Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 36012 times)

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #80 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$80 million credit facility has been replaced by a 365-day revolving term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.


sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #81 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.


SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #82 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?
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #83 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.

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #84 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.

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Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #85 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.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #86 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.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #87 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.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #88 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.


Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #89 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