value of the underlying investments. So we would absolutely look at anything in that regard.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 14, 2017, 02:03:22 PM
Thanks for this. I'm curious why the sale of Dream Unlimited shares is treated as some sort of wonderful catalyst creating liquidity. Haven't the Dream Unlimited shares been liquid all along given this is a publicly traded company?

Any investment whether public or private is not seen as cash or fully liquid until it is sold. This was case with DC & Dream. Now its sale has allowed them to repay all bank debt, fund some needed liquidity into Parq completion and given them about $40mm cash liquidity on the balance sheet to fund operations for the next year or so.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 26, 2017, 04:33:10 PM
Parq articles...

http://vegasseven.com/2017/08/17/parq-to-the-future/

https://www.bloomberg.com/news/articles/2017-07-07/parq-vancouver-preview-bringing-vegas-flair-to-a-business-hotel

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on September 22, 2017, 07:57:44 AM
Good to see this finally.

From GMP....We see this announcement as positive for
DC.A. Although our NAV was reduced, we believe the market may have been
assigning near nil value to UHIC. Closing the deal would remove monthly cash
requirements to maintain the property and add long run royalty potential.



Dundee Corporation and United Hydrocarbon International Corp. Announce Closing of Transaction With Delonex Energy Limited

TORONTO, ONTARIO--(Marketwired - Sept. 22, 2017) - Dundee Corporation ("Dundee") (TSX:DC.A) and its subsidiary, United Hydrocarbon International Corp. (the "Company" or "United"), are pleased to announce that United has closed its previously announced transaction (the "Transaction") with Delonex Energy Limited ("Delonex"). The Company and Delonex have satisfied or waived all the conditions precedent under the Share Purchase Agreement dated May 10, 2017, as amended (the "SPA"), including all board, shareholder and regulatory approvals.
The Transaction is for Delonex to acquire United's indirectly wholly-owned subsidiary, United Hydrocarbon Chad Ltd. ("UHCL"), which holds the Company's May 2, 2012 Production Sharing Contract, as amended (the "PSC").

Delonex paid US$35 million on the closing of the Transaction (subject to applicable escrow and holdback requirements), and will pay an additional US$50 million if first oil is achieved, including US$20 million for first oil at Doba and US$30 million for first oil at Block H. United will retain a royalty of 10 per cent on Doba production and a 5 per cent royalty on Block H production, payable unless the average price of Brent Crude oil is less than US$45 for a quarter.
Delonex has committed US$65 million in funding within two years of the closing date for a comprehensive exploration program for the assets in Chad, and, subject to commerciality being achieved, a further US$35 million for development in Doba. The exploration program will include 2D and 3D seismic programs and three exploration wells, representing a significant increase in activity when compared to UHCL's current obligations.

United estimates that following closing of the Transaction and payment of all outstanding debts, expenses and other obligations of the Company, including repayment to Dundee of CAD$5.1 million, United will retain approximately CAD$14 million for working capital purposes, not including escrow amounts.
United's President and Chief Executive Officer, Gabriel Ollivier, commented as follows: "The Transaction is very encouraging for United's shareholders as it grants us sustained material exposure to the potential of our blocks without having to raise additional capital." David Goodman, Chairman of the board of directors of the Company, added: "We are very pleased with the Transaction as it gives shareholders the opportunity to realize a significant return on their investment once commerciality is achieved."

GMP FirstEnergy acted as financial advisor to United.

ABOUT DUNDEE CORPORATION

Dundee Corporation is a public Canadian independent holding company, listed on the Toronto Stock Exchange under the symbol "DC.A". Through its operating subsidiaries, Dundee is engaged in diverse business activities in the areas of investment advisory, corporate finance, energy, resources, agriculture, real estate and infrastructure. Dundee also holds, directly and indirectly, a portfolio of investments mostly in these key areas, as well as other select investments in both publicly listed and private enterprises.

ABOUT DELONEX ENERGY LIMITED

Delonex Energy Limited is a Sub-Saharan oil and gas company focused on exploration, development and production. Delonex is currently active in Ethiopia, Kenya and Mozambique and the Transaction in Chad is part of the company's strategy for expanding its portfolio in Central & West Africa.
Delonex is led by a management team with a proven track record in discovering, developing and operating world-class onshore basins and building and operating pipeline infrastructure. Their core leadership team previously worked together at Cairn India, where they established a recoverable resource base of 1.2 billion barrels of oil onshore in Rajasthan, India, with plateau production of c. 200,000 barrels of oil per day. They also managed the successful financing and execution of integrated upstream and midstream development projects with a combined capital spend of over US$4 billion. The projects included development wells, processing facilities and the world's longest (c. 700 km) continuously heated and insulated oil pipeline with an export terminal. Delonex is backed by a group of global investors with extensive oil & gas experience, led by global private equity firm Warburg Pincus and the International Finance Corporation (a part of the World Bank group).
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on September 22, 2017, 09:34:54 AM
And Parq opens next Friday...

http://parqvancouver.com/


GMP's take...

Parq Casino could be portfolio ace

In our view, DC.A’s medium term performance largely depends on three core
items: opening the Parq Casino, completing the sale of United Hydrocarbon
(UHIC) assets and managing liquidity at the corporate level. In this report, we
are taking a deeper dive into each of these three items.

Parq Casino set for fall 2017 open

The Parq Casino project in Vancouver remains on track for a fall 2017 open.
Management projects Parq may generate $75-$100 million annual EBITDA
with an estimated 12-month ramp up to full operations. We have performed
a sensitivity analysis for the project using the EBITDA range, possible debt
refinancing, and valuation multiples based on gaming peer comparables.
Although our range is wide, we calculate DC.A’s 40% equity stake in the
project may be worth ~$196 million at our midpoint assumptions. With ~$102
million carrying value, we see potential for a material win here, and the
addition of a lasting, cash generating property to the investment portfolio.

UHIC sale a positive outcome

DC.A recently announced the sale of UHIC assets (DC.A ownership 85%) to
Delonex Energy Ltd. for US$35 million cash on closing, US$50 million cash on
first oil, and a royalty stream. The deal is subject to a number of conditions
with uncertain timing including approval from the government of Chad. GMP
is advising UHIC on the transaction. We see this announcement as positive for
DC.A. Although our NAV was reduced, we believe the market may have been
assigning near nil value to UHIC. Closing the deal would remove monthly cash
requirements to maintain the property and add long run royalty potential. For
now, our NAV conservatively reflects only the initial payment on closing.
Maintain BUY – DREAM sale eases any liquidity concerns

We continue to pay close attention to DC.A’s liquidity position. On May 19th,
DC.A sold all remaining shares in DREAM Unlimited Corp. for net proceeds of
$106 million. We calculate this brings DC.A’s net cash position at the
corporate level to ~$57 million and offers management significant flexibility.
We anticipate selective cash injections into existing investments, with an eye
towards funding those most likely to reach profitability in the medium term.
Our updated NAV is now $9.79 (previously $9.77). We apply a 20% discount
to yield our price target of $8.00 (unchanged). We maintain our BUY rating.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on September 22, 2017, 12:14:30 PM
I've been buying some more of the prefs (D series) over the past week as they were trading with a >10% current yield.  Anybody else?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on September 22, 2017, 12:25:38 PM
And Parq opens next Friday...

http://parqvancouver.com/


GMP's take...

Parq Casino could be portfolio ace

Parq Casino set for fall 2017 open

The Parq Casino project in Vancouver remains on track for a fall 2017 open.
Management projects Parq may generate $75-$100 million annual EBITDA
with an estimated 12-month ramp up to full operations. We have performed
a sensitivity analysis for the project using the EBITDA range, possible debt
refinancing, and valuation multiples based on gaming peer comparables.
Although our range is wide, we calculate DC.A’s 40% equity stake in the
project may be worth ~$196 million at our midpoint assumptions. With ~$102
million carrying value, we see potential for a material win here, and the
addition of a lasting, cash generating property to the investment portfolio.

Thanks for this info sculpin. I like that GMP is using ~$200M for the Parq value. I had been optimistic it would be worth $120M.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on September 22, 2017, 12:33:47 PM
And Parq opens next Friday...

http://parqvancouver.com/


GMP's take...

Parq Casino could be portfolio ace

Parq Casino set for fall 2017 open

The Parq Casino project in Vancouver remains on track for a fall 2017 open.
Management projects Parq may generate $75-$100 million annual EBITDA
with an estimated 12-month ramp up to full operations. We have performed
a sensitivity analysis for the project using the EBITDA range, possible debt
refinancing, and valuation multiples based on gaming peer comparables.
Although our range is wide, we calculate DC.A’s 40% equity stake in the
project may be worth ~$196 million at our midpoint assumptions. With ~$102
million carrying value, we see potential for a material win here, and the
addition of a lasting, cash generating property to the investment portfolio.

Thanks for this info sculpin. I like that GMP is using ~$200M for the Parq value. I had been optimistic it would be worth $120M.

For an opening a week away looks like quite alot of outdoor work still going on. Hopefully they are ready to go on the 29th...

http://skyscraperpage.com/forum/showthread.php?t=213941&page=33
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on September 22, 2017, 12:42:39 PM
I've been buying some more of the prefs (D series) over the past week as they were trading with a >10% current yield.  Anybody else?

I haven't been buying any D's because I already have a ton. I think this one is a no-brainer. When you calculate the future yield based on the ability to convert into the B's in 2 years and likely interest rates increases, the number starts getting silly high.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on September 22, 2017, 12:46:16 PM
I was surprised that the stock did not react more favourably following Q2 results as they had mentioned that the sale to Delonex could close in Q3 (market expectations were for end of year), liquidity risks were significantly reduced with the sale of their Dream Unlimited stake or no longer any bank debt, Blue Goose had turned profitable, HQ costs have been reduced significantly (Toronto office, less interest cost) and Parq Casino was on its way to open.

Technicals look really good right now and I would expect the company to start doing some financial engineering which should bring this thing to $4+ in no time.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on September 22, 2017, 01:04:56 PM
... I would expect the company to start doing some financial engineering which should bring this thing to $4+ in no time.

Cardboard

There are a few things they can do on this front in the near- and medium-term:

1) Refinance Parq loan at lower interest rate (I think they are paying 8%+ now in a USD construction loan; lucky for them that CAD is now strong)
2) Buy back the preferred at 10% after-tax yield.  These shares offer higher return than most of their investment ventures ;)
3) Further monetize non-core assets and buy back the common

OTOH, they would need to redeem 17% of the outstanding Series 5 preferred shares in January so that's a $15M outlay.  Given the net cash position they are in I am not worried about liquidity.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on October 02, 2017, 09:40:13 AM
The Parq Casino opened this past Friday (Sept 29) at 11pm.  I've found surprisingly little media coverage of the event.  Plenty of coverage leading up to the opening, but very little after the fact. Just a handful of folks on Reddit making moderately negative statements  about the casino itself (poor layout, very small, no better than what it replaced, no buffet, ...) and some moderately positive comments about the food (biggest complaint: no buffet).  I guess Parq is only licensed for the same number of tables as the Edgewater Casino that they replaced. So perhaps they'll see how things go and push for more tables at some point in the future.  Still lots of construction going on in the outdoor spaces, and the hotels aren't even taking guests until end of October.

BUT:  The casino did indeed open, apparently without any huge issues.  I think this is solidly in the positive column for Dundee investors.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on October 03, 2017, 09:20:22 AM
It is very positive indeed to have an opening on time and on budget. I am also fairly confident that the $75 to $100 million in EBITDA/year for Parq Casino is conservative or based on past run rate from Edgewater.

Despite its troubled past, this team seems to have done a lot of positive moves over the past year or two. I am a buyer.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: longlake95 on October 03, 2017, 10:43:14 AM
People are more bullish on the preferreds too. The Series III's have moved some 12% in a week.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on October 03, 2017, 01:00:26 PM
I am not a gambler but as a preferred shareholder did some "on ground research" last Saturday, i.e. the first weekend of grand opening.  I arrived there at about 9pm and the whole place was completely packed.  Let me be more specific: all the seats in the game tables and slot machines in the general area were completely occupied.  The high-limit slots / tables look pretty full too.  We tried to get into two restaurants and the wait time was each >30 min.  Minimum bet for Blackjack is $25.

The exterior of the complex is indeed not very "Vancouver-ish" - doesn't blend well into the surroundings and I can see why we see some negative online comments about that.  The inside is pretty decent.  Quite luxurious but not quite on par to the best Vegas casinos.  The number of slots / tables is limited to the same as what they had on the old Edgewater casino (btw does the DC.A joint venture own this extremely valuable piece of land?  Build a couple condo towers and it can easily be a half billion development).

Granted this was the first weekend so everyone wants to check out what's the deal, but it looks like the casino is off to a good start.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on October 03, 2017, 01:40:52 PM
I am not a gambler but as a preferred shareholder did some "on ground research" last Saturday, i.e. the first weekend of grand opening.  I arrived there at about 9pm and the whole place was completely packed.  Let me be more specific: all the seats in the game tables and slot machines in the general area were completely occupied.  The high-limit slots / tables look pretty full too.  We tried to get into two restaurants and the wait time was each >30 min.  Minimum bet for Blackjack is $25.

The exterior of the complex is indeed not very "Vancouver-ish" - doesn't blend well into the surroundings and I can see why we see some negative online comments about that.  The inside is pretty decent.  Quite luxurious but not quite on par to the best Vegas casinos.  The number of slots / tables is limited to the same as what they had on the old Edgewater casino (btw does the DC.A joint venture own this extremely valuable piece of land?  Build a couple condo towers and it can easily be a half billion development).

Granted this was the first weekend so everyone wants to check out what's the deal, but it looks like the casino is off to a good start.

Found this online:

“April 2011, Vancouver city council agreed to relocation without expansion of the existing Paragon-owned Edgewater Casino licence. The 70-year, $6 million-a-year lease with B.C. Pavilion Corp. was renegotiated in 2013 to $3 million-a-year. Construction began in summer 2014. Under an accommodation side deal, Paragon will pay Musqueam Indian Band, instead of PavCo, $8.5 million of the first $9 million in lease payments. The project is a joint venture between Paragon, Dundee Corp. and PBC Real Estate Advisors.”

Is $3M per year a good deal?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on November 15, 2017, 12:25:21 PM
Pretty cheap stock here with the family finally getting its act together. Many issues have been solved including the debt at HQ, lower costs, United Hydrocarbon deal closed and Parq operating.

Blue Goose/Tender Choice was a negative today but, at least they are moving quickly to fix it. I would say it is an improvement over previous behavior.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: longlake95 on November 15, 2017, 12:33:37 PM
I own the Pref's series III, as a chicken way to participate in DC. They are still waaay out of favour. But nice to see things improving...but slowly...might I add...

Where's Ned?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on December 08, 2017, 10:23:00 AM
These guys have presided over some crazy capital destruction, but they also  aren't catching many breaks.

News out recently about a big fire at the Tender Choice plant in Burlington.  Apparently the building is pretty much destroyed.  (From what I've read. Not a first-hand account.)

It'll be interesting to see if there's a big rebound in the new year.  This is a really strong candidate for tax-loss selling.   I was surprised (on the downside) with the Q3 report and actually had orders in to sell at $3.15.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on December 08, 2017, 10:42:07 AM
These guys have presided over some crazy capital destruction, but they also  aren't catching many breaks.

News out recently about a big fire at the Tender Choice plant in Burlington.  Apparently the building is pretty much destroyed.  (From what I've read. Not a first-hand account.)

It'll be interesting to see if there's a big rebound in the new year.  This is a really strong candidate for tax-loss selling.   I was surprised (on the downside) with the Q3 report and actually had orders in to sell at $3.15.

What specifically was the negative surprise you saw in the Q3 report?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on December 10, 2017, 04:50:41 PM
These guys have presided over some crazy capital destruction, but they also  aren't catching many breaks.

News out recently about a big fire at the Tender Choice plant in Burlington.  Apparently the building is pretty much destroyed.  (From what I've read. Not a first-hand account.)

It'll be interesting to see if there's a big rebound in the new year.  This is a really strong candidate for tax-loss selling.   I was surprised (on the downside) with the Q3 report and actually had orders in to sell at $3.15.

What specifically was the negative surprise you saw in the Q3 report?

The continued poor performance of the operating subsidiaries, particularly Blue Goose.  I was (perhaps naively) expecting some stabilization there but Q3 was sour and Q4 looks like it will be uglier.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 13, 2017, 07:52:25 AM
In the grips of ferocious tax loss selling Dumbdee hits an all time low of sub $2.40 - this in striking contrast of DC's estimate of it's value per share of $11.79 in just the latest Q3 report. Yet the masterminds behind this destruction of corporate value and collapse of the share price refuse to buy back any shares to support their estimate of the lofty value of their corporation.

The gong show of the Blue Goose shut down of the Tender Choice plant in Q3 underlines the poor decision making and capital allocation still resident in Dundee Corp. Purchased only 1 year ago, the Tender Choice plant was deemed unfit to carry out its processing work and needed significant repairs and modifications. The Blue Goose President was forced to walk the plank. Then the plant burnt down....

TORONTO, ONTARIO--(Marketwired - Oct. 19, 2016) - Blue Goose Capital Corp. ("Blue Goose") ("the Company"), a privately-held, Canadian-based protein and organic food company which is a subsidiary of Dundee Corporation ("Dundee") (TSX:DC.A) today announced the acquisition of Tender Choice Foods Inc. ("Tender Choice"), a leading Burlington, Ontario based processing plant specializing in the processing, packing and distribution of meat products.
"Blue Goose is pleased to have Tender Choice as part of the Blue Goose group of companies," said Ben Nikolaevsky, President and CEO of Blue Goose, "With the acquisition of Tender Choice, Blue Goose has acquired a tremendous platform to build on the rapid growth of its poultry operations, and allows us to facilitate our growth in the industry."

At this stage it is apparent that Dundee Corp should be placed in liquidation mode over the next few years. No new investments. Sell all assets at the best available price but not in a fire sale. Cut all admin, management & Board costs to the bone to limit the cash drain. Start buying back the preferred shares at prices less than half of par to cut both the ultimate liability & save on the quarterly dividend drain.

Is this not the best way to save shareholder value??
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on December 13, 2017, 08:02:32 AM
At this stage it is apparent that Dundee Corp should be placed in liquidation mode over the next few years. No new investments. Sell all assets at the best available price but not in a fire sale. Cut all admin, management & Board costs to the bone to limit the cash drain. Start buying back the preferred shares at prices less than half of par to cut both the ultimate liability & save on the quarterly dividend drain.

Is this not the best way to save shareholder value??


Couldn't agree more.  But I think these guys have deluded themselves into believing they are astute investors (despite all evidence to the contrary), and of course they're getting paid a good salary to do play the game.

If they tried to put some of their assets up for sale, I think we'd see some pretty significant write-downs on their fair-value estimate. 
 



Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on December 13, 2017, 05:18:36 PM
In the grips of ferocious tax loss selling Dumbdee hits an all time low of sub $2.40 - this in striking contrast of DC's estimate of it's value per share of $11.79 in just the latest Q3 report. Yet the masterminds behind this destruction of corporate value and collapse of the share price refuse to buy back any shares to support their estimate of the lofty value of their corporation.

The gong show of the Blue Goose shut down of the Tender Choice plant in Q3 underlines the poor decision making and capital allocation still resident in Dundee Corp. Purchased only 1 year ago, the Tender Choice plant was deemed unfit to carry out its processing work and needed significant repairs and modifications. The Blue Goose President was forced to walk the plank. Then the plant burnt down....

TORONTO, ONTARIO--(Marketwired - Oct. 19, 2016) - Blue Goose Capital Corp. ("Blue Goose") ("the Company"), a privately-held, Canadian-based protein and organic food company which is a subsidiary of Dundee Corporation ("Dundee") (TSX:DC.A) today announced the acquisition of Tender Choice Foods Inc. ("Tender Choice"), a leading Burlington, Ontario based processing plant specializing in the processing, packing and distribution of meat products.
"Blue Goose is pleased to have Tender Choice as part of the Blue Goose group of companies," said Ben Nikolaevsky, President and CEO of Blue Goose, "With the acquisition of Tender Choice, Blue Goose has acquired a tremendous platform to build on the rapid growth of its poultry operations, and allows us to facilitate our growth in the industry."

At this stage it is apparent that Dundee Corp should be placed in liquidation mode over the next few years. No new investments. Sell all assets at the best available price but not in a fire sale. Cut all admin, management & Board costs to the bone to limit the cash drain. Start buying back the preferred shares at prices less than half of par to cut both the ultimate liability & save on the quarterly dividend drain.

Is this not the best way to save shareholder value??


They can’t buyback shares because they need liquidity to pay down the preferreds that are puttable. You may not like it but there is logic to it. As a D class preferred holder, I appreciate that too.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on December 13, 2017, 05:51:16 PM
I’m content to continue to hold the stock, both the common and the preferred (B shares). We should get a valuation on Parq Vancouver sometime in 2018. I’m optimistic that the value wil be $2+ per share. If that comes to pass it will be a game changer. With some more rationalization of the remaining holdings, I think we will have a solid NAV of $7 to $10 with the $2 from Parq. Much of that will be cash and near-cash. If the stock remains where it is now the oportunity to add value through share buy-backs will be immense. If the market is reluctant to reprice the stock, the buy-backs could go on indefinitely.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on December 13, 2017, 08:49:37 PM
In the grips of ferocious tax loss selling Dumbdee hits an all time low of sub $2.40 - this in striking contrast of DC's estimate of it's value per share of $11.79 in just the latest Q3 report. Yet the masterminds behind this destruction of corporate value and collapse of the share price refuse to buy back any shares to support their estimate of the lofty value of their corporation.

The gong show of the Blue Goose shut down of the Tender Choice plant in Q3 underlines the poor decision making and capital allocation still resident in Dundee Corp. Purchased only 1 year ago, the Tender Choice plant was deemed unfit to carry out its processing work and needed significant repairs and modifications. The Blue Goose President was forced to walk the plank. Then the plant burnt down....

TORONTO, ONTARIO--(Marketwired - Oct. 19, 2016) - Blue Goose Capital Corp. ("Blue Goose") ("the Company"), a privately-held, Canadian-based protein and organic food company which is a subsidiary of Dundee Corporation ("Dundee") (TSX:DC.A) today announced the acquisition of Tender Choice Foods Inc. ("Tender Choice"), a leading Burlington, Ontario based processing plant specializing in the processing, packing and distribution of meat products.
"Blue Goose is pleased to have Tender Choice as part of the Blue Goose group of companies," said Ben Nikolaevsky, President and CEO of Blue Goose, "With the acquisition of Tender Choice, Blue Goose has acquired a tremendous platform to build on the rapid growth of its poultry operations, and allows us to facilitate our growth in the industry."

At this stage it is apparent that Dundee Corp should be placed in liquidation mode over the next few years. No new investments. Sell all assets at the best available price but not in a fire sale. Cut all admin, management & Board costs to the bone to limit the cash drain. Start buying back the preferred shares at prices less than half of par to cut both the ultimate liability & save on the quarterly dividend drain.

Is this not the best way to save shareholder value??


They can’t buyback shares because they need liquidity to pay down the preferreds that are puttable. You may not like it but there is logic to it. As a D class preferred holder, I appreciate that too.

Ha! Yeah they're real short on cash or something that can be turned into cash to buyback the common shares. Sell off some of that consistently disappointing position in Dundee Precious Metals...

At the head office level, the corporation held cash of $53.0-million and a portfolio of publicly traded securities with a total value of $194.5-million at the end of the third quarter of 2017.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on December 14, 2017, 02:57:25 AM
In the grips of ferocious tax loss selling Dumbdee hits an all time low of sub $2.40 - this in striking contrast of DC's estimate of it's value per share of $11.79 in just the latest Q3 report. Yet the masterminds behind this destruction of corporate value and collapse of the share price refuse to buy back any shares to support their estimate of the lofty value of their corporation.

The gong show of the Blue Goose shut down of the Tender Choice plant in Q3 underlines the poor decision making and capital allocation still resident in Dundee Corp. Purchased only 1 year ago, the Tender Choice plant was deemed unfit to carry out its processing work and needed significant repairs and modifications. The Blue Goose President was forced to walk the plank. Then the plant burnt down....

TORONTO, ONTARIO--(Marketwired - Oct. 19, 2016) - Blue Goose Capital Corp. ("Blue Goose") ("the Company"), a privately-held, Canadian-based protein and organic food company which is a subsidiary of Dundee Corporation ("Dundee") (TSX:DC.A) today announced the acquisition of Tender Choice Foods Inc. ("Tender Choice"), a leading Burlington, Ontario based processing plant specializing in the processing, packing and distribution of meat products.
"Blue Goose is pleased to have Tender Choice as part of the Blue Goose group of companies," said Ben Nikolaevsky, President and CEO of Blue Goose, "With the acquisition of Tender Choice, Blue Goose has acquired a tremendous platform to build on the rapid growth of its poultry operations, and allows us to facilitate our growth in the industry."

At this stage it is apparent that Dundee Corp should be placed in liquidation mode over the next few years. No new investments. Sell all assets at the best available price but not in a fire sale. Cut all admin, management & Board costs to the bone to limit the cash drain. Start buying back the preferred shares at prices less than half of par to cut both the ultimate liability & save on the quarterly dividend drain.

Is this not the best way to save shareholder value??


They can’t buyback shares because they need liquidity to pay down the preferreds that are puttable. You may not like it but there is logic to it. As a D class preferred holder, I appreciate that too.

Ha! Yeah they're real short on cash or something that can be turned into cash to buyback the common shares. Sell off some of that consistently disappointing position in Dundee Precious Metals...

At the head office level, the corporation held cash of $53.0-million and a portfolio of publicly traded securities with a total value of $194.5-million at the end of the third quarter of 2017.

All true, but they also have a ton of expenses to run the business annually so if you shrink the assets to much, the management expenses get too big as a percentage. I’m not saying it’s a good reason but it’s why they don’t buy back stock now when they did when the stock was 10x higher.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on December 14, 2017, 04:29:29 AM
All true, but they also have a ton of expenses to run the business annually so if you shrink the assets to much, the management expenses get too big as a percentage. I’m not saying it’s a good reason but it’s why they don’t buy back stock now when they did when the stock was 10x higher.

There's probably too much margin of safety for them to invest in their own stock right now.  Makes them uncomfortable. 

In all seriousness:  I understand the need to maintain liquidity, but I'd like to see them put money into their own stock (or buying back prefs or whatever) rather than make new speculative investments.  Pare the operations back to focus only on rationalizing the existing portfolio.  Once the market starts giving them some credit, they can try to grow the company again. 


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on December 14, 2017, 08:59:47 AM
All true, but they also have a ton of expenses to run the business annually so if you shrink the assets to much, the management expenses get too big as a percentage. I’m not saying it’s a good reason but it’s why they don’t buy back stock now when they did when the stock was 10x higher.

There's probably too much margin of safety for them to invest in their own stock right now.  Makes them uncomfortable. 

In all seriousness:  I understand the need to maintain liquidity, but I'd like to see them put money into their own stock (or buying back prefs or whatever) rather than make new speculative investments.  Pare the operations back to focus only on rationalizing the existing portfolio.  Once the market starts giving them some credit, they can try to grow the company again.

But the liquidity is to redeem the E class preferred isn’t it which is like buying back preferred.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bizaro86 on December 14, 2017, 09:10:09 AM

All true, but they also have a ton of expenses to run the business annually so if you shrink the assets to much, the management expenses get too big as a percentage. I’m not saying it’s a good reason but it’s why they don’t buy back stock now when they did when the stock was 10x higher.

Heaven forbid they trim down management expenses a bit as the business shrinks.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Og on December 14, 2017, 09:14:05 AM
You guys can always call their CFO. She responds very promptly to shareholders.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on December 14, 2017, 11:01:19 AM
All true, but they also have a ton of expenses to run the business annually so if you shrink the assets to much, the management expenses get too big as a percentage. I’m not saying it’s a good reason but it’s why they don’t buy back stock now when they did when the stock was 10x higher.

There's probably too much margin of safety for them to invest in their own stock right now.  Makes them uncomfortable. 

In all seriousness:  I understand the need to maintain liquidity, but I'd like to see them put money into their own stock (or buying back prefs or whatever) rather than make new speculative investments.  Pare the operations back to focus only on rationalizing the existing portfolio.  Once the market starts giving them some credit, they can try to grow the company again.

But the liquidity is to redeem the E class preferred isn’t it which is like buying back preferred.

I understand why they want to maintain liquidity.  But occasionally they're deciding to throw money at new investments (or put more money into old investments).  This is also a draw on their liquidity. I'd rather see them put that money into buybacks.

In some cases they may be putting more money into things to keep them afloat.  Sometimes this is necessary and prudent but history has shown that they often throw good money after bad.   

At the very least I'd like to see them stop with new speculative investments. Surely they cannot expect better returns than investing in their own shares and proceeding rationally.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on January 29, 2018, 11:03:39 AM
Through it's holding in Union Group, Dundee indirectly owns 16M shares of ICC Labs (ICC-X), a Cannabis producer in Uruguay. I think it's worth watching because ICC has recently moved up from $1 to $1.70 as it seems to be catching the cannabis wave. At the current price it's worth about 50 cents per Dundee share, or roughly 20% of the market cap. I guess a best case scenario would be that ICC shoots up to $5 or so on a take over or continuation of the bubble, and Union Group sells. Dundee's share of that value would be about $1.40 per share, more than half the current market cap, a not inconsiderable amount.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: colinwalt on January 29, 2018, 11:19:37 AM
Through it's holding in Union Group, Dundee indirectly owns 16M shares of ICC Labs (ICC-X), a Cannabis producer in Uruguay. I think it's worth watching because ICC has recently moved up from $1 to $1.70 as it seems to be catching the cannabis wave. At the current price it's worth about 50 cents per Dundee share, or roughly 20% of the market cap. I guess a best case scenario would be that ICC shoots up to $5 or so on a take over or continuation of the bubble, and Union Group sells. Dundee's share of that value would be about $1.40 per share, more than half the current market cap, a not inconsiderable amount.

Thanks for noticing that and letting us know
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on January 29, 2018, 11:29:44 AM
It is a good catch Rod. So, it has added around $0.18/share to NAV since Sep 30.

Moreover, they also own 228 million shares of DST which has doubled or another $0.17/share to NAV.

Unfortunately, none of that gets recognized or discussed. All we hear is about Blue Goose and the CEO who has been replaced by his brother due to a concussion...

And nothing being done to make value surface. No share buyback, no preferreds buyback which are trading at $12-13 or half of par. No wonder that we see no insider buying!

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on February 06, 2018, 04:11:38 PM
Excerpt from the Intrepid Endurance fund latest quarterly letter. Might be a good idea to sell the 2 Parq hotels once they have some favourable financial & operating history. They agree on continued stupid decisions & poor capital allocation in the Blue Goose acquisition of Tender Choice...


Dundee achieved two important milestones in the third quarter, including closing the sale of United Hydrocarbon
(UHIC) to Delonex Energy and opening the Parq Vancouver casino and resort. The UHIC deal eliminates a $12 million
annual cash drag to Dundee and offers the potential for a future royalty tied to Delonex’s Chadian oil production several
years from now. Parq Vancouver is Dundee’s main opportunity for near-term cash flows, although this is dependent on
refinancing the project’s prohibitively expensive construction debt. We believe Dundee should capitalize on the strong
market for Vancouver hotel transactions and sell the two hotels attached to Parq Vancouver, with proceeds applied to
reducing borrowings.

Just when Dundee’s situation seemed to be incrementally brightening, the company reported in November that it
suspended activities at Blue Goose’s Tender Choice chicken processing facility to address repairs required by the
Canadian Food Inspection Agency. Weeks later, the facility burned down. While destructive fires are unpredictable
(usually, and hopefully in this case), Dundee’s original rationale for purchasing Tender Choice wasn’t strong.
Management claimed Tender Choice would help Blue Goose expand its organic brand into conventional chicken, and
they also suggested vertical integration synergies, but the main purpose was to acquire EBITDA to dilute losses at
the Blue Goose subsidiary. This is another disappointing example of capital allocation by Dundee’s leadership. With
that said, Dundee’s stock already reflects nothing favorable, as it’s trading at less than 25% of tangible book value. If
management can begin extracting cash flow from Parq Vancouver in 2018, Dundee could partially stem its ongoing
bleed in book value. Dundee is not a material position for the Fund.

http://www.intrepidcapitalfunds.com/media/pdfs/fsb0.nschmidt.xf00.193745.endurance_fund_commentary.pdf
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on February 07, 2018, 12:22:28 PM
To see the share price where it is at, along with the preferreds, and these guys doing squat is sickening.

On the DC.PR.B and DC.PR.D, they are now at or below $12. The current dividend yield is respectively 11.8% and 10.6% with once again favorable tax treatment for Canadians.

There is nothing close to that out there. Please chime in if you know of others. Even the Aimia preferreds trade around that price, no longer pay any dividend (accumulates and who knows if will ever be paid?) and the company is on very shaky ground.

What is a bit crazy is that the DC.PR.E trade at $24.30 or pretty close to par of $25 and offer a yield of 7.7%. They did redeem about 10% of them recently and the rest are due for redemption on June 30, 2019.

However, why do investors believe that they will redeem them instead of trying once again to exchange them for another serie as they did for Serie 4? And even if they have the intention to redeem them, why are investors perceiving the financial risk of that happening to be very low with them trading near par, while they discount the "B" and "D" by over half of par???

Considering that Dundee has no longer any bank debt since a little while, still resolved some issues over the past 2 years along with reduction in corporate costs and has enough assets to redeem all these preferreds, the current price definitely looks like an opportunity once again.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on February 07, 2018, 01:50:32 PM
To see the share price where it is at, along with the preferreds, and these guys doing squat is sickening.

On the DC.PR.B and DC.PR.D, they are now at or below $12. The current dividend yield is respectively 11.8% and 10.6% with once again favorable tax treatment for Canadians.

There is nothing close to that out there. Please chime in if you know of others. Even the Aimia preferreds trade around that price, no longer pay any dividend (accumulates and who knows if will ever be paid?) and the company is on very shaky ground.

What is a bit crazy is that the DC.PR.E trade at $24.30 or pretty close to par of $25 and offer a yield of 7.7%. They did redeem about 10% of them recently and the rest are due for redemption on June 30, 2019.

However, why do investors believe that they will redeem them instead of trying once again to exchange them for another serie as they did for Serie 4? And even if they have the intention to redeem them, why are investors perceiving the financial risk of that happening to be very low with them trading near par, while they discount the "B" and "D" by over half of par???

Considering that Dundee has no longer any bank debt since a little while, still resolved some issues over the past 2 years along with reduction in corporate costs and has enough assets to redeem all these preferreds, the current price definitely looks like an opportunity once again.

Cardboard

I'm surprised less than half of those that were allowed to redeem at par did so! They could have redeemed at par and bought their position back below par.

The yield on the D's prospectively is closer to 11.3%. It lags the move in 3 month t-bills and changes every 3 months as I'm sure you are aware.

The BIR.PR.C has a YTM close to 11% (as they are puttable) that are close to that yield. There are some listed bonds with similar YTMs as well.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on February 07, 2018, 03:21:58 PM
I've been holding my nose and buying some common.  I may also top up a bit on the prefs.  They seem much safer to me than the yield would imply. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on February 08, 2018, 06:43:28 AM
"The BIR.PR.C has a YTM close to 11% (as they are puttable) that are close to that yield. There are some listed bonds with similar YTMs as well."

Sure but, YTM's and/or interest yielding securities are different beasts IMO. Here you have around 11% immediate eligible dividend yield. Around 80% upside potential if these preferreds were trading at a yield of 6.5% (more in line to other preferreds based on risk, liquidity). How you translate that into a YTM is a good question but, certainly needs to be considered.

These preferreds are essentially the only debt of Dundee Corp. All other debt is non-recourse except a $10 million loan by Blue Goose guaranteed by Dundee Agriculture. So if you consider them as bonds, the equivalent taxable yield puts them closer to 14%.

And again, there are more than enough assets within Dundee Corp. to redeem them all at par. It is a holding company after all which is not dependent on any of its holdings to keep going. I consider this differently that say a ZAR.DB.A where your only "backing" is one operating business.

Very mispriced IMO and I have been buying.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on February 08, 2018, 07:26:47 AM
"The BIR.PR.C has a YTM close to 11% (as they are puttable) that are close to that yield. There are some listed bonds with similar YTMs as well."

Sure but, YTM's and/or interest yielding securities are different beasts IMO. Here you have around 11% immediate eligible dividend yield. Around 80% upside potential if these preferreds were trading at a yield of 6.5% (more in line to other preferreds based on risk, liquidity). How you translate that into a YTM is a good question but, certainly needs to be considered.

These preferreds are essentially the only debt of Dundee Corp. All other debt is non-recourse except a $10 million loan by Blue Goose guaranteed by Dundee Agriculture. So if you consider them as bonds, the equivalent taxable yield puts them closer to 14%.

And again, there are more than enough assets within Dundee Corp. to redeem them all at par. It is a holding company after all which is not dependent on any of its holdings to keep going. I consider this differently that say a ZAR.DB.A where your only "backing" is one operating business.

Very mispriced IMO and I have been buying.

Cardboard

I am long as well. Didn’t want to give the impression I didn’t agree they were cheap but was trying to answer the question.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on February 08, 2018, 08:53:49 AM

On the DC.PR.B and DC.PR.D, they are now at or below $12. The current dividend yield is respectively 11.8% and 10.6% with once again favorable tax treatment for Canadians.

Cardboard

It's worth noting that the B shares will reset next year and given the 5-year bond is at 2.15%, that would produce a 13% yield on the B's at $12.00. And would anyone be that surprised if the 5-year was 3% by next year? If we reset at 3% then the yield on the B's will be very close to 15%!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on February 08, 2018, 09:04:02 AM
Hopefully this is a sign of continuing clean up of the mess that is the DC portfolio. Unfortunately being done at the 52 week low of ADK shares....

Dundee Corporation Sells Shares in Diagnos Inc.

TORONTO, Feb. 08, 2018 (GLOBE NEWSWIRE) -- In accordance with regulatory requirements, Dundee Corporation (TSX:DC.A) announces that, through its wholly owned subsidiary, Dundee Resources Limited, it has sold 2,026,000 common shares (“Shares”) of Diagnos Inc. (the “Issuer”).
Immediately prior to the disposition of securities described in this news release, Dundee owned 18,487,764 Shares representing an approximate 10.72% interest in the Issuer on an undiluted basis.  Immediately following the transaction that triggered the requirement to file this news release, Dundee owns 16,461,764 Shares, representing an approximate 9.55% interest in the Issuer on an undiluted basis.

Dundee acquired the Shares of the Issuer for investment purposes only. Dundee intends to review, on a continuous basis, various factors related to its investment, including (but not limited to) the price and availability of the securities of the Issuer, subsequent developments affecting the Issuer or its business, and the general market and economic conditions.  Based upon these and other factors, Dundee may decide to purchase or sell securities of the Issuer.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on February 08, 2018, 12:33:57 PM

On the DC.PR.B and DC.PR.D, they are now at or below $12. The current dividend yield is respectively 11.8% and 10.6% with once again favorable tax treatment for Canadians.

Cardboard

It's worth noting that the B shares will reset next year and given the 5-year bond is at 2.15%, that would produce a 13% yield on the B's at $12.00. And would anyone be that surprised if the 5-year was 3% by next year? If we reset at 3% then the yield on the B's will be very close to 15%!

Also if you own the Ds at that point you can ask to convert to the Bs if you want to lock in for 5 years.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on February 12, 2018, 02:12:31 PM
https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aPMA-2568009&symbol=PMA&region=C

$12,000 worth of securites sold which triggers the need for a press release or a cost of around $3,000. Smart!

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Maximu$ on February 12, 2018, 03:51:27 PM
I am long the B and C rate reset preferreds.  Given that the rate reset feature provides significant protection from interest rate risk, I assume the large discount from par value primarily reflects the poor quality of the Dundee assets.  Out of (morbid) curiosity, when I see a NR like the one you just referred to I investigate the company to see if it is a hidden gem or a dog.  Petromaroc traded as high as $0.25 over the last 5 years and has fallen to $0.06 as of today.  The company currently has a NBV of $.02, with the assets by my figuring being approx. 5M shares of sound energy and $500K in cash (see Feb '18 news release re payment of debentures).  Petromarcoc is now effectively a shell ready for the re-birth of some equally speculative venture as the one they just exited.  My question after reviewing several of DC.A's holding is ... What is DC.A doing wasting its time on holdings like these?  And, why would I let Dundee manage my money in their new, fledgling investment management business when this is what they themselves invest in.  I think a serious re-focusing and re-branding is required.  Don't get me wrong ... I love investing in mining and speculative companies; however, these should be part of a balanced portfolio of other, more solid businesses providing consistent and growing cash flows.  Am I missing something with DC.A?

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on February 13, 2018, 05:10:58 PM
https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aPMA-2568009&symbol=PMA&region=C

$12,000 worth of securites sold which triggers the need for a press release or a cost of around $3,000. Smart!

Cardboard

They sold the remaining 13.2 million shares today for approx $800k (0.06 per share).

As usual with Dundee, I'm curious what triggered the sale, and even more curious what triggered the investment in the first place. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on February 13, 2018, 05:30:39 PM
Wondering if anyone knows what are their cost basis for Diagnos and PETROMAROC?  If I had to guess, they probably bought high and sold low.  Of course, the main worry is that they need the cash due to a liquidity crunch.  I think they sold DREAM last year for this reason.

Discl: long DC.B, DC.D
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on February 13, 2018, 05:55:00 PM
Wondering if anyone knows what are their cost basis for Diagnos and PETROMAROC?  If I had to guess, they probably bought high and sold low.  Of course, the main worry is that they need the cash due to a liquidity crunch.  I think they sold DREAM last year for this reason.

Discl: long DC.B, DC.D

I think it's just part of a plan to reduce their holdings generally. I don't think there's more to it than that.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on February 13, 2018, 07:19:04 PM
Wondering if anyone knows what are their cost basis for Diagnos and PETROMAROC?  If I had to guess, they probably bought high and sold low.  Of course, the main worry is that they need the cash due to a liquidity crunch.  I think they sold DREAM last year for this reason.

Discl: long DC.B, DC.D

After a little digging I came up with the following narrative, but I did it on the quick so take it for what it's worth:

- In Feb 2012, Dundee buys 10 million shares of APIC Petroleum at $0.20 per (a 13% interest)

- In Fall 2012, APIC agrees to  merge with Longreach Oil & Gas, which has a focus in Morocco.  APIC does a private placement prior to the merger to raise cash for the soon-to-be-combined entity's drill program.  They raise $30 million through subscription receipts.

- Dundee participates in the private placement, buying another 56 million shares at 0.13 per (now a 21.4% interest)

- The merger goes ahead. Shareholders of APIC are entitled to one share of Longreach for every 5.3846 APIC shares.

- In April 2014, Dundee purchases $2.8 million in units of Longreach, each unit priced at $1000 and consisting of $1000 face in convertible debentures + 1000 warrants with $0.30 strike.

- In July 2014, Longreach changes its name to PetroMaroc.  At this point Dundee has nearly 13 million shares of PetroMaroc.

- In November 2014, Dundee Capital Markets is appointed financial advisor to evaluate "financial alternatives".  PetroMaroc does another PP, the first tranche raises $3 million at $0.15 a share.

- In January 2015, PetroMaroc announces second tranche of the PP was unsuccessful, and debenture interest due Dec 2014 would be paid in shares, valued at $0.06 each.  Dundee should have received about 1 million shares through their debenture holdings.

So altogether, Dundee's Petromaroc shares cost them roughly $9.25 million.   Sold today for less than a tenth of that.

There's also the $2.8 million in debentures+warrants, which I presume are still outstanding.  And possibly some more sunk money through affiliates. (e.g. in July 2017, PetroMaroc announces a debt-for-shares settlement with a Dundee subsidiary, where $325k of debt is exchanged for 1 million shares at a deemed price of $0.325 (US) per share -- a curiously huge premium to market)

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on February 14, 2018, 02:29:12 AM
What is a bit crazy is that the DC.PR.E trade at $24.30 or pretty close to par of $25 and offer a yield of 7.7%. They did redeem about 10% of them recently and the rest are due for redemption on June 30, 2019.

However, why do investors believe that they will redeem them instead of trying once again to exchange them for another serie as they did for Serie 4? And even if they have the intention to redeem them, why are investors perceiving the financial risk of that happening to be very low with them trading near par, while they discount the "B" and "D" by over half of par???


I'm fairly new to Dundee but FWIW Series 5 shareholders would get to vote on any exchange, as the Series 4 holders did; they would presumably only vote for it if they liked it, and dissidents would presumably be paid in cash as they were for the Series 4 exchange. So I think the put, which is valid any time from June 2019, has real value compared to the Series 2 and 3 prefs (for which par is only really relevant in a bankruptcy) so I am not surprised the 5s trade where they do.

What's more interesting to me is that a) the 4s were exchanged for mix of a smaller amount of 5s and subordinate share warrants, meaning the 4s were partially converted into equity (although I don't know if the warrants converted). If they keep doing that, in effect, the 2's and 3's get promoted up the capital structure. The 5's are also convertible to sub shares at the company's call. It's hard to see any rationale for doing that at the moment but if things got really tight at Dundee it presumably could happen, which only accelerates the promotion of the 2's and 3's. Putting it another way, the 5's are accounted for as debt, depressing the equity coverage of the 2's and 3's. That might be too conservative.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on February 14, 2018, 02:42:33 AM
Wondering if anyone knows what are their cost basis for Diagnos and PETROMAROC?  If I had to guess, they probably bought high and sold low.  Of course, the main worry is that they need the cash due to a liquidity crunch.  I think they sold DREAM last year for this reason.

Discl: long DC.B, DC.D

DREAM solves the liquidity crunch. They are now very net cash at the holdco and have virtually no recourse debt. There's no liquidity crunch - just a question mark over whether you really want these guys allocating that cash. Judging by the carrying value vs. cost of the investment and equity-accounted portfolios as of q3 they are very good at buying high.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bizaro86 on February 14, 2018, 06:37:52 AM
Wondering if anyone knows what are their cost basis for Diagnos and PETROMAROC?  If I had to guess, they probably bought high and sold low.  Of course, the main worry is that they need the cash due to a liquidity crunch.  I think they sold DREAM last year for this reason.

Discl: long DC.B, DC.D

DREAM solves the liquidity crunch. They are now very net cash at the holdco and have virtually no recourse debt. There's no liquidity crunch - just a question mark over whether you really want these guys allocating that cash. Judging by the carrying value vs. cost of the investment and equity-accounted portfolios as of q3 they are very good at buying high.

I would value a stack of hundreds in my safe deposit box at face value.

I would value a stack of hundreds a crazy guy had lit on fire at zero, even if they theoretically belonged to me.

I'm not totally sure where Dundee fits on the scale, but their record is pretty bad on some of this stuff.

That being said, they do have $2 in retained earnings for every $1 in capital raised. If they would stick to building and selling financial services businesses instead of investing in speculative nonsense this would probably be a great investment.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: no_free_lunch on February 14, 2018, 07:28:18 AM
I'm not totally sure where Dundee fits on the scale, but their record is pretty bad on some of this stuff.

That being said, they do have $2 in retained earnings for every $1 in capital raised. If they would stick to building and selling financial services businesses instead of investing in speculative nonsense this would probably be a great investment.

You really nailed it.  What seems to have changed is their diversification efforts, the sale of some of their financial service businesses and the former CEO retiring/passing control to his kids.  I am not sure this is the same company it once was.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on February 14, 2018, 07:31:28 AM
DREAM solves the liquidity crunch. They are now very net cash at the holdco and have virtually no recourse debt. There's no liquidity crunch - just a question mark over whether you really want these guys allocating that cash. Judging by the carrying value vs. cost of the investment and equity-accounted portfolios as of q3 they are very good at buying high.

I would value a stack of hundreds in my safe deposit box at face value.

I would value a stack of hundreds a crazy guy had lit on fire at zero, even if they theoretically belonged to me.

I'm not totally sure where Dundee fits on the scale, but their record is pretty bad on some of this stuff.

That being said, they do have $2 in retained earnings for every $1 in capital raised. If they would stick to building and selling financial services businesses instead of investing in speculative nonsense this would probably be a great investment.
[/quote]

I noticed that both Dundee and Pinetree Capital were principal investors in APIC / Longreach / Petromaroc.   I haven't looked into it but I wonder to what extent they were drinking the Sheldon Inwentash kool-aid.   A bunch of these guys were heroes in the pre-crisis commodities boom and I don't think they learned their lessons from the crisis.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on February 14, 2018, 07:37:03 AM

I would value a stack of hundreds in my safe deposit box at face value.

I would value a stack of hundreds a crazy guy had lit on fire at zero, even if they theoretically belonged to me.

I'm not totally sure where Dundee fits on the scale, but their record is pretty bad on some of this stuff.


Agreed. I may have misunderstood the post I was replying to. I thought you were wondering what triggered the most recent share sales, and speculating that it might be a current liquidity issue, which it clearly isn't. That doesn't change the fact that they might create one in the future by being morons!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on February 26, 2018, 01:59:22 PM
I'm confused about how the dividend on the Series 3 (DC.PR.D) shares is being calculated. Today the dividends on the three series of preferred shares were declared by press release. The D shares will be getting $0.30637, which is $1.225 annualized. This is a yield of 4.90% on face value of $25. The dividend is supposed to be set at the rate of the 3-month Government of Canada T-bill plus 4.10%. So why is the dividend set as if the T-bill is 0.80%? I see today that it is trading at 1.15%. Does anyone understand this?

From the AIF:

"The holders of Series 3 Shares are entitled to receive a quarterly floating rate dividend, as and when declared by the board of directors of the Company, equal to the then current three-month Government of Canada Treasury Bill Yield plus 4.10%."
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on February 26, 2018, 07:20:55 PM
I'm confused about how the dividend on the Series 3 (DC.PR.D) shares is being calculated. Today the dividends on the three series of preferred shares were declared by press release. The D shares will be getting $0.30637, which is $1.225 annualized. This is a yield of 4.90% on face value of $25. The dividend is supposed to be set at the rate of the 3-month Government of Canada T-bill plus 4.10%. So why is the dividend set as if the T-bill is 0.80%? I see today that it is trading at 1.15%. Does anyone understand this?

From the AIF:

"The holders of Series 3 Shares are entitled to receive a quarterly floating rate dividend, as and when declared by the board of directors of the Company, equal to the then current three-month Government of Canada Treasury Bill Yield plus 4.10%."

The language in the AIF is not clear (or even accurate?).  Look at the Series 2 prospectus.  The rate is calculated as follows:

- The payment period for the dividend just declared runs from December 31 to March 30, which is 90 days.

- The "floating rate calculation date" (FRCD) is 30 days prior to December 31, so December 1

- The T-bill rate is the 3-month average yield from the auction immediately prior to the FRCD.  This auction was on Nov 28, with avg yield 0.87.  (see https://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/selected-treasury-bill-yields-10-year-lookup/ (https://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/selected-treasury-bill-yields-10-year-lookup/) )

- The dividend paid is then (4.10 + 0.87)/100 * 90/365 * 25 = 0.30637

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on February 26, 2018, 07:47:46 PM
I'm confused about how the dividend on the Series 3 (DC.PR.D) shares is being calculated. Today the dividends on the three series of preferred shares were declared by press release. The D shares will be getting $0.30637, which is $1.225 annualized. This is a yield of 4.90% on face value of $25. The dividend is supposed to be set at the rate of the 3-month Government of Canada T-bill plus 4.10%. So why is the dividend set as if the T-bill is 0.80%? I see today that it is trading at 1.15%. Does anyone understand this?

From the AIF:

"The holders of Series 3 Shares are entitled to receive a quarterly floating rate dividend, as and when declared by the board of directors of the Company, equal to the then current three-month Government of Canada Treasury Bill Yield plus 4.10%."

The language in the AIF is not clear (or even accurate?).  Look at the Series 2 prospectus.  The rate is calculated as follows:

- The payment period for the dividend just declared runs from December 31 to March 30, which is 90 days.

- The "floating rate calculation date" (FRCD) is 30 days prior to December 31, so December 1

- The T-bill rate is the 3-month average yield from the auction immediately prior to the FRCD.  This auction was on Nov 28, with avg yield 0.87.  (see https://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/selected-treasury-bill-yields-10-year-lookup/ (https://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/selected-treasury-bill-yields-10-year-lookup/) )

- The dividend paid is then (4.10 + 0.87)/100 * 90/365 * 25 = 0.30637

Well, that explains it. Thank you. Note to future self: "check the prospectus".
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on February 28, 2018, 10:20:27 AM
https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aPMA-2568009&symbol=PMA&region=C

$12,000 worth of securites sold which triggers the need for a press release or a cost of around $3,000. Smart!

Cardboard

They sold the remaining 13.2 million shares today for approx $800k (0.06 per share).

As usual with Dundee, I'm curious what triggered the sale, and even more curious what triggered the investment in the first place.

I'm certain Dumbee has sold most or all (18.5 million shares) of their position in Diagnos as well following the early warning report on the 8th of April. Good to see them disposing of the garbage spec share positions and realizing some cash. Cleaning up the holdco and reducing it down to a relatively easy to understand businesses should be good in the longer term for the share price vis a vis the NAV discount narrowing. Combined the aforementioned sale & the Diagnos one would have brought in about $2.5mm.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on March 02, 2018, 01:26:00 PM

I'm certain Dumbee has sold most or all (18.5 million shares) of their position in Diagnos as well following the early warning report on the 8th of April.

I'm sure I am about to get schooled but why are you certain?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on March 02, 2018, 01:31:47 PM

I'm certain Dumbee has sold most or all (18.5 million shares) of their position in Diagnos as well following the early warning report on the 8th of April.

I'm sure I am about to get schooled but why are you certain?

Probably should have said I'm making an educated guess. Reasons why..

Previous EWR position (Petromaroc) was fully sold,
Trading in Diagnos showed substantial sale volume subsequently by the same broker at the same price level that handled the sale resulting in the EWR

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on March 02, 2018, 01:56:08 PM
Thanks! I'd make the same guess. Here's hoping.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on March 08, 2018, 07:01:33 AM
I was just doing some digging on the current state of Tender Choice.  Found this brief article from Jan 28 that may be of interest to some:

It’s been almost two months since the massive fire at the Paletta International building in Burlington. The fire marshal’s office has wrapped up their part of the investigation, they don’t know what caused the fire and the building has now been handed over to owner.

“We were all in the office and we actually heard and felt a large rumbling coming from the ceiling. A couple of my office staff saw some steel beams come through the wall and the fire alarm went off and about 10 seconds after that we saw smoke coming into our office.” Angelo Paletta, owner.

They all got out and within minutes the entire east side of the building was engulfed causing about $10 million in damage. Their tenet, a meat processor called Tender Choice Foods, have since filed for bankruptcy leaving about 150 employees without jobs. Prior to the fire their operating license had been suspended by the Canadian Food Inspection agency for failing to meet requirements relating to building maintenance. There were contractors working there the day it caught fire.

We reached out to the parent company of Tender Choice Foods to ask about their employees, their plans going forward and if there was a working sprinkler system, they wouldn’t answer any of our questions instead directing us to with their court appointed receiver Deloitte who weren’t able to answer either.


I also stumbled on the Google Reviews for Tender Choice.  Horrible, and darkly funny:

- 1 star:  "Canada's worst job site. ever" . one star
- 1 star: "Do not work here ! The working conditions and the environment at this plant is terrible. The plant manager under pays and insults workers plus the work quite unreasonable, better off working some where else !"
-  5 star: "It's on fire."

Blue Goose bought this business in fall 2016.  These guys could make money generating power from the incinerator where they burn the money.  Virtuous cycle.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gitawa on March 08, 2018, 07:21:50 AM
Can anyone give me the links to the prospectuses? Thanks
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on March 08, 2018, 07:27:18 AM
Can anyone give me the links to the prospectuses? Thanks

For the preferred?

I picked them up from here:

https://www.preferredstockchannel.com/symbol/dc.prb.ca/

(this is for the B/Ds and there's a link for the A page)
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gitawa on March 09, 2018, 03:24:22 AM
Got it. thanks.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on March 28, 2018, 09:56:41 AM
Wow.  I got filled at $1.99 today.  As usual, my elation at getting a bargain quickly turns to fear that I'm the patsy.

Results will be out after market close today. I expect a significant Blue Goose write-down, but haven't seen anything to suggest other calamities. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on March 28, 2018, 11:14:53 AM
Wow.  I got filled at $1.99 today.  As usual, my elation at getting a bargain quickly turns to fear that I'm the patsy.

Results will be out after market close today. I expect a significant Blue Goose write-down, but haven't seen anything to suggest other calamities.

I beat you by 1 cent--bought a little at $1.98.

I don't think the sellers are engaged in any long term thinking here. In fact, I feel that about the market generally. I've seen a lot of stocks that just sit there at very cheap prices and nobody wants them because they don't see any immediate catalyst. In seems to me we are in one of those markets where investors refuse to look more than a few months ahead and want immediate returns. Reminds me of the late 1990s.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: benhacker on March 28, 2018, 02:13:20 PM
Don't the Series E preferred have a put feature with DC.a at $2?  Does that concern you regarding dilution as a common owner??  I own a tiny slice of the D series preferred, so not following closely.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on March 29, 2018, 12:06:23 PM
Wow.  I got filled at $1.99 today.  As usual, my elation at getting a bargain quickly turns to fear that I'm the patsy.

Probability that I'm the patsy is increasing every day! ;)

Ugly results.  I expected the Blue Goose writeoff. The Union Group impairment was a surprise and I think should be viewed as a permanent loss of capital, despite their commentary about future revaluations.  I must say that, aside from publicly traded securities, I value all of their holdings at a very substantial discount -- but it's still amazing to see them go to zero one by one. 

Interesting call today.  An analyst from Intrepid Capital (which has a legacy position in Dundee via its Endurance Fund) challenged Jon Goodman to give any examples where Dundee has actually added value over the past few years,  and openly pushed for liquidation. Not going to happen, although management is embarking on a strategic review of their holdings and was guiding to end of summer as a date by which we should expect to see some disposals. 

My other takeaway from the call was that we shouldn't expect too much out of Parq too soon.   They expect EBITDA to be $50-$75 million this year, ramping up to $100 in coming years. But they'll be putting another $20-25 million of capital into the project in the very near term, and will continue paying exorbitant interest during the ramp-up period. 

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on March 29, 2018, 12:12:40 PM
Don't the Series E preferred have a put feature with DC.a at $2?  Does that concern you regarding dilution as a common owner??  I own a tiny slice of the D series preferred, so not following closely.

As I recall, the put allows Dundee to pay the prefs either in cash or the greater of (1) $2, or (2) 95% of recent trading price. 

They're quite aware of the redemption and will raise cash by selling some of their holdings. Or at least that's the plan.   They have a bit of work to do on that front because corporate burn + extra capital deployed to Parq and others will eat through all current cash resources.  So yes the redemption is on my mind but I see a very low chance of them going nuclear with dilution. 




Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on March 29, 2018, 12:39:36 PM
Yes, redemption of these preferreds is very much on their mind for 2019 based on the call today. However, please don't forget that they also have an $80 million unused credit line as to cash availability. It matures at the end of April so we will see the renewal amount but, I would be shocked if it turned out to be zero.

I think that there is a lot of optionality with this company if managed properly: selling assets or a large portfolio, buying back securities trading at severe discounts, more focus, cost reduction, all of this with a book value of $10.36 for a stock price of $1.87 right now or a 82% discount!

Even if assuming some write-offs, value is there and you have to jump in when everyone is rushing out. It feels very uncomfortable or not unlike Fairfax at $87 in 2003 or BAC at $5 in 2011. However, I cannot see how this implodes (at least for a few years) while I could have had with the other two.

The message from Intrepid and another analyst was very clear today or to deliver returns and to stick with what they know. It was very blunt and there was some acknowledgement that status quo is not working: expensive, complicated and unprofitable to manage 100 holdings.

Jonathan Goodman is correct that there is an opportunity with the development of junior miners. In this world of ETF's and algos, anything small is totally ignored especially after a multi-year bear market for most commodities. An example is Altius Minerals who does specialize in that with some success.

If he brings more urgency to liquidate the underperforming and/or unrelated and develops a smart, low capital investment banking operation to develop only the most promising juniors, this could turn out rather well or like dad did.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on March 29, 2018, 01:20:08 PM
Wow.  I got filled at $1.99 today.  As usual, my elation at getting a bargain quickly turns to fear that I'm the patsy.

Probability that I'm the patsy is increasing every day! ;)

Ugly results.  I expected the Blue Goose writeoff. The Union Group impairment was a surprise and I think should be viewed as a permanent loss of capital, despite their commentary about future revaluations.  I must say that, aside from publicly traded securities, I value all of their holdings at a very substantial discount -- but it's still amazing to see them go to zero one by one. 

Interesting call today.  An analyst from Intrepid Capital (which has a legacy position in Dundee via its Endurance Fund) challenged Jon Goodman to give any examples where Dundee has actually added value over the past few years,  and openly pushed for liquidation. Not going to happen, although management is embarking on a strategic review of their holdings and was guiding to end of summer as a date by which we should expect to see some disposals. 

My other takeaway from the call was that we shouldn't expect too much out of Parq too soon.   They expect EBITDA to be $50-$75 million this year, ramping up to $100 in coming years. But they'll be putting another $20-25 million of capital into the project in the very near term, and will continue paying exorbitant interest during the ramp-up period.

Dundee was hit pretty hard by natural disasters in 2017: Blue Goose had TWO major fires, one in the Tender Choice plant and the other a major fire in the cattle ranch in BC. Also, Union Group had a dam under construction washed away by floods in Peru. I think that may have had a large impact on Union Group and led directly to the writedown. Throw in a CEO concussion for good measure...

If I remember correctly the refinancing of Parq doesn't need to wait until the project has fully ramped. I believe they are planning to do it this year.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on March 29, 2018, 01:24:03 PM
Yes, redemption of these preferreds is very much on their mind for 2019 based on the call today. However, please don't forget that they also have an $80 million unused credit line as to cash availability. It matures at the end of April so we will see the renewal amount but, I would be shocked if it turned out to be zero.

I think that there is a lot of optionality with this company if managed properly: selling assets or a large portfolio, buying back securities trading at severe discounts, more focus, cost reduction, all of this with a book value of $10.36 for a stock price of $1.87 right now or a 82% discount!

Even if assuming some write-offs, value is there and you have to jump in when everyone is rushing out. It feels very uncomfortable or not unlike Fairfax at $87 in 2003 or BAC at $5 in 2011. However, I cannot see how this implodes (at least for a few years) while I could have had with the other two.

The message from Intrepid and another analyst was very clear today or to deliver returns and to stick with what they know. It was very blunt and there was some acknowledgement that status quo is not working: expensive, complicated and unprofitable to manage 100 holdings.

Jonathan Goodman is correct that there is an opportunity with the development of junior miners. In this world of ETF's and algos, anything small is totally ignored especially after a multi-year bear market for most commodities. An example is Altius Minerals who does specialize in that with some success.

If he brings more urgency to liquidate the underperforming and/or unrelated and develops a smart, low capital investment banking operation to develop only the most promising juniors, this could turn out rather well or like dad did.

Cardboard

I certainly got the impression that Jonathan is going to be more aggressive on the restructuring front than David was. Agree with you about lots of opportunities to create value. The upside versus downside on this stock is very attractive.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on April 02, 2018, 06:25:11 AM
GMP...


   Equity Research
 
Dundee Corporation   BUY
DC.A-TSX   
Last:   C$1.98
Target:   C$6.40
 
Q4/17 – Eventful quarter, key progress made
 
 
Undiscounted NAV $8.00

Dundee Corp. (DC.A-TSX) reported its Q4/17 results on March 28th, after the market closed. Our NAV was of $8.00 versus $9.19 previously, was lower q/q largely due to a write-down at Blue Goose and at Cambridge Medical Funding. The discount to NAV increased to ~75%, up from 67% q/q.

Notable events

A catastrophic fire at the facilities of Blue Goose Pure Foods Ltd. (“BGPF”), a subsidiary, rendered the facilities inoperative, catapulting BGPF into receivership as BGPF did not have any recourse. As a result, the net assets of BGPF were derecognized and an associated loss of $22.6 million was recognized.

Cambridge has indicated it will no longer acquire any further medical receivables as a result of an investigation by Californian authorities into excessive and improper medical billings, effectively raising concerns on collectability. As a result, the investment in Cambridge was deemed fully impaired, resulting in a loss of $8.5 million.

Parq guidance

Management has given guidance for 2018 and expects to generate EBITDA of $50 to $75 million and in excess when operations are fully ramped up. As a result of expected increases in customer traffic and slot utilization rates, 50% to 60% of EBITDA is expected to be generated through casino operations while the remainder is from hotel operations and beverage services. To fund operations, we note, the casino requires a capital injection of $25 million between the ownership group.

Maintain BUY – Strategic review

In our view, management has made some progress towards meeting key objectives, which included streamlining their corporate cash needs. Annual corporate level cash needs (interest, dividends, op. expenses, capital) are now ~$59 million as management continues to streamline operations. Net cash at the corporate level was ~$40.5 million exiting the quarter. Our NAV is now $8.00 (previously $9.19). The discount to NAV increased to ~75%. We apply a 20% discount to yield our target of $6.40 (previously $8.00). We maintain our BUY rating. See Figure 1 for our NAV sensitivity analysis.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: ADcure? on April 03, 2018, 12:33:15 PM
With cash on hand of about 40M and annual needs of about 59M, how long do you think till they hit zero, seriously?
Thanks for your thoughts
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on April 03, 2018, 02:26:41 PM
With cash on hand of about 40M and annual needs of about 59M, how long do you think till they hit zero, seriously?
Thanks for your thoughts

Costs are way lower than 59M. I think that number includes capital investment into Parq Vancouver
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on April 11, 2018, 09:26:18 AM
United Hydrocarbons at $72 Brent is becoming highly valuable to this company.

Now, I can see why people would not want to touch the stock but, what about the preferreds B and D now yielding over 12% and selling at 45% of par?

Here is a thought. The preferred E could be exchanged for stock next year at whatever the stock is trading at that point.

Not the plan but, if that was to happen, the only debt left for this company would be the preferred B and D which is overall $130 million at par.

Book value is $10.36 per share or $610 million and this assumes that the preferred E or $90 million are redeemed for cash. If they are not, then there is $700 million to honour the preferreds B and D.

So you are talking years of cash burn and for most of investments to be written off to zero to get par on these in trouble.

Dundee Corp. right now, looks to me like a margin account (debt are the preferreds) that has a bunch of stocks deep in the red and the holder is unwilling to let them go or waiting for things to turn.

The new guy has said that 100 positions is way too many and wants to cleanup. If that happens then liquidity has to dramatically increase which should certainly alleviate fears around the preferreds.

Makes any sense?

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on April 11, 2018, 10:06:53 AM
It makes a lot of sense and I’ve been thinking the same. Unfortunately under MIFID2 in Europe ALL securities that pay out based on a reference value are termed PRIIPS and PRIIPS can only be sold in Europe if they come with a Key Information Document or KID. KIDs are 3 pages long and are so summarised as to be actively unhelpful but apparently we are all too stupid to read the real underlying documents. Anyway, obviously only European issuers give a fuck about it this and issue KIDs so the unintended consequence is Europeans can’t buy floating rate bonds or prefs issued outside Europe. (Or maybe it was an intended consequence - capital controls anyone?) And this comes in just when rates are rising and the only way to protect yourself is ... a floating rate bond! And while I’m on a roll, the final straw is that I’m British, and we are leaving the EU, so why are we implementing the damned regulation anyway?

In case you can’t tell I’m bloody annoyed. I’ve emailed Dundee and asked them to consider preparing a KID. They are pretty basic and can refer to a prospectus so it would take about five minutes. Got no reply. (Atlantic Power replied and said no.)

Grrr.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on April 13, 2018, 07:28:10 AM
The new guy has said that 100 positions is way too many and wants to cleanup. If that happens then liquidity has to dramatically increase which should certainly alleviate fears around the preferreds.

Makes any sense?

Cardboard

Agreed with most of your points, and I've been holding my nose and buying.

Many of the 100+ holdings must be of very low value. I hope that they are aggressive with their clean-up process.  I think market sentiment would improve dramatically  if they were to cut their losses on some of the larger non-performing holdings. It's not like anyone is currently assessing these things at their carrying value anyway. So the writedowns wouldn't be a surprise, and the simplicity/transparency gained would be significant.

The market is currently pricing this business to anticipate "more of the same".  Any substantive action demonstrating that the new sheriff is optimistic and will run things differently would be very welcome.   (Along these lines, I think management is being unnecessarily stubborn/noncommittal regarding repurchases and insider purchases.)
 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on April 13, 2018, 07:59:48 AM
"Along these lines, I think management is being unnecessarily stubborn/noncommittal regarding repurchases and insider purchases."

Isn't this crazy to you that while they are a large holder (9.6 million shares or still worth $17 million) and their family is highly associated to this company, that it takes other people to tell them what to do or the obvious? And even then they refuse?

I mean if the salaries were much larger than the stake I could see the incentives but, here?

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on April 13, 2018, 08:01:15 AM
"Along these lines, I think management is being unnecessarily stubborn/noncommittal regarding repurchases and insider purchases."

Isn't this crazy to you that while they are a large holder (9.6 million shares or still worth $17 million) and their family is highly associated to this company, that it takes other people to tell them what to do or the obvious? And even then they refuse?

I mean if the salaries were much larger than the stake I could see the incentives but, here?

Cardboard

There is a reason I titled this thread "Dumbdee"...
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on April 13, 2018, 08:25:52 AM
There is a reason I titled this thread "Dumbdee"...

Indeed.  Although perhaps the title needs to be updated to reflect that it has moved from a "30% of NAV bargain?" to a "17% of NAV bargain?"!!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on April 25, 2018, 09:08:33 AM
Horizon Kinetics done selling??
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on April 25, 2018, 10:28:14 AM
I have been buying the preferreds "B".

Amazing value and they would have to screw up in a crazy way to impair these. And even if partially impaired, they are at $11.40 vs par of $25...

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on April 25, 2018, 11:36:37 AM
I have been buying the preferreds "B".

Amazing value and they would have to screw up in a crazy way to impair these. And even if partially impaired, they are at $11.40 vs par of $25...

Cardboard

Ditto.  And couldn't resist picking away at some common in the mid $1.70s. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on April 25, 2018, 01:51:00 PM
I’m split half and half between B prefs and common. I’ve been reinvesting the dividends from the prefs into common. I don’t average down—I set a position size at the beginning, so reinvesting divs is all I can do. Feels good to get a 12% yield then reinvest that in assets that seem to be worth at least double or triple the price I’m paying.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on April 30, 2018, 07:37:55 AM
Dundee: An Under The Radar Holding Company Trading At A Significant Discount To Conservative NAV


https://seekingalpha.com/article/4167479-dundee-radar-holding-company-trading-significant-discount-conservative-nav


Summary

Trades at a significant discount to conservative NAV of $4.41 per share, compared to stated NAV of $10.36.

Dundee has a variety of levers to pull to realize value for shareholders; it continues to de-risk the portfolio and is reducing costs at the corporate level.

The Goodman family has significant financial and reputational skin in the game and has never sold a share.

Liquidity concern re preferred notes due 2019 is unwarranted as it has the option to pay cash, issue common shares or a combination of the two.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Foreign Tuffett on April 30, 2018, 08:25:48 AM
A couple questions after 15 minutes of research:

Aren't they liquidity-constrained? Based on the CC comments they have 60 million in cash needs this year. Next year they'll have to make a decision on how they want to redeem the (82 million par value?) preferred. The idea is that they will sell off assets to raise cash, thus closing the large market price-NAV spread right? Why haven't they been more aggressive in selling off assets to raise cash?

Do they have any major subsidiaries that will likely be cash generative in the near future? Similarly, do they have any subsidiaries that are strong businesses?


 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on April 30, 2018, 01:56:17 PM
A couple questions after 15 minutes of research:

Aren't they liquidity-constrained? Based on the CC comments they have 60 million in cash needs this year. Next year they'll have to make a decision on how they want to redeem the (82 million par value?) preferred. The idea is that they will sell off assets to raise cash, thus closing the large market price-NAV spread right? Why haven't they been more aggressive in selling off assets to raise cash?

Do they have any major subsidiaries that will likely be cash generative in the near future? Similarly, do they have any subsidiaries that are strong businesses?

Well their position in Dundee precious metals is publicly traded and currently worth $118 million - this could be sold easily over the next year to raise money to redeem those preferreds.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on April 30, 2018, 05:59:44 PM
I think it’s important to note that holders chose to redeem less than allowed at previous redemption dates of DC.PR.E and that will likely be the case on June 30, 2019.

Its possible, they will trade like DRM.PR.A which trade at a premium to par and are puttable at any time.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: obtuse_investor on April 30, 2018, 06:13:26 PM
I ran into a writeup about Dundee today from Roumell Asset Management, which is a value shop of the Ben Graham variety.

http://www.roumellasset.com/pdf/update_1Q2018.pdf

It includes a SOTP analysis and their conservative estimate of NAV comes to about $4.40/share. The writeup is on pages 5 and 6.

Enjoy.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on April 30, 2018, 06:36:12 PM
I ran into a writeup about Dundee today from Roumell Asset Management, which is a value shop of the Ben Graham variety.

http://www.roumellasset.com/pdf/update_1Q2018.pdf

It includes a SOTP analysis and their conservative estimate of NAV comes to about $4.40/share. The writeup is on pages 5 and 6.

Enjoy.

Just FYI the Seeking Alpha post above is from the same outfit.

I really don't understand fears over the pref A redemption.  There are plenty of levers to pull.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 01, 2018, 05:55:39 AM
A couple questions after 15 minutes of research:

Aren't they liquidity-constrained? Based on the CC comments they have 60 million in cash needs this year. Next year they'll have to make a decision on how they want to redeem the (82 million par value?) preferred. The idea is that they will sell off assets to raise cash, thus closing the large market price-NAV spread right? Why haven't they been more aggressive in selling off assets to raise cash?

Do they have any major subsidiaries that will likely be cash generative in the near future? Similarly, do they have any subsidiaries that are strong businesses?

Well their position in Dundee precious metals is publicly traded and currently worth $118 million - this could be sold easily over the next year to raise money to redeem those preferreds.

Here is more on Dundee PM which is worth about $2 per DC.A share at the current price and about $3.25 per Dundee share at Paradigm's $5 target price....

In Summary....

Dundee Precious Metals: Hosted a lunch with DPM senior mgmt recently… in sum, it’s a cheap name that has deep value and a lot of growth within the next 12-18 months.
•   The Tsumeb smelter is operating efficiently – generated FCF for the first time of $7m in 2017 and CEO Rick Howes tells us we can expect $12-15m FCF going forward at Tsumeb
•   With both mines operational in 2019… AuEq >350koz @ $600oz AISC for the next 3 years….
•   We expect DPM to generate $120m in FCF each year between 2019-2021
•   Cheapest of the junior producers:
o   0.49x p/nav, vs junior producer avg. of 0.91x.
o   5.2x p/cf, vs junior producer avg. of 7.1x.




Dundee Precious Metals Inc.
RESEARCH NOTE | May 1, 2018
Don MacLean, Sr. Analyst | 416. 360.3459 |dmaclean@paradigmcap.com
Don Blyth, Analyst| 416.360.3461| dblyth@paradigmcap.com
Lauren McConnell, Analyst | 416.366.7776 | lmcconnell@paradigmcap.com

Open Path to Revaluation

Investment Thesis. DPM has the potential to achieve a substantial rerating, based on strong
growth over the next 1–2 years, but first it must prove it can operate its Tsumeb smelter profitably
and secondly DPM, now with permitting and financing complete, it must build the Krumovgrad
mine. We believe it can.

Event

We hosted a client lunch on April 24 with members of DPM’s senior management team
(CEO, CFO, SVP Corporate Development and Investor Relations). While DPM has
already experienced strong outperformance, up 19% in the last year, we believe a
further 30–50% rerating is setting up to occur in 2018 as the Tsumeb Smelter
continues to perform and remains cash flow positive, Chelopech remains a steady core
performer and Krumovgrad moves toward first concentrate in late 2018, positioning
DPM for a >100% increase in cash flow.


Highlights

 Smelter Transitioning to Free Cash Flow | Five years of construction finally
wound down in 2017 with an essentially new plant. Smelters require continuous
operation and the on-and-off nature of tying in rebuilt parts of the project precluded
this. The only continuous aspect was that the operating team constantly had to
learn new features about the processes. Since Q1/17, Tsumeb has essentially
been able to operate continuously, save the annual refractory relining (now every
14–15 months), showing that it is able to break even or better. Nameplate capacity
is 240KTpa. It produced 220Kt in 2017 and is guided to 220–250KTpa in 2018, with
upside to 265KTpa without further construction capital. Our C$7.27/sh NAV for
DPM attaches zero value to the smelter (Figure 1), which we suspect other analysts
do as well. Indeed, the market might assign a negative intrinsic value via a risk
discount, given the long history of capital consumption ($50M acquisition plus
$365M construction, plus sustaining capex). Our luncheon discussion confirmed
that there are no longer obstacles to prevent Tsumeb from operating continuously,
or extra capital items required that will prevent it from generating net free cash flow.
If it can do so in 2018, together with the three-quarter stretch in 2017, we would
expect the market to gradually lower its smelter risk discount.
 Construction of Krumovgrad on Time and Below Budget I As of March 31,
Krumovgrad’s construction was 59% complete with $96.3M having been spent and
a further $66–$72M to be spent over the next two quarters (total $162–$168M,
budget $178M). Commissioning and start-up are expected in Q3/18 with first
concentrate production in Q4/18 (targeted for November). Krumovgrad’s production
is expected to average 103Koz/year for the first five years, increasing DPM’s gold
production by an average of 60% and boosting our estimated cash flow by an
average of 75% during that timeframe.

Chelopech Continuing to Deliver I Chelopech has been DPM’s cash flow engine, and while
grades have been declining to align with reserve grade, this has been offset by productivity improvements. The mine, now one of the most modern in the world, is positioned to deliver
relatively steady grades and hence cash flow going forward. Until 2016, exploration at Chelopech had focused in-mine. DPM now has several targets that it is testing outside of the current mine area, but still very close to existing infrastructure. It has planned 15,000m this year, comprising 10,000m infilling existing holes at the Southeast Breccia Pipe Zone (SEBPZ)
and 5,000m at the Krasta target (Figure 2). Underground drilling at SEBPZ in 2017 confirmed
the potential for economically significant high-sulphidation style copper-gold mineralization over the 1,500m strike length. This year the focus will be to conduct systematic underground drilling to test the large areas between previous drilling. At the Krasta target, drilling only
began in late 2017 with two surface diamond drill holes showing encouraging results with alternation and copper-gold mineralization similar to the Chelopech high-sulphidation style
ore bodies.

 What’s Next for DPM? I A substantial valuation multiple lift (about one-third) typically comes with growing a company from a Junior to an Intermediate producer. For us, the threshold is +250–300Koz/year. We estimate that DPM will produce gold in concentrate of 263Koz and 305Koz in 2019 and 2020, respectively, and will generate net free cash flow of $75M and $150M. Once Krumovgrad is up and running in Q4/18, will it deploy this cash and, if so, how?
Management feels that it should be deployed. An operating project would be ideal, otherwise a development/advanced exploration-stage project would make sense, particularly in Eastern
Europe, where it has a solid track record and understanding. In our April 9 Gold Sector research note, we suggested that DPM and Nevsun Resources (NSU-T, C$5.20 TP, Buy) would be a good fit as Nevsun proceeds with its Timok project in Serbia, where DPM also has exploration/development projects (Lenovac, Timok and Tulare projects). Another possibility
could be Sabina (SBB-T, C$3.25 TP, Speculative Buy), of which it currently holds ~10% of
the shares outstanding. DPM acknowledged that it has always liked the project and the upside potential that Back River has (see our April 18 research note), but had always viewed SBB as too big. That might change in 2018–2019. Sabina’s market cap is $333M and the preproduction capex is $426M (our estimate), whereas DPM’s market cap is $453M. It would be a large bite, but one that could be considerably more doable with DPM’s US$75–
US$150M/year of net free cash flow and if a rerating of DPM occurs.

Valuation & Conclusion

We think that DPM is positioned for a rerating among the Junior Producers in 2018. It is now finally able to offer more predictable performance and free cash flow from its existing operations, the smelter in particular, followed by strong growth starting in late 2018 from the new Krumovgrad mine. If
investors can gain confidence that the smelter will be at least self-funding and Krumovgrad starts up
without the problems experienced by most new projects these days, we think DPM could see a 30–
50% rerating, possibly more. It stands to reason that it will take multiple quarters before investors stop looking for the elephant in the room, but the upside is considerable and we believe it is achievable. DPM is trading at 0.45x NAV@5%, assuming spot gold of $1,315/oz and zero value for the smelter. Our Junior and Intermediate averages are 0.91x and 0.81x, respectively. We mention both tiers
because with 2019–2021 production of 263–305Koz/year, plus copper, DPM will be on the 250–
300Koz/year threshold of our Intermediate category. With base metal and gold multiples now very
similar, we like DPM’s blend of copper and gold. The smelting element might keep its valuation
multiple below its gold peer average, but we still we see potential for a further 30–50%+ relative outperformance over the next year. DPM remains a Top Pick with a Buy rating and C$5.00 target.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on May 14, 2018, 05:49:53 PM
Dundee's Q1 report was released this morning.  More losses, yawn.  NAV down to $10.06 from $10.36 at Dec 31.

Some highlights:

- Raised approx $43mm from asset sales, mostly publicly listed securities.  Details weren't provided but it appears that they've sold off some (all?) of their shares in Osisko.  No sales of Dundee Precious Metals or eCobalt Solutions.

- They had $37mm cash at end of Q.

- All of their subsidiaries experienced operating losses, except for Dundee Energy (small gain due to accounting gimmickry) and UHIC (revaluation of future royalties given higher oil price).

- The Parq "ramp up" is not going as well as expected. They put another $17mm into the project.  Refinancing unlikely to happen in Q2, probably Q3 or Q4.

- Put another $7mm into Blue Goose, which had a $6.4mm operating loss.  They were asked on the call if/when they would throw in the towel on some of these losers.  No clear answer aside from saying the status quo is not an option.

- They're "streamlining" GCIC and expect to move the bulk of the AUM to other platforms.  Unclear what effect this will have on GCIC's numbers.

- Only two analysts on the call.  Very few probing questions.



Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 15, 2018, 07:02:50 AM
GMP commentary....

Dundee Corporation BUY

DC.A-TSX

Last: C$1.89   May 14, 2018 ▼ Target: C$5.90

Q1/18 – Streamlining continues

Undiscounted NAV $7.37

Dundee Corp. (DC.A-TSX) reported its Q1/18 results on May 14, 2018. Our NAV
of $7.37 versus $8.00 previously was lower q/q largely due to losses
recognized in its equity accounted investments and the continued
underperformance of some of its investments. The discount to NAV is
consistent at ~74%, largely unchanged q/q.

Notable events

Proceeds of $43.0 million was recognized from the sale of a basket of
securities (Osisko Mining Inc. being one) – non-core to the business. A portion
of the proceeds were invested in Parq Vancouver ($17.4 million). GCIC
reported AUM of $210.8 million, an increase of $16.7 million, y/y. GCIC has
indicated that during Q2/18, it will complete a streamlining of its private client
line of business, following which ~$130 million in AUM will be transferred to
other platforms. Relief efforts through government compensation has been
sought with responses expected in Q2/18, for a wildfire that resulted in higher
feed costs for Blue Goose.

Parq guidance

Parq Vancouver became fully operational in Jan/18. The initial ramp up of
operations were slower than expected due to regulations and higher costs.
However, Parq Vancouver is forecasting improved results in Q2/Q3 – in line
with an improved outlook on the overall tourism industry in B.C. Funding of
$33.4 million by two partners were invested into the project in order to meet
certain obligations.

Maintain BUY – Strategic review

In our view, management has made some progress towards meeting key
objectives. Management has created an industry-focused capital markets
group with the hire of four seasoned professionals; subsidiaries will proceed
with their streamlining activities to reduce annual corporate cash needs. Net
cash at the corporate level was ~$37.2 million exiting the quarter. Our NAV is
now $7.37 (previously $8.00). The discount to NAV remain largely consistent at
~74%. We apply a 20% discount to yield our target of $5.90 (previously $6.40).
We maintain our BUY rating. See Figure 1 for our NAV sensitivity analysis.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on May 15, 2018, 07:36:21 AM
Osisko released an underwhelming resource estimate for their Windfall deposit yesterday after market close.  OSK shares are currently down 20%.   I wonder what price Dundee got for their shares. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: lessthaniv on May 15, 2018, 08:23:51 AM
A 50% allocation of investment dollars between the commons and the preffered seems to make sense to me. Net dividends of 5.75%. The pref is acquired at <50% of par which hedges the capital invested into the common if you believe in the safety of the prefs. Limits the downsize exposure immensely but still gives significant exposure to the undervalued common. A textbook asymmetric bet.

Value here is visible. Hence, I’ve joined the party.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on May 15, 2018, 08:41:50 AM
I am a little over 50% into the stock but, totally agree with you Lessthaniv.

Let's hope that this Goodman or Jonathan finally wakes up sometime this summer when he is done with his portfolio review and does something constructive.

Oh, and I had to hold myself yesterday not to call in and to tell Lucie to go FU in her retirement and hoping to never hear from her again!

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on May 15, 2018, 08:57:13 AM
I am a little over 50% into the stock but, totally agree with you Lessthaniv.

Let's hope that this Goodman or Jonathan finally wakes up sometime this summer when he is done with his portfolio review and does something constructive.

Oh, and I had to hold myself yesterday not to call in and to tell Lucie to go FU in her retirement and hoping to never hear from her again!

Cardboard

Do you have something specific against Lucie?  Just curious.   I don't hold her responsible for bad investing decisions and I found her answers to questions were generally quite thorough and explanatory.  But I haven't been following this company for years so don't know any of the history.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 15, 2018, 10:33:34 AM
Recent review of the Marriott at Parq including many photos....

https://pointswise.ca/jw-marriott-parq-hotel-review-water-view-guest-room-vancouver-bc/



Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on May 30, 2018, 08:23:04 AM
The B prefs are on sale again, trading with a yield over 12.5%. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on May 30, 2018, 10:17:35 AM
That new CEO will finish his review of the portfolio this summer and then will take action...

Seriously, how much analysis do you need to figure out that buying your debt at 46 cents on the dollar is a good deal?

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on May 30, 2018, 10:24:23 AM
That new CEO will finish his review of the portfolio this summer and then will take action...

Seriously, how much analysis do you need to figure out that buying your debt at 46 cents on the dollar is a good deal?

Cardboard

Or buying the common at like 25% of NAV is as well. Anyone know when Delonex begins to drill in Chad? Brent price back over $77 again - will be a very nice royalty at these prices....

Delonex paid US$35 million on the closing of the Transaction (subject to applicable escrow and holdback requirements), and will pay an additional US$50 million if first oil is achieved, including US$20 million for first oil at Doba and US$30 million for first oil at Block H. United will retain a royalty of 10 percent on Doba production and a 5 per cent royalty on Block H production, payable unless the average price of Brent Crude oil is less than US$45 for a quarter.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on May 30, 2018, 10:47:23 AM
That new CEO will finish his review of the portfolio this summer and then will take action...

Seriously, how much analysis do you need to figure out that buying your debt at 46 cents on the dollar is a good deal?

Cardboard

I doubt they'd be able to scoop up much at these prices, due to limited volume etc.   But any amount would be accretive and would send a strong signal that they're not asleep at the wheel.

I'm anxiously waiting to see if they have any sensible ideas as to what to do with all the money-losing subs and private equity investments.  We're in a situation here where I think *any* positive development will precipitate meaningful upside in both the common and prefs.  And the bar for "positive" is pretty low.  I mean these guys can look good simply by selling some assets at a fraction of the carrying value.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 07, 2018, 10:48:54 AM
Did someone say something naughty at the AGM on Monday or something?  Shares down to all time low of $1.65 today, and looking like they're heading lower under steady selling pressure.

Someone is making a half-assed attempt at a patient exit.

I see that over 12% the subordinate share votes were withheld across the board.  Not that it matters when the Goodman's shares count 100 votes per.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on June 07, 2018, 11:03:54 AM
They were asked about buying back stock and they are reluctant while they are still trying to improve their liquidity position.

If someone was hoping that was a near term catalyst perhaps that would prompt an exit.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on June 07, 2018, 12:12:50 PM
Jonathan is still not done with his portfolio review. That will be sometime late this summer. Until then, impossible to consider buying back debt for less than 50 cents on the dollar, nor shares at a fraction of NAV.  ::)

Dumbdee what the proper title for this thread. I really don't know how these childrens can possibly look at themselves in the mirror.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on June 07, 2018, 01:14:10 PM
I pushed him on buying back the pref over the common primarily because it reduces future cash outflows and is effectively a risk free after tax return (to them) of over 12%.

The catalyst here could be whatever Delonex ends up reporting. That royalty could be a home run.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on June 07, 2018, 01:23:58 PM
I pushed him on buying back the pref over the common primarily because it reduces future cash outflows and is effectively a risk free after tax return (to them) of over 12%.

The catalyst here could be whatever Delonex ends up reporting. That royalty could be a home run.

Parq Vancouver could be a big win as well. It's opening into one of the best hotel markets in North America. Commercial properties are selling for very high valuations. It's hard to believe that there aren't Chinese investors taking an interest in it. And, hopefully this isn't culturally insensitive, but a gold building in Vancouver with a large casino... Can you think of anything more appealing to Chinese investors?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 07, 2018, 01:41:15 PM
I pushed him on buying back the pref over the common primarily because it reduces future cash outflows and is effectively a risk free after tax return (to them) of over 12%.

The catalyst here could be whatever Delonex ends up reporting. That royalty could be a home run.

Parq Vancouver could be a big win as well. It's opening into one of the best hotel markets in North America. Commercial properties are selling for very high valuations. It's hard to believe that there aren't Chinese investors taking an interest in it. And, hopefully this isn't culturally insensitive, but a gold building in Vancouver with a large casino... Can you think of anything more appealing to Chinese investors?

With regard to Parq, I was a bit surprised to read this in the annual letter:

"To date, results have been encouraging but more work needs to be done to reach our internal targets. And while the Casino is performing well, both hotels remain in ramp-up mode and results for the food and beverage options have been mixed. The Victor has proven to be premier destination for connoisseurs of steak and seafood, while other restaurants will require a repositioning to help ensure their competitive position."

All of my lame Google research led me to the conclusion that the casino was subpar (at least for experienced players, particularly with respect to poker) whereas the hotels were excellent.  And the restaurants seem to all have strong reviews, again based on minimal research.

They go on to say:

"Earlier this year, we provided guidance for EBITDA of between $50 and $75 million for Parq Vancouver in 2018. While we
still think this goal is reachable, it may take slightly longer than originally anticipated to achieve. Longer-term, once the project is fully ramped up, we anticipate that it has the potential to achieve annual EBITDA of greater than $70 million. However, we need to address the capital structure in order to ensure Parq Vancouver’s longer term viability. Currently, Dundee and its two equity partners in the project, PBC Group and Paragon Gaming, are exploring alternatives that could result in a debt refinancing or other changes to the capital or ownership struc- ture. While we have a favorable view of Parq Vancouver, and continue to believe in its potential as a cornerstone asset, ex- ploring various alternatives at this stage in its life is prudent."


All their recent language regarding Parq has been aimed at lowering any near-term expectations.   But it's now at the point where we don't need Parq to be a home run.  Any reasonable refinancing / restructuring of the project should allay concerns and be positive for Dundee shares.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 07, 2018, 01:49:17 PM
I pushed him on buying back the pref over the common primarily because it reduces future cash outflows and is effectively a risk free after tax return (to them) of over 12%.

The catalyst here could be whatever Delonex ends up reporting. That royalty could be a home run.

Agreed on Delonex.  Apparently they expect a well to be drilled this calendar year, so a reasonably near term potential catalyst.

Do you mind sharing his response to being pushed on the prefs?  I understand the company not buying back the common at this point.  I don't understand insiders staying out of the market -- not even a nibble -- and I really don't understand why the company doesn't at least make an attempt at taking out some of those prefs.  Instead, they're talking about building out a merchant banking business.  Do they seriously think they can outlay capital in any manner that competes with the risk-free return they'd get from buying the prefs?

Of course there's very likely not enough liquidity for them to buy much anyway, and I don't know the costs of maintaining a buyback program. Maybe those are big factors. But my guess is that they overestimate their ability as investors/businessmen and are simply being irrational.


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on June 07, 2018, 02:02:16 PM
I pushed him on buying back the pref over the common primarily because it reduces future cash outflows and is effectively a risk free after tax return (to them) of over 12%.

The catalyst here could be whatever Delonex ends up reporting. That royalty could be a home run.

Agreed on Delonex.  Apparently they expect a well to be drilled this calendar year, so a reasonably near term potential catalyst.

Do you mind sharing his response to being pushed on the prefs?  I understand the company not buying back the common at this point.  I don't understand insiders staying out of the market -- not even a nibble -- and I really don't understand why the company doesn't at least make an attempt at taking out some of those prefs.  Instead, they're talking about building out a merchant banking business.  Do they seriously think they can outlay capital in any manner that competes with the risk-free return they'd get from buying the prefs?

Of course there's very likely not enough liquidity for them to buy much anyway, and I don't know the costs of maintaining a buyback program. Maybe those are big factors. But my guess is that they overestimate their ability as investors/businessmen and are simply being irrational.

I believe that Richard McIntyre exercised 45,000 rights in April. Unless I am misunderstanding this, that would represent a commitment of about $90,000
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: obtuse_investor on June 07, 2018, 02:47:39 PM

Of course there's very likely not enough liquidity for them to buy much anyway, and I don't know the costs of maintaining a buyback program. Maybe those are big factors. But my guess is that they overestimate their ability as investors/businessmen and are simply being irrational.

From what I have observed; Canadian listed entities with low liquidity end up doing a tender offer to draw out the impatient motivated sellers.

If the management offers low liquidity as the reason for the lack of buybacks, you can be sure they don't want to buy back shares. Where there is a will, there is a way. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on June 07, 2018, 03:01:58 PM
I pushed him on buying back the pref over the common primarily because it reduces future cash outflows and is effectively a risk free after tax return (to them) of over 12%.

The catalyst here could be whatever Delonex ends up reporting. That royalty could be a home run.

Agreed on Delonex.  Apparently they expect a well to be drilled this calendar year, so a reasonably near term potential catalyst.

Do you mind sharing his response to being pushed on the prefs?  I understand the company not buying back the common at this point.  I don't understand insiders staying out of the market -- not even a nibble -- and I really don't understand why the company doesn't at least make an attempt at taking out some of those prefs.  Instead, they're talking about building out a merchant banking business.  Do they seriously think they can outlay capital in any manner that competes with the risk-free return they'd get from buying the prefs?

Of course there's very likely not enough liquidity for them to buy much anyway, and I don't know the costs of maintaining a buyback program. Maybe those are big factors. But my guess is that they overestimate their ability as investors/businessmen and are simply being irrational.

The pushback was mainly that capital is finite and that they need the liquidity for paying off the DC.PR.E (which by the way shows no fear like the rest of the capital structure does) and running the business. I think they are just afraid of spending the capital on enhancing shareholder value in the short term and then having to do something dilutive later on.

He did say that he is considering buying some common and preferred personally but didn’t say what he was waiting for.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on June 12, 2018, 05:59:12 AM
You can hear audio of the AGM at this link:

https://www.youtube.com/watch?v=5xsFtnIBLYI

Commentary and Q/A begin at 10 minute mark.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Sportgamma on June 12, 2018, 07:55:59 AM
You can hear audio of the AGM at this link:

https://www.youtube.com/watch?v=5xsFtnIBLYI

Commentary and Q/A begin at 10 minute mark.

The old guy at the meeting was pretty funny. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 12, 2018, 09:12:38 AM
You can hear audio of the AGM at this link:

https://www.youtube.com/watch?v=5xsFtnIBLYI

Commentary and Q/A begin at 10 minute mark.

The old guy at the meeting was pretty funny.

Yeah that was something.  He's probably been on quite the return trip with his Dundee shares.

Volume has really picked up the past couple days in this $1.65-$1.70 range.  It'll take a while to clear a big holder who wants out.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on June 12, 2018, 11:21:05 AM

Yeah that was something.  He's probably been on quite the return trip with his Dundee shares.

Volume has really picked up the past couple days in this $1.65-$1.70 range.  It'll take a while to clear a big holder who wants out.

Probably the guy who asked about the share buyback.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 19, 2018, 05:23:26 AM
DC.PR.E (which by the way shows no fear like the rest of the capital structure does).

That's because they're puttable, which in effect means they rank senior to the other prefs. The YTM would be sky high if they traded much below par!

Interestingly they are also convertible at the company's option into common at the current price, which enhances the value of the other prefs IMHO and is potentially very dilutive to the common given the current market cap.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on June 19, 2018, 05:36:41 AM
DC.PR.E (which by the way shows no fear like the rest of the capital structure does).

That's because they're puttable, which in effect means they rank senior to the other prefs. The YTM would be sky high if they traded much below par!

Interestingly they are also convertible at the company's option into common at the current price, which enhances the value of the other prefs IMHO and is potentially very dilutive to the common given the current market cap.

Actually the E shares are convertible into common at the current price or $2, whichever is greater. You might think the E holders would be a little worried about that with the common currently below $2.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 19, 2018, 05:43:23 AM
Does anyone know much about TauRx? I am struck by the carrying valuation - both in that it is significant, suggesting real value is present (despite poor trials results) and in that it is discounted by 50%, suggesting rapid potential upside if the discount is removed.

Could be a zero, could be a hero, and I have no idea which. Does anyone?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 19, 2018, 05:47:12 AM
DC.PR.E (which by the way shows no fear like the rest of the capital structure does).

That's because they're puttable, which in effect means they rank senior to the other prefs. The YTM would be sky high if they traded much below par!

Interestingly they are also convertible at the company's option into common at the current price, which enhances the value of the other prefs IMHO and is potentially very dilutive to the common given the current market cap.

Actually the E shares are convertible into common at the current price or $2, whichever is greater. You might think the E holders would be a little worried about that with the common currently below $2.

Given that they're sitting on a bunch of liquid investments, I find it hard to believe that they'd dilute their own holdings in the common to pay off the E's.    I'm sure they don't want to sell off much DPM, but if it's a choice between that and diluting the hell out themselves, I think they would sell.   

I haven't read the E prospectus lately: can they do a hybrid thing, part cash part equity?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 19, 2018, 05:54:15 AM
DC.PR.E (which by the way shows no fear like the rest of the capital structure does).

That's because they're puttable, which in effect means they rank senior to the other prefs. The YTM would be sky high if they traded much below par!

Interestingly they are also convertible at the company's option into common at the current price, which enhances the value of the other prefs IMHO and is potentially very dilutive to the common given the current market cap.

Actually the E shares are convertible into common at the current price or $2, whichever is greater. You might think the E holders would be a little worried about that with the common currently below $2.

Given that they're sitting on a bunch of liquid investments, I find it hard to believe that they'd dilute their own holdings in the common to pay off the E's.    I'm sure they don't want to sell off much DPM, but if it's a choice between that and diluting the hell out themselves, I think they would sell.   

I haven't read the E prospectus lately: can they do a hybrid thing, part cash part equity?

I can't remember but that's effective what they did with the D's I think, so where there's a will there's a way.

This may link into the buyback discussion in that they won't want to use any liquidity on un-necessary buybacks until the dilution risk is gone.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 19, 2018, 05:57:43 AM
Does anyone know much about TauRx? I am struck by the carrying valuation - both in that it is significant, suggesting real value is present (despite poor trials results) and in that it is discounted by 50%, suggesting rapid potential upside if the discount is removed.

Could be a zero, could be a hero, and I have no idea which. Does anyone?

I did a reasonably deep dive into this a while back.  My conclusion was that it should be conservatively treated as a 0.

They did some a questionable post-hoc statistical analysis on their last (failed) trial data, and are moving toward a new trial on that basis.  Outside experts are extremely skeptical -- with the analysis of the failed trial, and with the biochemistry of the drug itself (which is a derivative of the commonly used stain methylene blue).

Here's an old post.  You can find plenty more recent ones via the Google:

https://www.alzforum.org/news/conference-coverage/first-phase-3-trial-tau-drug-lmtm-did-not-work-period

I hope Dundee manages to sell off their stake so there is some fractional recovery.  But at this point I don't even know what they could get for it, so it may just linger there until a seemingly inevitable write-off.  As Jon Goodman said at the AGM:  There's a difference between book value and what we could actually sell these things for (paraphrased).
 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on June 19, 2018, 06:04:14 AM
Does anyone know much about TauRx? I am struck by the carrying valuation - both in that it is significant, suggesting real value is present (despite poor trials results) and in that it is discounted by 50%, suggesting rapid potential upside if the discount is removed.

Could be a zero, could be a hero, and I have no idea which. Does anyone?

Casino-Backed Startup Eyes Alzheimer's Cure Worth $2.5 Billion

By Joyce Koh  and Livia Yap
March 1, 2018 at 8:24:41 PM EST

 TauRx will look at options including IPO if trial successful
 Big pharmaceutical companies have exited or failed in field

It hasn’t found a cure for Alzheimer’s disease and doesn’t have any drugs on the market. Yet, TauRx Pharmaceuticals Ltd. says the company’s worth about $2.5 billion as it embarks on its latest trial funded by shareholders including casino operator Genting Bhd.

If the trial proves successful, the Singapore-based company plans to apply to European and U.S. regulators for conditional or accelerated approval of its drug, TauRx Deputy Chairman Tay Siew Choon said in an interview in the city-state last month. It will also need to raise about $150 million to conduct a more comprehensive phase III trial, though at that point, it would evaluate options including an initial public offering or sale.

TauRx is pressing ahead in a field that has seen many of the largest pharmaceutical players from Pfizer Inc. to Axovant Sciences Ltd. exit or fail. Just last month, Merck & Co. said it will end a trial of its most advanced Alzheimer’s drug while Biogen Inc.’s shares tumbled after saying it was making changes to its trial. TauRx disappointed investors in 2016 when it said its LMTX drug failed to meet a primary goal of slowing the rate of disease progression when taken in combination with other Alzheimer’s drugs.

“We have consistently seen that our theory works, and there’s no reason to give it up,” said Tay. “Shareholders’ support and faith in us has not weakened.”

On top of a $71 million rights issue in October to fund the current trial, TauRx had already raised more than $500 million since 2002, according to Tay. The last financing round in 2016 valued the company at about $2.5 billion, he said. Billionaire Lim Kok Thay’s Genting invested $112 million in TauRx in 2012, becoming its biggest shareholder with about a 20 percent stake.

TauRx has been recruiting patients since November for the current trial, where it plans to test its drug on 200 patients with mild Alzheimer’s disease who aren’t taking any other medication. The results are expected in early 2019.

https://www.bloomberg.com/news/articles/2018-03-02/casino-backed-startup-eyeing-alzheimer-s-cure-worth-2-5-billion
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bizaro86 on June 19, 2018, 07:52:06 AM
How venal are these guys? From the perspective of the common/remaining prefs it seems like the best option would be to cash out the shares with equity at $2, given that equity is grading at $1.69. That much dilution would tank the stock, so you could probably do a tender and get most/all the shares back for $1 to $1.50, which is potentially pretty accretive.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 20, 2018, 06:30:19 AM
How venal are these guys? From the perspective of the common/remaining prefs it seems like the best option would be to cash out the shares with equity at $2, given that equity is grading at $1.69. That much dilution would tank the stock, so you could probably do a tender and get most/all the shares back for $1 to $1.50, which is potentially pretty accretive.

It might not tank the stock. All the liquidity issues and some of the leverage would go away, and I suspect there is also a dilution discount in the price now which would also go; plus you'd still only end up at about 0.3x book!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bizaro86 on June 20, 2018, 10:01:40 AM
It 100% would tank the stock, at least in the short term. There would be a huge additional supply of shares in the hands of buyers of the prefs close to Par. Those aren't people who want Dundee common, and many of them will sell indiscriminately.  The stock is well below $2 right now, and volume would be up and price would be down post a conversion,  so a big tender then would be timely.

There are lots of examples of companies converting income securities to common (usually debs) in the Canadian market, I can't think of one where the stock didn't decline badly in the short term.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 20, 2018, 11:25:15 AM
It 100% would tank the stock, at least in the short term. There would be a huge additional supply of shares in the hands of buyers of the prefs close to Par. Those aren't people who want Dundee common, and many of them will sell indiscriminately.  The stock is well below $2 right now, and volume would be up and price would be down post a conversion,  so a big tender then would be timely.

There are lots of examples of companies converting income securities to common (usually debs) in the Canadian market, I can't think of one where the stock didn't decline badly in the short term.

Absolutely agree.  I think it would kill the stock. 

Would it not also significantly hamper their ability to  raise additional funds, even years in the future?   

I think it is very unlikely that they go this route.    And I also think it's very unlikely they'd be astute enough to put out a tender if they *did* go this route!

 


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on June 20, 2018, 12:46:34 PM
Come on guys...

They have $100's of millions of assets that can be sold to easily cover.
They have no debt other than this maturity of $82 million. Rest are preferreds "B" and "D" with no maturity.
They had cash of $37 million at HQ on March 31.
The unused credit line of $20 million (other than $3.8 million for letters of credit) will be renewed over the next few days with the new CFO and could be used to repay a portion of it.
Someone could lend them money at 8-10% subordinated only to the bank debt, guaranteed by assets with covenants, etc.
And I am certain that this preferred could be extended once more for a good chunk of existing holders if terms are slightly improved.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on June 20, 2018, 12:52:36 PM
Come on guys...

They have $100's of millions of assets that can be sold to easily cover.
They have no debt other than this maturity of $82 million. Rest are preferreds "B" and "D" with no maturity.
They had cash of $37 million at HQ on March 31.
The unused credit line of $20 million (other than $3.8 million for letters of credit) will be renewed over the next few days with the new CFO and could be used to repay a portion of it.
Someone could lend them money at 8-10% subordinated only to the bank debt, guaranteed by assets with covenants, etc.
And I am certain that this preferred could be extended once more for a good chunk of existing holders if terms are slightly improved.

Cardboard

There is an assumption that these DC.PR.E will all be put next June but it’s unlikely to happen. These same preferred holders have had chances to put their preferred twice already and have undersubscribed to that option each time. These will probably end up trading DRM.PR.A, slightly above par as everyone who wants to put does and everyone else sits and does nothing.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 20, 2018, 01:42:46 PM
They have $100's of millions of assets that can be sold to easily cover.

Out of interest, what should they prioritise selling in your view? The obvious assets (DPM, Parq, and the Chad royalty) aren't at a point where they could be sold for full value. And the others, well, who knows if there is much value there at all?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 20, 2018, 05:55:38 PM
They have $100's of millions of assets that can be sold to easily cover.

Out of interest, what should they prioritise selling in your view? The obvious assets (DPM, Parq, and the Chad royalty) aren't at a point where they could be sold for full value. And the others, well, who knows if there is much value there at all?

I know I wasn't asked, but my 2 cents:

I think they'll be a bit aggressive with Parq.  I'm not basing this on anything more scientific than "reading between the lines", but I think they've realize the ramp-up will take longer than expected, the results won't be as rosy as predicted, and they can't keep putting more into it. So I expect they'll transact even if at a non-opportune time. 

The easiest thing for them to sell would be DPM.  But given Jon Goodman's predisposition toward mining, and his statements to the effect that DPM is a labour of love, and that it's undervalued etc., I'm guessing they'll try to hold on to that one.


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 21, 2018, 12:33:14 AM
They have $100's of millions of assets that can be sold to easily cover.

Out of interest, what should they prioritise selling in your view? The obvious assets (DPM, Parq, and the Chad royalty) aren't at a point where they could be sold for full value. And the others, well, who knows if there is much value there at all?

I know I wasn't asked, but my 2 cents:

I think they'll be a bit aggressive with Parq.  I'm not basing this on anything more scientific than "reading between the lines", but I think they've realize the ramp-up will take longer than expected, the results won't be as rosy as predicted, and they can't keep putting more into it. So I expect they'll transact even if at a non-opportune time. 

The easiest thing for them to sell would be DPM.  But given Jon Goodman's predisposition toward mining, and his statements to the effect that DPM is a labour of love, and that it's undervalued etc., I'm guessing they'll try to hold on to that one.

The quickest way to raise cash would be to sell the $70m they have invested in Ecobalt and other small listed stakes, plus $30m in debt. I trust the valuations on those and I imagine a decent chunk of those will be sold as part of the portfolio review and just a few will be kept and nurtured. I'm not including the value of DST here which looks like an option worth keeping to me.

For me the second most obvious asset is to sell is Parq. I agree the language around Parq is only going in one direction. My guess is they'll get back something around what they put in but at least it will improve the liquidity profile.

I don't think it makes sense to sell DPM until the new mine is up and running.

Then you get into the harder stuff, where I find it very hard to know if there is meaningful realisable value: roughly $100m BV in other private equity (excluding Parq prefs) + TauRx + Android + Sarea which could be worth anything from $0 upwards. And Union - could be worth $50m or nothing (they have it on the books at the value of ICC but I don't know if they have the power to force a sale of ICC and distribution of cash so it may be meaningless). Finally Agrimarine and Dream 360. All of these could go but one has to assume it would take time and a haircut.

P
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 21, 2018, 08:56:06 AM
I believe the Blue Goose land was valued at $100m in 2006. a) does that sound right and b) does anyone know what debt Blue goose has?

Thanks.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on June 21, 2018, 09:04:15 AM
I believe the Blue Goose land was valued at $100m in 2006. a) does that sound right and b) does anyone know what debt Blue goose has?

Thanks.

Blue Goose and its subsidiaries have entered into several borrowing arrangements, pursuant to which Blue Goose had borrowed an aggregate of $60,015,000 at December 31, 2017 (2016 – $55,130,000).
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 21, 2018, 09:05:44 AM
The Union Group investment is very strange. I've been meaning to get in touch with them to ask a few questions about this but haven't yet done so. Does anyone here know much about what's going on?

Last we heard, the write-down was because Union couldn't provide audited financials, and they said something to the effect that they're waiting on Union to provide them with such and will revisit the valuation later.  But there's been no word since -- no mention at all in the latest Q.  And they wrote it down to the value of ICC less a 30% discount.  Do they have any way at all of extracting value from this?

They were asked about Blue Goose land value on one of the recent calls.  My understanding was that the land value would be impaired significantly by the fires, but can't remember if this was said or inferred by me.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 21, 2018, 09:55:56 AM
I believe the Blue Goose land was valued at $100m in 2006. a) does that sound right and b) does anyone know what debt Blue goose has?

Thanks.

Blue Goose and its subsidiaries have entered into several borrowing arrangements, pursuant to which Blue Goose had borrowed an aggregate of $60,015,000 at December 31, 2017 (2016 – $55,130,000).


Outstanding. Thanks. I should have spotted that.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on June 21, 2018, 10:17:24 AM
The Union Group investment is very strange. I've been meaning to get in touch with them to ask a few questions about this but haven't yet done so. Does anyone here know much about what's going on?

Last we heard, the write-down was because Union couldn't provide audited financials, and they said something to the effect that they're waiting on Union to provide them with such and will revisit the valuation later.  But there's been no word since -- no mention at all in the latest Q.  And they wrote it down to the value of ICC less a 30% discount.  Do they have any way at all of extracting value from this?

They were asked about Blue Goose land value on one of the recent calls.  My understanding was that the land value would be impaired significantly by the fires, but can't remember if this was said or inferred by me.

On Union, the impairment was made in the 4q and in the 1q call they simply noted that ICC's share price had risen and so they'd moved the value up marginally. Whether they have any way of extracting the value of ICC, I don't know.

On Blue Goose, the land was damaged in the fire but as of the 4q call they could not assess the extent due to snow cover (ironic) and this was not updated on the 1q call. My uninformed guess given that this is grazing land (not, for example, standing timber) is that the value should not be permanently impaired by a fire. Grass grows back fast and fires can be part of the regenerative process. Correct me if I am wildly wrong (which is quite possible).

Does anyone know what's happened to Canadian grazing land and rights prices since 2006?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on June 21, 2018, 11:02:33 AM
The Union Group investment is very strange. I've been meaning to get in touch with them to ask a few questions about this but haven't yet done so. Does anyone here know much about what's going on?

Last we heard, the write-down was because Union couldn't provide audited financials, and they said something to the effect that they're waiting on Union to provide them with such and will revisit the valuation later.  But there's been no word since -- no mention at all in the latest Q.  And they wrote it down to the value of ICC less a 30% discount.  Do they have any way at all of extracting value from this?

They were asked about Blue Goose land value on one of the recent calls.  My understanding was that the land value would be impaired significantly by the fires, but can't remember if this was said or inferred by me.

On Union, the impairment was made in the 4q and in the 1q call they simply noted that ICC's share price had risen and so they'd moved the value up marginally. Whether they have any way of extracting the value of ICC, I don't know.

On Blue Goose, the land was damaged in the fire but as of the 4q call they could not assess the extent due to snow cover (ironic) and this was not updated on the 1q call. My uninformed guess given that this is grazing land (not, for example, standing timber) is that the value should not be permanently impaired by a fire. Grass grows back fast and fires can be part of the regenerative process. Correct me if I am wildly wrong (which is quite possible).

Does anyone know what's happened to Canadian grazing land and rights prices since 2006?

I don't think that the land is damaged. The biggest cost issue was that Blue Goose would need to pay for supplemental feed in the interim, which is a major expense, hence the decision to reduce the herd size.

Farmland in the Caribou region of BC averages $2,500 per acre.

https://www.fcc-fac.ca/fcc/about-fcc/reports/2017-farmland-values-report-e.pdf

Blue Goose owns about 45,000 acres.

"Blue Goose owns over 45,000 acres of farm land in British Columbia, and is a recognized consumer brand with beef, chicken, and fish products distributed to over 640 retail locations across Canada, making Blue Goose well-positioned to capitalize on the high-growth organic food market."

 So a $100 million value would seem likely.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 21, 2018, 11:07:21 AM
I don't think that the land is damaged. The biggest cost issue was that Blue Goose would need to pay for supplemental feed in the interim, which is a major expense, hence the decision to reduce the herd size.

Farmland in the Caribou region of BC averages $2,500 per acre.

https://www.fcc-fac.ca/fcc/about-fcc/reports/2017-farmland-values-report-e.pdf

Blue Goose owns about 45,000 acres.

"Blue Goose owns over 45,000 acres of farm land in British Columbia, and is a recognized consumer brand with beef, chicken, and fish products distributed to over 640 retail locations across Canada, making Blue Goose well-positioned to capitalize on the high-growth organic food market."

 So a $100 million value would seem likely.

Thanks for the insight.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: wachtwoord on June 21, 2018, 01:40:31 PM
I opened a small position in this as well today. The margin of safety is so huge that I reckon the monkeys at the helm won't mess up enough to make this a bad investment. Time will tell I guess ...
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cevian on June 21, 2018, 01:59:53 PM
I opened a small position in this as well today. The margin of safety is so huge that I reckon the monkeys at the helm won't mess up enough to make this a bad investment. Time will tell I guess ...

Same here
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on June 21, 2018, 03:20:25 PM
Common or prefs?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: wachtwoord on June 25, 2018, 07:28:10 AM
Common or prefs?

Commons. Not sure whether that's the best risk-reward investment but I find it easier to get a sense for value with common stocks versus preferreds.

How do you compare the two asset classes to determine best value in this case? Or did you buy both to not have to?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on June 25, 2018, 10:04:20 AM
Common or prefs?

Commons. Not sure whether that's the best risk-reward investment but I find it easier to get a sense for value with common stocks versus preferreds.

How do you compare the two asset classes to determine best value in this case? Or did you buy both to not have to?

For Dundee, I simply do not trust the competency or integrity of the management so from a risk perspective I don't have enough confidence in the commons.  The preferred OTOH offers a nice 12% dividend return (on cost) and I think it's very safe given the large discount to NAV at the moment.  However, if management continues to screw around and has more writedown, even the preferred may become uninvestable.  If they are able to turn around, then yes the common could provide a much greater return than the pref.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: wachtwoord on June 25, 2018, 12:27:08 PM
Sounds reasonable. I generally prefer to not cap my upside (by buying prefs) and take the extra risk with the commons. I control my risk by keeping the position small (since I agree with you management is simply terrible).

Of course at some price point the capped return with the prefs is preferable over the (potentially uncapped) returns of the common. I find it hard to determine what that price point is (even roughly).
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 26, 2018, 09:58:08 AM
I see that eCobalt is down more than 10% today and has been falling steadily to a new 52-week low (0.97 now, compared to $1.47 at end of last Q).  Dundee holds 16m shares, which is just over a 10% position, so any selling on their part should have triggered a notice.  They also had 400,000 warrants to purchase shares at $0.40. These expired June 1, so I would imagine they exercised them this Q.

Osisko has continued in free-fall since Dundee's exit in Q1.  I was hoping they'd also sell out of ECS but like they have not.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on June 27, 2018, 01:50:50 PM
I've jumped on the band wagon and taken a position. The valuation is so low that it should only take a bit of good news for the stock to go higher.

If they stop buying shit we should be fine. I'm not keen on their forward strategy with junior miners. Sounds like it would be quite easy to buy some worthless assets.

Fingers crossed Parq doesn't catch fire.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: wisowis on June 27, 2018, 02:04:11 PM
David Eby (Attorney General of BC) is putting a lot of effort into investigating the role of BC casinos in money laundering. Maybe a bit of (indirect) political risk to Parq (?)

https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-report-1.4723958
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 27, 2018, 06:16:49 PM
David Eby (Attorney General of BC) is putting a lot of effort into investigating the role of BC casinos in money laundering. Maybe a bit of (indirect) political risk to Parq (?)

https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-report-1.4723958

Found this interesting twitter stream while searching for more on money laundering at Parq.  Haven't dug deeper but... lots of smoke:

https://twitter.com/Garossino/status/1009659203290402816
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on June 27, 2018, 07:07:53 PM
Quote
New Parq Casino is an outrageous land deal—public assets leased way below market to a 2-bit US casino player, then millions in construction subsidies.

I don't think is is uncommon practice for big city redevelopments. Thats the way it happens across the globe.


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: rb on June 27, 2018, 07:18:13 PM
Money laundry going on at Casinos? This is ground breaking stuff. Who knew?  ::)
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 27, 2018, 07:33:27 PM
Quote
New Parq Casino is an outrageous land deal—public assets leased way below market to a 2-bit US casino player, then millions in construction subsidies.

I don't think is is uncommon practice for big city redevelopments. Thats the way it happens across the globe.

Could be.  But that wasn't the part that seemed sketchy to me.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: RichardGibbons on June 28, 2018, 10:01:22 AM
Money laundry going on at Casinos? This is ground breaking stuff. Who knew?  ::)

In case it's not obvious to you, the reason it matters isn't that it's money laundering in casinos. It's that the provincial government is making it one of their top five high-profile political issues.

If a chunk of a business's revenue is derived from illegal activity, and the government says, "This is the particular illegal activity we're going to focus on and eliminate", then some might consider that news relevant to future of the business.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cevian on June 29, 2018, 01:44:48 PM
I really hope this isn't going to end up being the perfect case study for a falling knife one day. I can't believe there are sellers are this price but there doesn't appear to be any sign of a bottom.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on June 29, 2018, 02:45:55 PM
I really hope this isn't going to end up being the perfect case study for a falling knife one day. I can't believe there are sellers are this price but there doesn't appear to be any sign of a bottom.

I fondly remember thinking that at $1.99.   The B prefs are at a 13% yield.

Don't know if it's steady selling from a large holder, or simply a lack of any news that would trigger a change in direction.  All the obvious stuff is negative:  DPM is down 10% from highs,  ECS is down heavily over the past few months,  money laundering is becoming a big story re: Parq, and not a hint of insider purchases as it plumbs new lows.   







Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 04, 2018, 09:29:49 AM
The market cap of the B and D prefs is now $37m + $18m.  The E's are essentially debt with a $83m face value.  So assuming the E's get paid off in full ahead of the B's and D's, the market is valuing Dundee's liabilities at around $138m.

This is against a portfolio consisting of:
$118m in shares of DPM (today's price)
$16m in shares of ECS (today's price)
$50m in "other" publicly traded securities (prices at Mar 31)
a bunch of operating entities and private investments (hard to value, but presumably nonnegative)

For some reason the market has very low expectations of the Goodmans (...turns to look at 5 year stock chart). 

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 04, 2018, 10:43:00 AM
Been buying B's & D's and more common in low $1.60's. Might visit Parq in next week to see how it is doing at height of tourist/holiday season.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 05, 2018, 02:10:55 PM
FYI: Just found this today.  Possibly linked to the recent weakness in the prefs etc. 

---------------------------------------------------

22 Jun 2018
$291 million of debt rated
Toronto, June 22, 2018 -- Moody's Investors Service downgraded Parq Holdings Limited Partnership's (Parq) corporate family rating (CFR) to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD, and senior secured term loan ratings to B2 from B1. The ratings outlook was changed to negative from stable.

"Parq's CFR was downgraded and the outlook changed to negative to reflect materially weaker first quarter 2018 results than we expected, weak liquidity and expected leverage of 14x, which may improve, but will likely be maintained above 10x in the next 12 to 18 months", said Peter Adu, a Moody's Vice President and Senior Analyst.

Ratings downgraded:

Corporate Family Rating, to Caa1 from B3

Probability of Default Rating, to Caa1-PD from B3-PD

$246 million senior secured first lien term loan due 2020, to B2 (LGD3) from B1 (LGD3)

$45 million senior secured delayed draw term loan due 2020, to B2 (LGD3) from B1 (LGD3)

Outlook Actions:

Outlook, Changed to Negative from Stable

RATINGS RATIONALE

Parq's Caa1 CFR is constrained by: (1) Moody's expected leverage (adjusted Debt/EBITDA) around 14x for its first year of operation (2018) and the likelihood that the metric will be maintained above 10x in the next 12 months thereafter; (2) heightened refinancing risk in December 2020; (3) weak liquidity; (4) single location and ramp-up risks associated with its new casino and hotel resort; (5) saturation of gaming and lodging facilities in the Lower Mainland of British Columbia; and (6) small scale relative to key Canadian peers. The company benefits from: (1) its attractive location; (2) Marriott Hotel's brand strength, and (3) the demonstrated willingness of its private owners to inject equity for cost overruns and delays in the past, which may continue, but is not assured.

Parq has weak liquidity. The company's source of liquidity is its cash balance of C$21 million at Q1/2018 while it has uses of about C$14 million in the next four quarters. The company has no external revolving credit facility and Moody's expects free cash flow of negative C$10 million and C$4 million of term loan amortization in the next four quarters, which leaves minimal excess liquidity. Parq has a C$15 million minimum liquidity covenant that will be breached in 2018. However, Parq's private owners have injected capital to fund cost overruns and delays during the construction phase of the resort. Moody's believes the owners will have to inject liquidity into the company to keep it operating. Parq has limited ability to generate temporary liquidity from asset sales.

The negative outlook considers that Parq's liquidity will be insufficient to support its operations in the next 12 months. The negative outlook also signals Moody's default concerns as the company may not be able to expand EBITDA or repay debt to reduce leverage meaningfully prior to the maturity of its $291 million in term loans in December 2020.

The rating will be downgraded if EBITDA and free cash flow do not expand meaningfully or if Moody's perceives that there is increased risk of a debt restructuring or default. The rating will be considered for upgrade if the company is likely able to maintain adequate liquidity and sustain leverage below 8x (14.1x expected for 2018) and EBIT/Interest above 1x (0.1x expected for 2018).

The principal methodology used in these ratings was Gaming Industry published in December 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Parq Holdings Limited Partnership, headquartered in Vancouver, British Columbia, owns a new 775,000 square foot casino and hotel resort in downtown Vancouver. Parq is privately-owned by Dundee Corporation, PBC Group and Paragon Gaming (45.9%, 32.2% and 21.9% respectively). Revenue for the two quarters of operation, ended March 31, 2018 was C$71 million.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on July 05, 2018, 03:00:06 PM
What about $78 Brent for the Chad venture?

The whole thing is retarded, just like for oil stocks. People find plenty of excuses not to buy and they foresee the next 5 recessions and 2 depressions. Where is skepticism in the S&P or TSX?

Parq is prime Vancouver real estate!

Bought some DC.PR.B today and was close to get more common.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 05, 2018, 03:40:42 PM
What about $78 Brent for the Chad venture?

The whole thing is retarded, just like for oil stocks. People find plenty of excuses not to buy and they foresee the next 5 recessions and 2 depressions. Where is skepticism in the S&P or TSX?

Parq is prime Vancouver real estate!

Bought some DC.PR.B today and was close to get more common.

Cardboard

I'm not saying there's no value here. But the Parq downgrade does indicate that refinancing is not going to be easy.  Things aren't looking great for this year, and Dundee may find themselves forced to put in more capital than expected.   I was hoping they'd de-risk that project considerably in the near term.

With regards to the Chad venture.   Their carrying value is pretty high on their balance sheet, based on a 65% chance of commercial cash flows from Doba and 45% from Block H.   I don't know enough about oil or the project to know whether these are reasonable assumptions.  Maybe you've looked into it?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on July 05, 2018, 04:29:13 PM
Their two hotels should worth something.  Here are some room rates for end of July (peak hotel season for Vancouver) - first and last ones.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on July 05, 2018, 04:32:57 PM
...and rates for the beginning of November, should be low season.  Someone who has more experience in hotel valuations can figure out a value based on these room rates.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bizaro86 on July 05, 2018, 07:01:53 PM
You need to know occupancy to estimate a value, which could be poor given the hotel is new and ramping up.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 10, 2018, 02:06:49 AM
Their two hotels should worth something.  Here are some room rates for end of July (peak hotel season for Vancouver) - first and last ones.

Of course they're worth something. The question is, are they worth much more than the debt. I played with some ebitda and multiple scenarios and decided not to value it at more than they have invested - I hope I am being conservative but we don't have a lot of info.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 10, 2018, 02:08:03 AM
Is there any way of getting this thread into the investment ideas section? It faintly irritates the pedant in me that it's under general discussion!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 10, 2018, 02:10:36 AM
Separately, does anyone have a handle on valuing the Android and Sarea investments?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 10, 2018, 08:45:05 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
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 10, 2018, 08:50:04 AM
That's absolute madness. Surely you have to subtract at least the market value of the prefs (I would subtract the par value because they'll trade a lot closer to par if things go right, which is the only way you win in the common)? He is only subtracting 18 months of pref dividends!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 10, 2018, 09:11:38 AM
That's absolute madness. Surely you have to subtract at least the market value of the prefs (I would subtract the par value because they'll trade a lot closer to par if things go right, which is the only way you win in the common)? He is only subtracting 18 months of pref dividends!

I looked at his numbers and it is somewhat wonky but close to the per share figure. Before taking out corp costs & pref dividends over next 18 months and adding the $37mm cash he left out I get to $251mm net asset value per common or $4.25 per share. Taking out the costs & dividends gives me about $3.50 per share.

Total value of assets above = $434mm + Cash $37mm - Total pref of $218 = $251mm
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 10, 2018, 09:39:44 AM
Ah-I misunderstood, having not bothered to sum the assets myself. Sorry!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin 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 quarter’s 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 Chelopech’s 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 smelter’s 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec 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? ;)
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 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. 
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec 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 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod 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.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on July 11, 2018, 02:07:59 PM
Liquidate the whole thing is the best and only logical scenario. I doubt very much they will do that but, that is what should happen if that Jonathan Goodman was smart but, that is Dumbdee remember?

Where is it said that they have had success in mining and wealth management? Where are these resounding successes? Barrick, Teck, GoldCorp, Investors Group, banks? They are nowhere near any of these known Canadian companies.

All I see is incompetence all around. When you are too dumb to realize that buying your debt for 40 cents on the dollar while you can by selling garbage investment with little to no upside then it only indicate that you are really dumb.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on July 11, 2018, 02:32:46 PM
+1 Cardboard

I wonder if there will ever become a point where they decide they have destroyed enough of the Goodman fortune and hand over the reigns.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 11, 2018, 03:02:43 PM
+1 Cardboard

I wonder if there will ever become a point where they decided they have destroyed enough of the Goodman fortune and hand over the reigns.

Not a chance, IMO.  This is the huge risk with dual-class share structure.  Do these guys have kids in line to take over?   


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 12, 2018, 07:59:05 AM
Liquidate the whole thing is the best and only logical scenario. I doubt very much they will do that but, that is what should happen if that Jonathan Goodman was smart but, that is Dumbdee remember?

Where is it said that they have had success in mining and wealth management? Where are these resounding successes? Barrick, Teck, GoldCorp, Investors Group, banks? They are nowhere near any of these known Canadian companies.

All I see is incompetence all around. When you are too dumb to realize that buying your debt for 40 cents on the dollar while you can by selling garbage investment with little to no upside then it only indicate that you are really dumb.

Cardboard

I would call Dundee Wealth a resounding success.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: LongHaul on July 12, 2018, 08:38:22 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.

This is a great Question.   At one point it looks like they had a great track record - IIRC in the 2014 annual letter ~18% CAGR in per share value for ~20 years.  Then it all fell off a cliff.   In the ~50 page annual letter it seemed to lack clear insight about the nature of the current operations.  I did see that almost all the major listed businesses were losing money.  They seemed like very risky startups with a lot of assumptions.  New business ventures have a ton of risk as there are many assumptions.  One example was the Blue Goose Organic beef.  It looked like it was losing a ton of money.  I have heard that established cattle ranches sell for .5% cap rates.  Yes that is 1/2 of 1% as everyone wants to be a cowboy after the Westerns came out.  So to go into a risky startup where the payoff might be .5% seems nuts.

I did not take a deep dive but noticed a few things.
1.  IIRC there were 400 people in the corporate office.  What is the cost of that $50m per year?  They are still spending $16m per year I believe - which is waaaaay too high.  (I can lose money for a lot less!)
2.  Many investments in risky startups.
3.  Certainty of inflation so put money in gold and other "hedges" like natural resources.  I thought this was faulty thinking as real estate or good businesses would likely be better inflation hedges if bought cheaply.
4.  Perhaps they got luck in a long natural resource/gold boom and the bust was the unluck.


I passed on investing because if the current CEO is focusing on Junior mining companies, I have read that is  one of the riskiest areas to invest.  Count me out.   Not sure what the odds are Dundee is a 0 but it is a lot more than 0% with this mgmt team in place. 





Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 12, 2018, 10:31:26 AM
Yeah I don't think it makes a lot of sense to be a holding company of money-losing businesses.  They have pretty high corporate costs and don't have any money-making assets.  So if things stay the same, then over time they'll just have to keep liquidating assets, in increasing desperation, to pay their salaries.

The pivot to junior mining also concerns me.  Seems like a heck of a place to lose money, and I suspect their success in the past had more to do with the huge commodities boom as opposed to innate talent.  In any case, even in the best-case scenario, it will take quite a while before it can overcome the losses elsewhere in the company. 

I'm getting antsy to see something done with Blue Goose or any of the other private holdings.  That'll send a message that things really have changed, and also give us some insight as to how much we should be discounting their other assets.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 13, 2018, 01:27:21 AM
Junior mining can work very well if you know what you're doing. It's a graveyard for those that don't. I've no issue if they have a good team but I haven't found much on the guys they hired.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 13, 2018, 06:27:24 AM
Junior mining can work very well if you know what you're doing. It's a graveyard for those that don't. I've no issue if they have a good team but I haven't found much on the guys they hired.

The guys they hired all came from Primary Capital.  Three of them worked for Dundee Securities up to around 2010, before heading to Primary.  The fourth is a young'un.

http://www.dundeesecurities.com/

So these guys are a known entity for Dundee.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 13, 2018, 08:44:54 AM
Thanks. Do you have a view on whether they are any good?

It's interesting they've chosen to come back. That alone might say something.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on July 13, 2018, 09:07:15 AM
Thanks. Do you have a view on whether they are any good?

It's interesting they've chosen to come back. That alone might say something.

No, not a clue. You'd imagine Dundee wouldn't hire them back if they weren't capable.  It bodes well that none of them is a Goodman.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on July 17, 2018, 04:02:49 PM
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 17, 2018, 04:18:53 PM
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 18, 2018, 03:14:14 AM
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks

Also, the DC.PR.E, don’t “mature”. It’s just that holders are allowed to force the company to buy them back. If history is any guide, not every holder will do so.

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 18, 2018, 05:32:39 AM
Thanks. Do you have a view on whether they are any good?

It's interesting they've chosen to come back. That alone might say something.

No, not a clue. You'd imagine Dundee wouldn't hire them back if they weren't capable.  It bodes well that none of them is a Goodman.

True. But then I wouldn't have imagined that they'd have done half of what they've done over the years so sadly my imagination is not a good analytical tool ;)
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 18, 2018, 05:34:07 AM
Might be a dumb question... But,

What happens when a company cant pay the maturity for cumulative preference shares? I'm guessing that they just owe the money to the holders as they would with a dividend? Preventing the commons from receiving payments until obligation is met?

Thanks

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.

I think the prefs also become voters in a default situation which could be interesting.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 18, 2018, 01:10:58 PM
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 18, 2018, 01:56:27 PM
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.

Right now value of their holdings in Dundee Precious Metals = $109 million while Series 5 prefs liability = $90mm. Kind of premature to be discussing default but then again with DC's luck & general competence there is always need to worry about mine catastrophes, nationalization or anything else that can sink a junior gold miner.


Latest article I can find on TaurX of which I believe Dumbdee has a 4% stake (hopefully they have not put any more in on subsequent financings)....

Casino-Backed Startup Eyes Alzheimer's Cure Worth $2.5 Billion

By Joyce Koh  and Livia Yap

March 1, 2018, 8:24 PM EST

 *TauRx will look at options including IPO if trial successful

 *Big pharmaceutical companies have exited or failed in field


It hasn’t found a cure for Alzheimer’s disease and doesn’t have any drugs on the market. Yet, TauRx Pharmaceuticals Ltd. says the company’s worth about $2.5 billion as it embarks on its latest trial funded by shareholders including casino operator Genting Bhd.

If the trial proves successful, the Singapore-based company plans to apply to European and U.S. regulators for conditional or accelerated approval of its drug, TauRx Deputy Chairman Tay Siew Choon said in an interview in the city-state last month. It will also need to raise about $150 million to conduct a more comprehensive phase III trial, though at that point, it would evaluate options including an initial public offering or sale.


TauRx is pressing ahead in a field that has seen many of the largest pharmaceutical players from Pfizer Inc. to Axovant Sciences Ltd. exit or fail. Just last month, Merck & Co. said it will end a trial of its most advanced Alzheimer’s drug while Biogen Inc.’s shares tumbled after saying it was making changes to its trial. TauRx disappointed investors in 2016 when it said its LMTX drug failed to meet a primary goal of slowing the rate of disease progression when taken in combination with other Alzheimer’s drugs.

“We have consistently seen that our theory works, and there’s no reason to give it up,” said Tay. “Shareholders’ support and faith in us has not weakened.”

On top of a $71 million rights issue in October to fund the current trial, TauRx had already raised more than $500 million since 2002, according to Tay. The last financing round in 2016 valued the company at about $2.5 billion, he said. Billionaire Lim Kok Thay’s Genting invested $112 million in TauRx in 2012, becoming its biggest shareholder with about a 20 percent stake.

TauRx has been recruiting patients since November for the current trial, where it plans to test its drug on 200 patients with mild Alzheimer’s disease who aren’t taking any other medication. The results are expected in early 2019.

https://www.bloomberg.com/news/articles/2018-03-02/casino-backed-startup-eyeing-alzheimer-s-cure-worth-2-5-billion
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on July 18, 2018, 02:33:54 PM
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.

I wasn't sure of the answer so I asked my CFA tutor, who seemed to think that the preference shares would likely just be converted to common at maturity. So no bankruptcy fears.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on July 18, 2018, 03:23:27 PM
What is to be expected from the Parq operations?

Initially management gave guidance to GMP that Parq could do the following financially after a 12 month ramp period - should be the end of the ramp late this Fall...

Management has provided their financial expectations for Parq, which are subject to an
estimated 12-month ramp up period. Parq is on track to open in the fall of 2017.

 $75-$100 million EBITDA
 60-70% from casino activities
 10-15% from hotel activities
 15-30% from other services (food/beverage, parking etc.)


At the end of the first quarter they stated 2018 would look like this...

Parq guidance

Management has given guidance for 2018 and expects to generate EBITDA of
$50 to $75 million and in excess when operations are fully ramped up. As a
result of expected increases in customer traffic and slot utilization rates, 50%
to 60% of EBITDA is expected to be generated through casino operations
while the remainder is from hotel operations and beverage services.


So the contribution from the casino seems to be about 10% below in the overall results of the facility. It will be interesting to see if this is further adjusted in the Aug/Sep after experiencing the height of the tourist season in Vancouver (June - Aug). Potential value of Parq to Dundee using a simplistic valuation model of expected 2018 results is as follows ( On a fully converted basis, the Corporation holds a 45.9% interest in Parq Vancouver, while Paragon Gaming Inc. owns a 21.9% fully converted interest, and PBC owns a 32.2% fully converted interest)....

                EBITDA high     EBITDA low

               $75mm            $50mm

                 10X                 10X

EV              $750mm          $500mm

Debt           $550mm          $550mm

Equity         $200mm          ($50mm)

46% DC      $92mm             $0

At the upper end of the range value comes in at $90 million to Dundee using $75mm in EBITDA while Parq is owned by the debt holders at the lower end. Hopefully, upon full ramp in 2019, Parq can achieve the initial expected results resulting in a floor valuation to Dundee of $90mm & upside to a $200mm valuation with $100mm in EBITDA & possibly a much better financing arrangement.

As well, perhaps higher value & substantial financial breathing room could be extracted by selling the hotel operations in what is a strong Vancouver market - an example per room valuation multiple for the hotels would be $425,000 per room average over both the Douglas & Marriot's 517 guest rooms gives a valuation of $220mm just to the hotels & their expected approximate 15% - 25%  contribution to Parq EBITDA.

https://www.statista.com/statistics/496256/vancouver-downtown-value-per-hotel-room/

http://dailyhive.com/vancouver/interim-hotel-rooms-development-policy-vancouver-shortage

Vancouver’s tourism sector growth has been experiencing year-over-year records with overnight visitation, but this is not reflected in the city’s hotel accommodations capacity. A new report by the City of Vancouver states the municipality saw a net loss of 1,105 hotel rooms between 2008 and 2018, with the gains in the years leading to the 2010 Winter Olympics now lost.


Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 18, 2018, 06:20:04 PM
Wouldn’t they just pay with common priced at $2 in that scenario? Lots of new shares issued but cash is saved and no default.

I wasn't sure of the answer so I asked my CFA tutor, who seemed to think that the preference shares would likely just be converted to common at maturity. So no bankruptcy fears.

With the stock at $1.50, that means the DC.PR.E would be worth $18.75 in that scenario and with that class trading ~C$24, it shows very little concern on the part of those preferred holders. In addition, if they did issue ~41m shares to pay for those preferred, the stock would likely be under significant pressure which would take the stock even lower meaning $18.75 is generous.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 19, 2018, 01:30:15 AM
What is to be expected from the Parq operations?

Initially management gave guidance to GMP that Parq could do the following financially after a 12 month ramp period - should be the end of the ramp late this Fall...

Management has provided their financial expectations for Parq, which are subject to an
estimated 12-month ramp up period. Parq is on track to open in the fall of 2017.

 $75-$100 million EBITDA
 60-70% from casino activities
 10-15% from hotel activities
 15-30% from other services (food/beverage, parking etc.)


At the end of the first quarter they stated 2018 would look like this...

Parq guidance

Management has given guidance for 2018 and expects to generate EBITDA of
$50 to $75 million and in excess when operations are fully ramped up. As a
result of expected increases in customer traffic and slot utilization rates, 50%
to 60% of EBITDA is expected to be generated through casino operations
while the remainder is from hotel operations and beverage services.


So the contribution from the casino seems to be about 10% below in the overall results of the facility. It will be interesting to see if this is further adjusted in the Aug/Sep after experiencing the height of the tourist season in Vancouver (June - Aug). Potential value of Parq to Dundee using a simplistic valuation model of expected 2018 results is as follows ( On a fully converted basis, the Corporation holds a 45.9% interest in Parq Vancouver, while Paragon Gaming Inc. owns a 21.9% fully converted interest, and PBC owns a 32.2% fully converted interest)....

                EBITDA high     EBITDA low

               $75mm            $50mm

                 10X                 10X

EV              $750mm          $500mm

Debt           $550mm          $550mm

Equity         $200mm          ($50mm)

46% DC      $92mm             $0

At the upper end of the range value comes in at $90 million to Dundee using $75mm in EBITDA while Parq is owned by the debt holders at the lower end. Hopefully, upon full ramp in 2019, Parq can achieve the initial expected results resulting in a floor valuation to Dundee of $90mm & upside to a $200mm valuation with $100mm in EBITDA & possibly a much better financing arrangement.

As well, perhaps higher value & substantial financial breathing room could be extracted by selling the hotel operations in what is a strong Vancouver market - an example per room valuation multiple for the hotels would be $425,000 per room average over both the Douglas & Marriot's 517 guest rooms gives a valuation of $220mm just to the hotels & their expected approximate 15% - 25%  contribution to Parq EBITDA.

https://www.statista.com/statistics/496256/vancouver-downtown-value-per-hotel-room/

http://dailyhive.com/vancouver/interim-hotel-rooms-development-policy-vancouver-shortage

Vancouver’s tourism sector growth has been experiencing year-over-year records with overnight visitation, but this is not reflected in the city’s hotel accommodations capacity. A new report by the City of Vancouver states the municipality saw a net loss of 1,105 hotel rooms between 2008 and 2018, with the gains in the years leading to the 2010 Winter Olympics now lost.

I came up with similar numbers on an ev/ebitda analysis. I didn't think of the hotel valuation separately. For me the big question is whether initial guidance was just wrong, and 75-100 will never be reached, or the issue is more the ramp time, in which case we might still get there but slower. Either way we don't really have enough info.

I was also struggling with the appropriate multiple to use. I also centred on 10 but ran 8 and 12 for interest. These are hard and trophy assets which might argue for a higher multiple than the average equity analyst (me) would be comfortable assuming.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 19, 2018, 07:31:21 AM
What is to be expected from the Parq operations?

Initially management gave guidance to GMP that Parq could do the following financially after a 12 month ramp period - should be the end of the ramp late this Fall...

Management has provided their financial expectations for Parq, which are subject to an
estimated 12-month ramp up period. Parq is on track to open in the fall of 2017.

 $75-$100 million EBITDA
 60-70% from casino activities
 10-15% from hotel activities
 15-30% from other services (food/beverage, parking etc.)


At the end of the first quarter they stated 2018 would look like this...

Parq guidance

Management has given guidance for 2018 and expects to generate EBITDA of
$50 to $75 million and in excess when operations are fully ramped up. As a
result of expected increases in customer traffic and slot utilization rates, 50%
to 60% of EBITDA is expected to be generated through casino operations
while the remainder is from hotel operations and beverage services.


So the contribution from the casino seems to be about 10% below in the overall results of the facility. It will be interesting to see if this is further adjusted in the Aug/Sep after experiencing the height of the tourist season in Vancouver (June - Aug). Potential value of Parq to Dundee using a simplistic valuation model of expected 2018 results is as follows ( On a fully converted basis, the Corporation holds a 45.9% interest in Parq Vancouver, while Paragon Gaming Inc. owns a 21.9% fully converted interest, and PBC owns a 32.2% fully converted interest)....

                EBITDA high     EBITDA low

               $75mm            $50mm

                 10X                 10X

EV              $750mm          $500mm

Debt           $550mm          $550mm

Equity         $200mm          ($50mm)

46% DC      $92mm             $0

At the upper end of the range value comes in at $90 million to Dundee using $75mm in EBITDA while Parq is owned by the debt holders at the lower end. Hopefully, upon full ramp in 2019, Parq can achieve the initial expected results resulting in a floor valuation to Dundee of $90mm & upside to a $200mm valuation with $100mm in EBITDA & possibly a much better financing arrangement.

As well, perhaps higher value & substantial financial breathing room could be extracted by selling the hotel operations in what is a strong Vancouver market - an example per room valuation multiple for the hotels would be $425,000 per room average over both the Douglas & Marriot's 517 guest rooms gives a valuation of $220mm just to the hotels & their expected approximate 15% - 25%  contribution to Parq EBITDA.

https://www.statista.com/statistics/496256/vancouver-downtown-value-per-hotel-room/

http://dailyhive.com/vancouver/interim-hotel-rooms-development-policy-vancouver-shortage

Vancouver’s tourism sector growth has been experiencing year-over-year records with overnight visitation, but this is not reflected in the city’s hotel accommodations capacity. A new report by the City of Vancouver states the municipality saw a net loss of 1,105 hotel rooms between 2008 and 2018, with the gains in the years leading to the 2010 Winter Olympics now lost.

I came up with similar numbers on an ev/ebitda analysis. I didn't think of the hotel valuation separately. For me the big question is whether initial guidance was just wrong, and 75-100 will never be reached, or the issue is more the ramp time, in which case we might still get there but slower. Either way we don't really have enough info.

I was also struggling with the appropriate multiple to use. I also centred on 10 but ran 8 and 12 for interest. These are hard and trophy assets which might argue for a higher multiple than the average equity analyst (me) would be comfortable assuming.

I think based on projections from Dundee we could have a high confidence that EBITDA will come in at somewhere between 50M and 100M when fully ramped. Multiples I've seen for hotel and casino properties range between 10 and 12. So that gives a valuation range of 500M on the low end to 1200M on the high end. Debt plus preferreds plus a little for additional capital contribution is 700M. So the equity value could be anywhere from 0 to 500M. Dundee, I believe has 37%, giving a value to them of 0 to 185M or $0 to $3 per share. I don't think I could narrow this range down at this point. We really do need to wait and see. Encouraging factors are the very tight hotel market in Vancouver, the growth of tourism, the uniqueness of the property, the low land lease rate, and the high current valuations and investor interest in commercial properties in Vancouver.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 19, 2018, 08:11:05 AM
I think based on projections from Dundee we could have a high confidence that EBITDA will come in at somewhere between 50M and 100M when fully ramped. Multiples I've seen for hotel and casino properties range between 10 and 12. So that gives a valuation range of 500M on the low end to 1200M on the high end. Debt plus preferreds plus a little for additional capital contribution is 700M. So the equity value could be anywhere from 0 to 500M. Dundee, I believe has 37%, giving a value to them of 0 to 185M or $0 to $3 per share. I don't think I could narrow this range down at this point. We really do need to wait and see. Encouraging factors are the very tight hotel market in Vancouver, the growth of tourism, the uniqueness of the property, the low land lease rate, and the high current valuations and investor interest in commercial properties in Vancouver.

That's more or less the same conclusion I came to although I "converted" the prefs, only subtracting the debt and giving Dundee 46% not 37%. Works out at about the same NAV range though, and I have no confidence to call where in the range reality will fall.

My overall view is that taking the stocks at market and haircutting most of the other assets by 50%, I could have about 20% downside from here in the common; but if either Parq or United work out, I have enormous upside.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 27, 2018, 02:30:41 PM
D and B prefs trading around 10 now. That's over 14% yield on the B and more like 15.7% when it resets next year (at current 5-year bond yield). Does this not represent an extreme degree of pessimism?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: longlake95 on July 28, 2018, 08:22:21 AM
i've been adding to the D's. Not sure what to think. These securities have been left for dead. Call me crazy, but wouldn't they want to buyback the pref's on the cheap? sell one or more of the cash consuming crappy businesses and use the proceeds to buyback cheap debt - don't you create value at the stroke of a pen?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 28, 2018, 10:58:10 AM
i've been adding to the D's. Not sure what to think. These securities have been left for dead. Call me crazy, but wouldn't they want to buyback the pref's on the cheap? sell one or more of the cash consuming crappy businesses and use the proceeds to buyback cheap debt - don't you create value at the stroke of a pen?

I think that stock buybacks are part of the plan once the balance sheet has been sorted out.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on July 28, 2018, 11:18:49 AM
i've been adding to the D's. Not sure what to think. These securities have been left for dead. Call me crazy, but wouldn't they want to buyback the pref's on the cheap? sell one or more of the cash consuming crappy businesses and use the proceeds to buyback cheap debt - don't you create value at the stroke of a pen?

I think that stock buybacks are part of the plan once the balance sheet has been sorted out.

Have they said so?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: bizaro86 on July 28, 2018, 11:31:04 AM
i've been adding to the D's. Not sure what to think. These securities have been left for dead. Call me crazy, but wouldn't they want to buyback the pref's on the cheap? sell one or more of the cash consuming crappy businesses and use the proceeds to buyback cheap debt - don't you create value at the stroke of a pen?

Creating value doesn't necessarily seem to be their MO here.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on July 28, 2018, 12:37:33 PM
i've been adding to the D's. Not sure what to think. These securities have been left for dead. Call me crazy, but wouldn't they want to buyback the pref's on the cheap? sell one or more of the cash consuming crappy businesses and use the proceeds to buyback cheap debt - don't you create value at the stroke of a pen?

I think that stock buybacks are part of the plan once the balance sheet has been sorted out.

Have they said so?

Yes. In the reply to a question at the annual meeting as well as in the conference call for Q1. The idea of stock buybacks, both common and preferred, was raised. Jonathan Goodman said it was the right idea but needed to wait until the balance sheet issues were sorted out first.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on July 28, 2018, 03:52:49 PM
It would be nice if the family started buying stock too.

Jonathan indicated that he wants to buy common and preferred but I’m really not sure what’s giving him pause. Perhaps, conversion of the DC.PR.E’s to common is a possibility and the common would get hit in that scenario so maybe he wants to save his firepower or perhaps they consider themselves restricted while they are sorting out the balance sheet.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 01, 2018, 06:53:59 AM
Dundee Precious continuing to do well - DC's position worth about $120 million.

GMP research...

Dundee Precious Metals   BUY
DPM-TSX   
Last:   C$3.09
Target:   C$4.90
 
FLASH: 2Q18 results – Chelopech’s solid results lead to improved FY production and cost guidance
 
Last night, DPM reported Q2 results after pre-releasing production earlier this month (refer to our Flash note of July 11). Adj. EPS of $0.08 beat our estimate (and consensus) of $0.05. The variance largely driven by lower G&A. CFPS before changes in working capital, including interest paid was $27mm or $0.15 vs our forecast of $28mm or $0.15 (consensus at $0.16). Operating costs were below our estimates at Chelopech, but offset partly by higher cash cost per tonne smelted at Tsumeb.

As pre-reported, Chelopech had another solid quarter producing 48k oz gold and 8.5mm lbs copper in concentrates (with 55k oz and 10.4mm lbs payable in concentrates sold due to unsold inventory from Q1). Cash cost of $472/oz gold sold in copper concentrates (inclusive of pyrite oz) was lower than our forecast of $579/oz (1Q18 was $574/oz). The lower cash cost is partly due to benefiting from higher grades and recoveries as well as lower unit cost ($35.62/t processed vs $37.23/t in Q1).

At Tsumeb, 46.6kt of concentrate smelted in Q2 had a cash cost of $548/tonne smelted vs. our estimate of $494/t. Cash cost was negatively impacted by lower volumes of concentrate smelted along with lower acid by-product credits (due to the 24-day annual maintenance shutdown in May), higher electricity and labour cost, a stronger ZAR relative to the U.S. dollar. Despite the higher costs at Tsumeb in Q2, we expect cash costs to improve in the coming quarters driven stronger operational performance following the maintenance shutdown. Furthermore, DPM has put in place additional currency hedges and it has favourably revised 2018 cash cost per tonne smelted guidance to $430-480/t (from $440-500/t).

The smelter has performed well following the annual maintenance shutdown and concentrate smelted in July achieved a new record. At the end of Q2, Tsumeb is sitting at 43% of annual guidance of 220-250kt smelted. We currently model 240kt of concentrate smelted in 2018.

Strong YTD performance at Chelopech results guidance revision: 2018 gold production guidance has been increased by almost 6% or 10k oz (at mid-point of range) relative to original guidance. Chelopech is now expected to produce 180-200k oz gold (previously 165-195k oz) with payable gold in the range of 155-172k oz (previously 140-170k oz). Copper production and sales volumes are unchanged. AISC was also improved by $50/oz to $640–755/oz (from $640–855/oz previously) based on modestly lower unit cost and deferred sustaining capex (reflecting timing of expenditures). Refer to Figure 1 for details on updated guidance.

We currently model 2018 full-year production of 188k oz gold and 36.4mm lbs copper which is within revised guidance and AISC of $759/oz.

Krumovgrad’s construction progressing well but slightly behind schedule – first gold still expected in late 2018: The project was ~71% complete at the end of June (compared to project schedule of 78%). Capex remains unchanged ($164mm-$168mm budget - with $111.6mm spent at the end of June) and first concentrate production is still expected in late Q4.

Impact: Positive on improved guidance

Operationally, Chelopech had another solid quarter with cash cost coming below our expectations. The strong operational performance in H1 led to a positive guidance revision. We believe Chelopech is well positioned to meet the updated gold production guidance having produced ~55% of (mid-range) annual gold production in H1.

With the annual maintenance at Tsumeb complete, the smelter should see stronger operational performance in the coming quarters.

Recommendation: Maintain BUY rating and C$4.90 target
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 07, 2018, 02:41:30 PM


Dundee to release Q2 2018 results Aug. 14

2018-08-07 17:36 ET - News Release


Mr. John Vincic reports

DUNDEE CORPORATION TO HOST CONFERENCE CALL FOR SECOND QUARTER 2018 RESULTS

Dundee Corp. senior management will host a conference call on Wednesday, Aug. 15, 2018, at 10 a.m. ET to discuss the company's second-quarter 2018 results.

Second-quarter 2018 results conference call and webcast:

Date:   Wednesday, Aug. 15, 2018

Time:  10 a.m. ET

Webcast:  see company's website

Live Call:  1-855-859-2056 or 1-416-849-0833

Replay passcode:  3482877

Dundee plans to issue a news release containing the second-quarter 2018 results after market close on Tuesday, Aug. 14, 2018, and will also post it to the company's website. The conference call will be archived for replay until Wednesday, Aug. 22, 2018, at midnight. An archive of the audio webcast will also be available at Dundee's website.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 08, 2018, 08:20:15 AM
I'm enjoying the fact that the common is down 5% just because they set a date for announcing results! I get the sense Mr. Market has inverted "no news is good news" into "all news is bad news"! And understandably so, but if they've made progress on converting more holdings to cash and have something intelligent to say about future strategy, this could be a positive q.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on August 08, 2018, 08:46:42 AM
Goodman will probably say that he needs a few more months to review the portfolio...

Anyway bought a bit of stock and preferreds today on this craziness. You were correct Petec, summer months, no announcement of doing anything and things can get crazy cheap.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 08, 2018, 08:53:38 AM
Goodman will probably say that he needs a few more months to review the portfolio...

Anyway bought a bit of stock and preferreds today on this craziness. You were correct Petec, summer months, no announcement of doing anything and things can get crazy cheap.

Cardboard

The upside in this thing if either Parq or Chad work out is immense.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 08, 2018, 09:22:54 AM
Goodman will probably say that he needs a few more months to review the portfolio...

Anyway bought a bit of stock and preferreds today on this craziness. You were correct Petec, summer months, no announcement of doing anything and things can get crazy cheap.

Cardboard

The upside in this thing if either Parq or Chad work out is immense.

Recent reviews of Parq seems to be improving...

https://www.tripadvisor.ca/Attraction_Review-g154943-d12945737-Reviews-Parq_Vancouver-Vancouver_British_Columbia.html
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 08, 2018, 09:30:05 AM
Good. They need to!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 08, 2018, 11:37:01 AM
Goodman will probably say that he needs a few more months to review the portfolio...

Anyway bought a bit of stock and preferreds today on this craziness. You were correct Petec, summer months, no announcement of doing anything and things can get crazy cheap.

Cardboard


The upside in this thing if either Parq or Chad work out is immense.

Recent reviews of Parq seems to be improving...

https://www.tripadvisor.ca/Attraction_Review-g154943-d12945737-Reviews-Parq_Vancouver-Vancouver_British_Columbia.html

I was in Vancouver a few days ago so I stopped by Parq to take a look. I was there around noon so wasn't expecting it to be too busy. The casino was doing good business, more than I would have expected for that time of day. There was a lot of people checking in and out of hotels. The restaurants that I saw were not open at the time except for Honey Salt and Market East. There were people in them buy not a lot. The building itself is impressive. The exterior is beautiful and the interior is very clean and felt like a nice place to spend time. I would call it "classy" but coming from me that might not mean much. Hard to judge business from just one brief visit, but if there is a weak spot currently I can imagine it is the restaurants.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on August 09, 2018, 08:38:57 AM
Perhaps the pressure on the B/D prefs reflect a fear or expectation that the company will turn off interest payments to preserve capital.

The Goodmans don't own any of these series so it would not hurt their personal returns.



Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 09, 2018, 09:21:45 AM
Perhaps the pressure on the B/D prefs reflect a fear or expectation that the company will turn off interest payments to preserve capital.

The Goodmans don't own any of these series so it would not hurt their personal returns.

Don't those shares get votes if they do that? I think they have some rights which the Goodmans might want to avoid triggering.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on August 09, 2018, 01:57:49 PM
I think their only right is to receive dividends before the commons, management can delay div payments if they so wish.

Maybe some of the pressure is also worry that at maturity they wont be paid out with cash but with commons that are rapidly sinking?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on August 09, 2018, 02:26:23 PM
I think their only right is to receive dividends before the commons, management can delay div payments if they so wish.

Maybe some of the pressure is also worry that at maturity they wont be paid out with cash but with commons that are rapidly sinking?

If the market was really worried about that, you would think the DC.PR.E would be a lot lower since those are puttable in June and the conversion would be set at $2. That is, 12.5 shares at $1.37 is ~$17.13 vs the current quote of $23.12.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on August 10, 2018, 04:58:53 AM
You are correct SafetyinNumbers (Method would be shorter but, anyway).

The drop in the preferreds B and D can only be explained by fear in the marketplace: fear that price will keep heading down or a panic. Logic has left town a while ago.

Cardboard

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on August 10, 2018, 08:15:11 AM
I think their only right is to receive dividends before the commons, management can delay div payments if they so wish.

Maybe some of the pressure is also worry that at maturity they wont be paid out with cash but with commons that are rapidly sinking?

As far as I know, the B/D's are perpetual -- there's no maturity, and there is no mechanism to redeem them with equity rather than cash.

If dividends are not paid for 8 quarters, then each B/D pref share gets one vote.  But this would make no difference to the Goodmans, since their multiple voting shares would still leave them with a large majority of votes.  For the B & D series, I think there is a very real possibility that they could suspend dividends to preserve cash.  I just don't know to what extent this is driving the price dive.






Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: mrholty on August 10, 2018, 09:15:27 AM
You are correct SafetyinNumbers (Method would be shorter but, anyway).

The drop in the preferreds B and D can only be explained by fear in the marketplace: fear that price will keep heading down or a panic. Logic has left town a while ago.



I wonder if how much of the drop in the past few days was that perhaps Saudi's SWF owned some shares.  That has been the explanation for the sell off in some of the resource stocks after the Saudi gov't told Saudi companies to liquidate their positions in Canadian companies. 

I like buying when others are having to liquidate so I bought some.  Still a small position however.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 13, 2018, 11:11:37 AM
Roumell’s Q2 update…

http://roumellasset.com/pdf/update_2Q2018.pdf

Recent travels underscore our conviction that scuttlebutt (investigative journalism) provides real value
to our investors.

Dundee Corporation, a small (roughly $70 million capitalization) Canadian company discussed later
in this letter, is now one of RAM’s top holdings. Dundee has no active sell-side coverage, is deeply out
of favor, once boasted a $1 billion plus market cap, is difficult to understand and consequently uniquely
situated to be a source of investment value creation, in our opinion.

In early June, I traveled to Toronto to attend the company’s annual shareholder meeting. I was one of two investors from outside of Toronto who attended the meeting. Afterwards, I joined management and the company’s board for a wonderful
salmon dinner sourced from the company’s AgriMarine Holdings, Inc. subsidiary.

In addition to spending quality time with Jonathan Goodman, CEO, and Robert Sellars, CFO, I met
key management team members overseeing some of the company’s most important investments.
Richard McIntyre, COO, is heading up the company’s Vancouver Parq Casino investment. Richard seems
exceptionally well-suited, both professionally and temperamentally, to renegotiate Parq’s debt and also
to oversee the monetization of Dundee’s Blue Goose investment. He is joined by seasoned veteran L.
Geoffrey Morphy, Vice President, Corporate Development.

Dundee is described in greater detail below. What I can attest to is that there are some very competent management members, led by a new, albeit legacy controlling family member, CEO in Jonathan Goodman.

Spending three days in Vancouver this month visiting the Dundee’s Parq Casino and Hotel was one of the
nicer company visits in memory. Vancouver, rated by Mercer as being the number one North American
city to live in, and fifth in the world, is a wonderful city. The Parq property is a Class A asset with first rate
amenities. It strategically sits next to the Rogers Arena, home of the Vancouver Canucks as well as a venue
for some of the biggest concerts in the city. Parq is now the largest convention venue in Western Canada.
Joe Burnini, Parq’s President and on-site operator, provided me a detailed walk-through of the property.
I spoke with many of Parq’s line workers which gave me a good sense of their view of the property, what’s
working and what needs further attention.

Top Three Purchases

Dundee Corp., DCA-T/DDEJF. We wrote extensively about Dundee in our 1Q18 letter. After establishing
our initial position, the stock price continued to decline in the 2nd quarter. As is typical, we decided
to add to our position and average down. We believe Dundee is trading at a significant discount to a
conservative estimate of Net Asset Value.

Dundee is a public Canadian independent holding company, listed on the Toronto Stock Exchange
under the symbol DCA and also trades in the US under the symbol DDEJF. Through its operating
subsidiaries, Dundee is engaged in diverse business activities in the areas of investment advisory, corporate
finance, energy, resources/commodities, agriculture, and real estate. The Corporation also holds,
directly and indirectly, a portfolio of investments mostly in these key areas, as well as other select investments
in both publicly listed and private enterprises.

I had a face-to-face meeting with the company’s top management, including CEO Jonathan Goodman, last month and came away feeling confident in our investment. Further, as mentioned earlier, I visited one of Dundee’s significant assets, Parq Vancouver, a few weeks ago and believe that this property is extremely attractive and would garner significant interest
from other investors in the event Dundee decided it no longer wanted to own it and would rather exit. To
be clear, the company’s Parq asset is weighed down by costly debt that needs to be restructured. This debt
is non-recourse to Dundee and sits at the property level only.

Dundee is a prime example of an instance where RAM is acting contrary, in a major way, to the investment
community. The company is certainly “overlooked, misunderstood and out of favor.” Dundee is
a complex holding company that has destroyed massive amounts of capital in the past several years.
The company’s founder, Ned Goodman, who previously created a tremendous amount of value over
many decades, bet way too heavily on commodity-based investments during the latter period of the
financial crisis based on the belief that paper money would be destroyed by central bank actions. His son,
Jonathan, left the company in protest four years ago over deep disagreements with the company’s capital
allocation decisions.

To us, Dundee is a “reverse” prodigal son story— the son has returned to clean up the mess of the father.
We believe Jonathan has inherited a plethora of assets that sum to a significant premium to Dundee’s
share price. He has the vision, and team in place, to execute on a monetization plan resulting in a
streamlined business with core assets. Moreover, investors have time on their side. Dundee effectively
has permanent capital given a combination of perpetual preferred securities and one preferred series
that can be paid off in common stock. We like the investment odds on Dundee very much, particularly
at its recent price, which, from what appears to us, is the result of shareholder fatigue and capitulation.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: colinwalt on August 13, 2018, 11:40:09 AM
@sculpin... Thanks!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on August 13, 2018, 12:18:33 PM
"Moreover, investors have time on their side. Dundee effectively has permanent capital given a combination of perpetual preferred securities and one preferred series that can be paid off in common stock."

How much lower would the stock go if they decided to pay off the DC.PR.E with common? I would bet the other pref classes would trade off too despite their credit improving.

It's an interesting situation for the company. They could come back to preferred holders asking for another extension or threaten to pay in common which would be a big haircut from $25.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on August 14, 2018, 07:11:42 AM
Man, you guys are coming up with all kinds of scary theories. Sounds quite desperate to me. I see this kind of talk on Stockhouse when a stock has been beaten up like these but, I don't recall this on CoBF...

Sure, they can screw investors but, what happens after? They end up pretty much locked out of the equity/debt market.

I would like to remind everyone that their public holdings alone are about enough to redeem all preferreds at par!

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 14, 2018, 07:25:03 AM
I read the comment about the ability to repay one pref with common was a comment about liquidity, not solvency. It's a risk reducer and therefore a good thing. I may be wrong but that's what I thought he meant.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on August 14, 2018, 08:32:34 AM
I read the comment about the ability to repay one pref with common was a comment about liquidity, not solvency. It's a risk reducer and therefore a good thing. I may be wrong but that's what I thought he meant.

I agree, it's about preserving the option value of the equity especially versus the current share price which shows little to no optimism!

FWIW, I keep buying the DC.PR.B/D as it drops.

At the AGM, John Goodman, also mentioned that he was interested in buying more common and preferred. Not sure why we haven't seen any insider buying unless they think they are restricted.

Anyone buying the DC.PR.E, yet? The YTM is looking very good at these levels if you believe they will be cash settled.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Lakesider on August 14, 2018, 02:49:48 PM
I read the comment about the ability to repay one pref with common was a comment about liquidity, not solvency. It's a risk reducer and therefore a good thing. I may be wrong but that's what I thought he meant.

Spot on.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 14, 2018, 04:02:20 PM
Based on these reviews, the Douglas & JW Marriott are doing most things right & guests seems impressed. Pricing seems to be very solid this Summer...

https://www.tripadvisor.ca/Hotel_Review-g154943-d12619583-Reviews-or10-The_DOUGLAS_Autograph_Collection-Vancouver_British_Columbia.html

https://www.tripadvisor.ca/Hotel_Review-g154943-d12619570-Reviews-JW_Marriott_Parq_Vancouver-Vancouver_British_Columbia.html#REVIEWS
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on August 14, 2018, 06:21:02 PM
Based on these reviews, the Douglas & JW Marriott are doing most things right & guests seems impressed. Pricing seems to be very solid this Summer...

https://www.tripadvisor.ca/Hotel_Review-g154943-d12619583-Reviews-or10-The_DOUGLAS_Autograph_Collection-Vancouver_British_Columbia.html

https://www.tripadvisor.ca/Hotel_Review-g154943-d12619570-Reviews-JW_Marriott_Parq_Vancouver-Vancouver_British_Columbia.html#REVIEWS

Q2 results are out.  It appears Parq generated roughly the same revenue in Q2 as it did in Q1, and they've taken a big write down on the asset.  I am surprised by how poorly it performed heading into prime tourist season.   Will be interesting to hear whether gaming revenues took a dive, because one would certainly expect hotel revs to be up.

I haven't dug deep, but overall looks like a very bleak quarter.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 14, 2018, 06:21:37 PM
Q2 is out. Parq results not good--still running at an operating loss and now a writedown. Will be interesting to hear the conference call tomorrow.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 14, 2018, 11:20:49 PM
Results look pretty abysmal. Parq equity written down to nil and the preferred shares written down somewhat too, on changes to long term forecasts. They continue to contribute capital higher up the stack but there’s so much debt it doesn’t give them much protection. I struggle to believe this trophy asset could be a zero but the accounting is moving that way.

On the positive side there’s progress at DPM & DST, and first wells will be drilled in Chad in 3q.

No obvious signs of major decisions such as operations being moved into discontinued.

There are still significant potential writedowns to come (e.g. TauRx) and one of the two possible operating cash flow generators (Parq) doesn’t look like it’s working. The other is Chad and that’s speculative. Other holdings are illiquid or are the last things they want to sell (DPM would be a dumb sale IMHO as it’s making clear progress that isn’t in the price yet). I’d be cutting those pref dividends if I was them!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 15, 2018, 01:46:40 AM
FWIW my updated base case SOTP is $1.32/common share. I have:

- Listed equities at market (DPM, ECS, DST at current price and "other listed" at the 2q18 BV of 32).
- TauRx at 0
- Parq at 25 which is $60m of ebitda on 10x less debt; this ought to be conservative but at this point, who knows?
- All of other private investments, debt, Android, and Sarea at 50% of their carrying values because I don't have the visibility to know otherwise.
- Union at 75% of the value of ICC (since they can't sell it) and nothing for non-ICC assets
- Blue Goose and Agrimarine at 0
- Dundee Securities and D360 at book value
- United Hydrocarbons at 0
- Holdco cash at 20 not 30 because they have costs

Adds up to 325 in assets, less
- Recourse debt 10
- All prefs at par (I've considered using market but they don't have the cash to buy back and if things go right the prefs will rerate)
- 27 in other holdco liabilities

That feels to me like it's sufficiently conservative. There's a decent chance almost all of the assets could be worth more than I have them down for. I just want to see some real activity to convert nonperformers to cash, buy back some prefs, and focus down on the assets that are really likely to move the needle.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Sportgamma on August 15, 2018, 07:09:46 AM
Isn't this summary missing some non-core portfolio investments? According to the Q2 filing, public securities alone had a fair value of $164 m.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 15, 2018, 07:21:27 AM
My numbers are a mix of the MDA breakout for investments (eg Parq) and the segment breakdown at the back of the financial statements for the book values of consolidated holdings (eg Dundee Securities). Your 164 consists of direct equity holdings that aren’t consolidated and includes DPM+ECS+unspecified other. ECS has fallen since. The 164 does not include ICC (held through Union) or DST (consolidated).

P32 of the MD&A is useful for this.

It does take a bit of picking away to understand where everything is.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 15, 2018, 07:48:51 AM
I think the chance that the E prefs will be converted to common at $2 is growing. If that were to happen it would, obviously, not be good for the E holders. The common shares would lose some risk, but at the cost of losing a lot of the potential upside. The winner in this scenario would be the B and D prefs, which would be safer and not lose any upside.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 15, 2018, 07:59:32 AM
I think the chance that the E prefs will be converted to common at $2 is growing. If that were to happen it would, obviously, not be good for the E holders. The common shares would lose some risk, but at the cost of losing a lot of the potential upside. The winner in this scenario would be the B and D prefs, which would be safer and not lose any upside.

There are circumstances, I think, in which that would be good for the common as well. It increases my base case NAVPS outlined above. It decreases my bull case/everything goes right NAVPS. But everything isn't going right!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 15, 2018, 08:09:07 AM
I think the chance that the E prefs will be converted to common at $2 is growing. If that were to happen it would, obviously, not be good for the E holders. The common shares would lose some risk, but at the cost of losing a lot of the potential upside. The winner in this scenario would be the B and D prefs, which would be safer and not lose any upside.

There are circumstances, I think, in which that would be good for the common as well. It increases my base case NAVPS outlined above. It decreases my bull case/everything goes right NAVPS. But everything isn't going right!

The problems at Parq have added to the risk for the common and reduced the upside. I still think the common is a good bet. But I now believe that the B and D prefs are a better bet. You can get a double out of these and make 15% along the way with much less risk. It's hard for the common to compete with that IMO. When you throw in the growing possibility that the E prefs will be converted to common, it makes the case for the B and D even stronger. I own both the common and the prefs in about 30/70 ratio. I am pretty sure that if I didn't own any of it right now I'd only buy the prefs.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: gokou3 on August 15, 2018, 08:33:47 AM
Given the company is lacking cash, I think it's quite possible that management will offer to redeem the E at a discount to par, like $18 per pref, in lieu of converting to the common.  This would lessen the dilution for Goodman and stick it to the preferred holders.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Maximu$ on August 15, 2018, 09:07:39 AM
I actually see Parq as an existential threat to DC.  If they continue, cash calls like we have seen the past few quarters could quickly deplete all of DC's liquid equity (assumes DPM is not to be sold due to upside) and then force the firesale of DC's less liquid assets.  This issue is compounded by the looming Pfd-E redemptions.  Options at this point include: sale to or partner with another company with cash to invest and/or sell Parq to preserve any existing value, and/or convert Pfd-E to common @ $2 (an easy win, but requires acceptance that DC is no longer what it was and $2 is a ceiling price for the shares over short to mid term until this mess of z-grade companies can be sold).  While an option, I do not see suspension of the Pfd Series 2,3 dividends as helpful toward a LT solution.  Why?  DC's credit profile would weaken considerably, making future capital raises more difficult and expensive, DC is trying to get back into resource focused money management business and how you treat OPM (incl. your Pfd shareholders) matters, and the benefit is illusory as DC's problems are structural and require decisive (and fast) structural changes as opposed to short term relief that does not address the core issues. 

Other options:  (i) Rights offering for common and Pfd shareholders ... cash goes up, cap structure stays same, no dilution; (ii) Goodmans offer to give up dual class structure ... DC shares take off upwards ... benefitting all, including Goodmans ... and raise more common, (iii) any others?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 15, 2018, 10:38:48 AM
I actually see Parq as an existential threat to DC.  If they continue, cash calls like we have seen the past few quarters could quickly deplete all of DC's liquid equity (assumes DPM is not to be sold due to upside) and then force the firesale of DC's less liquid assets.  This issue is compounded by the looming Pfd-E redemptions.  Options at this point include: sale to or partner with another company with cash to invest and/or sell Parq to preserve any existing value, and/or convert Pfd-E to common @ $2 (an easy win, but requires acceptance that DC is no longer what it was and $2 is a ceiling price for the shares over short to mid term until this mess of z-grade companies can be sold).  While an option, I do not see suspension of the Pfd Series 2,3 dividends as helpful toward a LT solution.  Why?  DC's credit profile would weaken considerably, making future capital raises more difficult and expensive, DC is trying to get back into resource focused money management business and how you treat OPM (incl. your Pfd shareholders) matters, and the benefit is illusory as DC's problems are structural and require decisive (and fast) structural changes as opposed to short term relief that does not address the core issues. 

Other options:  (i) Rights offering for common and Pfd shareholders ... cash goes up, cap structure stays same, no dilution; (ii) Goodmans offer to give up dual class structure ... DC shares take off upwards ... benefitting all, including Goodmans ... and raise more common, (iii) any others?

I agree about Parq. It needs to be fixed fast. Either through a full or partial sale and/or refinancing. They can't wait much longer. And that doesn't suggest that they will get great terms on any deal. This is the deal breaker for me. I am hiding out in the preferreds until there is more safety in the common.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on August 15, 2018, 12:10:33 PM
I think the chance that the E prefs will be converted to common at $2 is growing. If that were to happen it would, obviously, not be good for the E holders. The common shares would lose some risk, but at the cost of losing a lot of the potential upside. The winner in this scenario would be the B and D prefs, which would be safer and not lose any upside.

Jonathan's comments on the CC suggest to me that cash redemption of the Es is the least likely outcome.   The very poor Parq results put them in a much more serious liquidity crunch than I previously believed.  DPM won't be sold.   Parq looks like it will require substantial ongoing capital infusions.   If the Delonex drilling doesn't go well, then I think they'll  turn off the dividends on the prefs.

I missed what he said about the CRA tax issue.  I looked at the financials and it appears there could be a material charge there, but not quantifiable at this time?  Anyone have further insight?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 15, 2018, 12:23:02 PM
Conference call transcript....

https://seekingalpha.com/article/4199547-dundee-corp-ddejf-ceo-jonathan-goodman-q2-2018-results-earnings-call-transcript
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 15, 2018, 12:45:34 PM
I think the chance that the E prefs will be converted to common at $2 is growing. If that were to happen it would, obviously, not be good for the E holders. The common shares would lose some risk, but at the cost of losing a lot of the potential upside. The winner in this scenario would be the B and D prefs, which would be safer and not lose any upside.

Jonathan's comments on the CC suggest to me that cash redemption of the Es is the least likely outcome.   The very poor Parq results put them in a much more serious liquidity crunch than I previously believed.  DPM won't be sold.   Parq looks like it will require substantial ongoing capital infusions.   If the Delonex drilling doesn't go well, then I think they'll  turn off the dividends on the prefs.

I missed what he said about the CRA tax issue.  I looked at the financials and it appears there could be a material charge there, but not quantifiable at this time?  Anyone have further insight?

Many negatives in the quarter & on the call but there were some things that give me a glimmer of hope. At least the events at Parq are really forcing them to move on getting this cleaned up. Some of the positives on the CC were the acknowledgement of potential buyers for Blue Goose, "advanced stages" in negotiating with outside parties for solutions to Parq, moving portfolio down to 30 positions from 70 and "potential proceeds of $100mm to $200mm" from these sales, DPM doubling EBITDA over next year & Jonathan saying "at right price anything is for sale".

While the BC gaming industry is having a tough year, it seems as though Parq Casino is outperforming the others...

 And the casino part – there is no question that the casino industry if you look at the other participants in the BC industry they’re down on the table drop close to 20% year-to-date.

We’re actually up on the edge water because - with the same number of tables and the same slots but we’re up because it's in a much nicer building. But certainly we’re up in a really tough market.


Need to look further into the CRA filing - could it be a disallowance of the deduction amount on a large capital gain??  DC currently has the following tax loss carry forwards which could be very valuable assuming they begin to make money again...

At June 30, 2018, the Corporation had operating loss carry forwards of $527,656,000 (December 31, 2017 – $505,195,000) and capital loss carry forwards of $234,396,000 (December 31, 2017 – $231,918,000).
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on August 15, 2018, 02:33:19 PM
I think they are going to use the conversion option as leverage on the DC.PR.E holders to extend their retraction feature again while keeping the coupon. Maybe they will even throw in a warrant again.

Basically, if preferred holders don't agree to terms, they will use their option to pay with shares which will materially hurt the preferred holders. If they agree to extend, they have a shot at getting their cash back in a few years and earning a reasonable return while they wait.

Dundee gets the benefit of having access to that capital for a few more years and does not dilute shareholders much.

It's a win-win versus paying all cash or diluting shareholders.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 15, 2018, 02:50:44 PM
I think the chance that the E prefs will be converted to common at $2 is growing. If that were to happen it would, obviously, not be good for the E holders. The common shares would lose some risk, but at the cost of losing a lot of the potential upside. The winner in this scenario would be the B and D prefs, which would be safer and not lose any upside.

Jonathan's comments on the CC suggest to me that cash redemption of the Es is the least likely outcome.   The very poor Parq results put them in a much more serious liquidity crunch than I previously believed.  DPM won't be sold.   Parq looks like it will require substantial ongoing capital infusions.   If the Delonex drilling doesn't go well, then I think they'll  turn off the dividends on the prefs.

I missed what he said about the CRA tax issue.  I looked at the financials and it appears there could be a material charge there, but not quantifiable at this time?  Anyone have further insight?

Many negatives in the quarter & on the call but there were some things that give me a glimmer of hope. At least the events at Parq are really forcing them to move on getting this cleaned up. Some of the positives on the CC were the acknowledgement of potential buyers for Blue Goose, "advanced stages" in negotiating with outside parties for solutions to Parq, moving portfolio down to 30 positions from 70 and "potential proceeds of $100mm to $200mm" from these sales, DPM doubling EBITDA over next year & Jonathan saying "at right price anything is for sale".

While the BC gaming industry is having a tough year, it seems as though Parq Casino is outperforming the others...

 And the casino part – there is no question that the casino industry if you look at the other participants in the BC industry they’re down on the table drop close to 20% year-to-date.

We’re actually up on the edge water because - with the same number of tables and the same slots but we’re up because it's in a much nicer building. But certainly we’re up in a really tough market.


Need to look further into the CRA filing - could it be a disallowance of the deduction amount on a large capital gain??  DC currently has the following tax loss carry forwards which could be very valuable assuming they begin to make money again...

At June 30, 2018, the Corporation had operating loss carry forwards of $527,656,000 (December 31, 2017 – $505,195,000) and capital loss carry forwards of $234,396,000 (December 31, 2017 – $231,918,000).

As someone who has owned both the common and the B/D prefs, I like to think about which offers the better risk adjusted return. As of now I feel that belongs to the prefs for the following reasons:

The B and D prefs have a potential upside of 2-2.5x from current prices around $9.40. I feel that to make a bet on the common you would need to have a reasonable expectation that 3x to 5x was possible, otherwise why choose the common over the preferred since the preferred is safer and pays a 15% dividend? Until problems with Parq materialized I felt that it was reasonable to think a 3x to 5x return was possible. But now with the Parq asset looking like a bust a large potential upside has been lost. Worse the cash flow problems stemming from the needs of Parq are making it more likely that the E prefs will be converted into common, which would take out an even larger part of the upside potential. At this stage I don't think the common offers enough of an upside advantage over the prefs to make it as good a bet.

Also, I figure even if things go well and it becomes clear that Dundee's NAV is solidifying on a decent number, say $6 per share, the stock is likely to trade at a large discount to that for a long time given the bad experience and doubts investors have about the company. So, it may not trade much above $3 even with a $6 NAV. If that happens the company would have ample opportunities to buy back cheap stock for a long time driving value growth. I would prefer to buy it then rather than now when there is so much uncertainty about it's ultimate value and the prefs are so cheap.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 15, 2018, 06:32:38 PM
I think they are going to use the conversion option as leverage on the DC.PR.E holders to extend their retraction feature again while keeping the coupon. Maybe they will even throw in a warrant again.

Basically, if preferred holders don't agree to terms, they will use their option to pay with shares which will materially hurt the preferred holders. If they agree to extend, they have a shot at getting their cash back in a few years and earning a reasonable return while they wait.

Dundee gets the benefit of having access to that capital for a few more years and does not dilute shareholders much.

It's a win-win versus paying all cash or diluting shareholders.

I wonder if the E shares might start to sell off and reflect the risk of conversion?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 16, 2018, 02:21:21 AM
My key takeaways from the call:

- DPM is going well and could be worth significantly more next year. It's big enough to move the needle significantly.
- They're clearly prepared to play hardball with the convertible prefs, which I regard as good news because it dramatically reduces liquidity risk.
- No real details on the portfolio review but the underlying commentary is positive. There's a steer to $100-200m of sales in 2H, not including DPM or UHIC. By definition that means liquifying a material of the undisclosed/private/hard-to-value holdings and if it happens it will harden up BV materially and remove liquidity risk. Interestingly they didn't explicitly exclude selling Parq, although they weren't asked. I think they also said that they have had interest in Blue Goose.
- Delonex drills first Chad well in 2H - potentially also hardens up BV (one way or the other!).
- They are clearly deep in the process of not only refinancing Parq (potentially with PIK flexibility) but also bringing in another capital provider with relevant skills to help ramp the business faster. That would presumably reduce Dundee's % stake but it might increase and harden up the value of the position. That said I don't really understand what skills they need given they have Marriott's support & systems already.
- I found it interesting that they reiterated long term ebitda guidance for Parq despite having written it down due to changes in long term forecasts. I take this to mean there is a chance the writedown is conservative.

More generally, I am tentatively impressed by Jonathan Goodman. He's saying most of what I want to hear - but ultimately it's actions that count.

On the negative side:
- There was a questioner on the call who seemed convinced that when the convertible prefs were extended, the conversion right was removed or affected. Need to check this.
- The tax thing is new to me and wasn't questioned but could be material.

I totally agree with most of the comments on here e.g. about Parq becoming a material risk and the prefs being better than the common here. Sadly I can only get exposure via the common (EU bureaucrats consider me too stupid to buy the prefs, as explained above). I will hold, but have cancelled my planned add.

Entirely theoretical exercise but it's quite interesting to work through the impact on the common if they convert the Series 5 prefs and do a tender offer for the others at say $13, paid for by a fire sale of assets below BV. It's surprisingly hard to get serious downside for the common in that scenario, but obviously that assumes the pref holders would sell.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 16, 2018, 03:01:58 AM
At June 30, 2018, the Corporation had operating loss carry forwards of $527,656,000 (December 31, 2017 – $505,195,000) and capital loss carry forwards of $234,396,000 (December 31, 2017 – $231,918,000).

Am I right in thinking that these have been written off as assets but could come back if profits/gains are made? And do they disclose how much of these are at the holdco vs, say, Blue Goose?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on August 16, 2018, 06:20:23 AM

- There was a questioner on the call who seemed convinced that when the convertible prefs were extended, the conversion right was removed or affected. Need to check this.


I don't know what that guy was smoking. It's as clear as day in the circular.  Look on Sedar for the circular dated Jan 11, 2016 and search for "conversion".
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: doc75 on August 16, 2018, 06:27:38 AM
Interestingly they didn't explicitly exclude selling Parq, although they weren't asked. I think they also said that they have had interest in Blue Goose.

They sold off some of the assets of the Blue Goose fish business, and said their is interest in the remaining parts.  I don't think they indicated any interest in Blue Goose more generally.  They just said that selling down the beef herd will generate some cash and limit the amount of capital that corporate has to send into that sub.

Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 16, 2018, 06:52:51 AM
Interestingly they didn't explicitly exclude selling Parq, although they weren't asked. I think they also said that they have had interest in Blue Goose.

They sold off some of the assets of the Blue Goose fish business, and said their is interest in the remaining parts.  I don't think they indicated any interest in Blue Goose more generally.  They just said that selling down the beef herd will generate some cash and limit the amount of capital that corporate has to send into that sub.

Thanks. I'd add that the 2006 land valuation (100m) less BG's liabilities (60) comes to more or less the BV (40, BV is 30) so I won't be surprised if there is interest in the land at a price that allows them to harden and liquify book value.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: sculpin on August 16, 2018, 10:32:35 AM
At June 30, 2018, the Corporation had operating loss carry forwards of $527,656,000 (December 31, 2017 – $505,195,000) and capital loss carry forwards of $234,396,000 (December 31, 2017 – $231,918,000).

Am I right in thinking that these have been written off as assets but could come back if profits/gains are made? And do they disclose how much of these are at the holdco vs, say, Blue Goose?

I believe all of these are at the corporate level but could be mistaken. Obviously if/when Dundee rights the ship & gets back to operating profitably and with potential investments that could have capital gains, then these tax loss carry forwards become very valuable allowing them to pay little or no tax on profitability & realized capital gains. The size of these losses could truly become an asset & opens the door in the future where profitable operations/assets could be bought by Dundee & their profits shielded by these TLCF's.


Unused business tax losses may be carried back up to three years or carried forward
up to 20 years to offset future tax liabilities of the taxpayer.16 Capital losses may be carried
back three years and carried forward indefinitely.


https://www.policyschool.ca/wp-content/uploads/2016/03/corporate-group-taxation.pdf


A tax loss carryforward is a "negative profit" for tax purposes. It usually occurs when a company's expenses exceed revenues, making the company unprofitable.

HOW IT WORKS (EXAMPLE):
Tax loss carryfowards reduce future tax payments. For example, let's assume Company XYZ has income of $1,000,000 but expenses of $1,300,000. Its net operating loss is $1,000,000 - $1,300,000 = -$300,000.

Company XYZ will probably not have to pay taxes that year, because it has negative taxable income. But let's assume that next year, Company XYZ makes a lot more money and records $500,000 of taxable income. Company XYZ pays a corporate tax rate of 30%.

Normally, the company would need to pay $500,000 x 30% = $150,000 in taxes. But because it had a tax loss carryforward from last year, it can apply last year's loss to this year's tax bill, reducing it significantly (or even to $0, depending on the jurisdiction Company XYZ is in).

Let's assume that Company XYZ can apply the entire -$300,000 tax loss carryforward to this year's tax bill. Instead of owing $500,000 x 30% = $150,000 in taxes, Company XYZ now owes only ($500,000 - $300,000) x 30% = $60,000 in taxes.

Similarly, investors can carry forward losses from selling investments and thereby reduce their taxes on future capital gains.

WHY IT MATTERS:

Tax loss carryforwards create future tax relief for companies and are therefore very valuable. The laws on how tax loss carryforwards apply vary by state, but usually a carryforward from the last two or three years can apply up to the next seven years. After that, the carryforwards expire. There are rules and exceptions for almost any circumstance, so it's best to check with the IRS or a qualified tax accountant when calculating and applying tax loss carryforwards.

As mentioned above, tax loss carryforwards are valuable assets in and of themselves. In fact, sometimes companies purchase other companies solely for their tax loss carryforwards.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Cardboard on August 16, 2018, 11:46:08 AM
My view is that most of you discount too much the probabilities of refinancing of the "E"s. Hence if you want to do that, you don't stop paying dividends on your existing debt (preferreds). And as one mentioned, if you are looking to do business with other people in the resource sector, you don't do that either.

Here is a fact:

"In accordance with the terms of the Corporation’s Preference Shares, series 5, holders thereof had the option to redeem up to 17% of their holdings on January 31, 2018 at a price of $25.00 per share.  During the first quarter of 2018, the Corporation paid cash of $7,582,000 to redeem 303,265 Preference Shares, series 5 pursuant to these arrangements."

Guess how many redeemed their shares? 8.4% vs 17% max. Why?

Something similar happened when these were issued to redeem Series 4 if I recall properly. Most of the unhappy got their cash and the rest carried on with better terms.

It happens all the time with convertible reaching maturity and when the company cannot easily repay. They get extended for better terms and sometimes a chunk is redeemed.

Cardboard
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 16, 2018, 01:19:20 PM
I think Dundee’s strategy with the E’s will depend on how things look for the company next year. If the restructuring has gone well (stop laughing), Dundee may be willing and able to pay off the E’s with cash. Or, more likely, as Safety has pointed out, the E’s will trade at a small premium and the holders won’t bother to redeem them. And Dundee may be happy just to let them continue indefinitely.

If things have gone very badly by next summer, Dundee may be happy to convert the E’s into common at $2. If progress is so-so, but not bad enough that the company would want to issue shares at $2, and the stock is still below $2, then Dundee may use Safety’s idea of threatening to convert the shares if E holders don’t support an extension. Of couse the stock may trade at or a little above $2 then things get complicated. The threat of conversion won’t likely work. And E holders may have no desire to continue.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on August 16, 2018, 06:45:28 PM
I don't think they will wait until next summer. Last time, the E's were heading towards their June redemption date, they pulled the trigger in November. The timing will probably be similar this time.

I also think the stock would have to be well above $2 for the E shareholders to be ok with the outcome of getting all stock as trying to sell ~40m shares, isn't easy.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Potato on August 17, 2018, 05:38:23 AM
Two recent blog posts on Dundee from others:

https://divestor.com/?p=8229

http://prefblog.com/?p=37057

I have B & D prefs, and tend to oscillate between excitement at how cheap they are (and look how much there is on the balance sheet behind them!) and a deep fear that the bums will get so enthralled at watching their dumpster fire that it ends in tears for all.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 17, 2018, 06:41:20 AM
I don't think they will wait until next summer. Last time, the E's were heading towards their June redemption date, they pulled the trigger in November. The timing will probably be similar this time.

I also think the stock would have to be well above $2 for the E shareholders to be ok with the outcome of getting all stock as trying to sell ~40m shares, isn't easy.

I suppose if the option presented to E holders is to get converted to common and lose almost half their value or get extended with some kind of sweetener then they most likely will take the extension. But I'm not sure what Dundee could do to sweeten the offer much.

My question is are we sure that Dundee wouldn't rather convert? Presumably an extension would eliminate the conversion option at $2. I am not sure that Dundee won't take it now instead of losing that option forever. I am no longer an owner of the common, just the B and D, so obviously I would prefer they convert, so maybe that is influencing my judgement!
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 17, 2018, 09:11:44 AM
If I was them I would not want to lose the convert option. That would be a deal breaker in a negotiation for me. And I wouldn't accept a lowering of the conversion price (much). Notably they said on the call that in the future they ideally have no liabilities at all so it's possible that future access to the credit/pref markets is not something they care about. Plus, credit markets have short memories these days and I have no doubt Dundee, if it turns its position around, would be given access.

So I tend to think renegotiation and conversion are roughly 50:50 probabilities, at least from my outside vantage point.

Obviously conversion is great for the other prefs. Whether conversion is good for the common depends entirely on your estimate of BVPS. In my base case, NAV is low enough that conversion is accretive to common BVPS. I'm being pretty punitive with some of the more opaque values (generally allowing for half of BV and in some cases nothing, including for UHIC which could easily be a zero) so my NAV is $81m. Conversion adds $83m, doubling the NAV but "only" adding two-thirds to the share count.

My base case has NAVPS at $1.38 and converted NAVPS at $1.66. Obviously conversion takes away some of the upside but it's still anything up to 5x on my bull NAVPS (with the major needle-movers being DPM rerating, Parq turning out OK, and UHIC producing oil). So, I kinda like the idea of converting. It leaves me with great upside and lower risk. But conversion would create a massive overhang in the shares. I can see a huge opportunity developing in the common over the next few months, and if that happens I'll buy more (depending on newsflow).

I see the common is down 11% today. Has anyone seen any news or are we just seeing (more) capitulation?
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: Rod on August 17, 2018, 09:48:29 AM
I can’t see the E’s voting to extend if the $2 conversion remains. What’s the benefit to them? And I have a hard time seeing Dundee give up the conversion option.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: petec on August 17, 2018, 10:15:33 AM
I can’t see the E’s voting to extend if the $2 conversion remains. What’s the benefit to them? And I have a hard time seeing Dundee give up the conversion option.

Agreed.
Title: Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
Post by: SafetyinNumbers on August 17, 2018, 01:08:44 PM
I can’t see the E’s voting to extend if the $2 conversion remains. What’s the benefit to them? And I have a hard time seeing Dundee give up the conversion option.

Well it’s a few more years of dividend payments and perhaps a chance at par again. A potential loss later versus a certain loss now, I suppose.