Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 137599 times)

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #230 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.




petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #231 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

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #232 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.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #233 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).

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #234 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.


petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #235 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.

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #236 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?

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #237 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.

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #238 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.

wachtwoord

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #239 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 ...
« Last Edit: June 21, 2018, 01:53:45 PM by wachtwoord »
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