Author Topic: GRC - Grenville Strategic Royalty Corp  (Read 11295 times)

sculpin

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #20 on: February 15, 2017, 08:00:23 AM »
Best option for shareholders here IMHO is to just wind this down and pay out via a liquidating trust model. No confidence in mgmt making royalty investments - will they be just throwing good money into more bad situations? Meanwhile G&A continues to erode remaining book value...

Grenville Strategic Royalty Corp. February 14, 2017

GRC-TSXV Company Comment
David Quezada CFA | 604.659.8257 | david.quezada@raymondjames.ca
Bryan Fast CFA (Associate) | 604.659.8262 | bryan.fast@raymondjames.ca
Diversified Income Corps.

4Q16 Miss; Awaiting Further Results from Revamped Strategy

Recommendation

While we continue to believe Grenville occupies a legitimate market niche and see
the company’s new partnership based strategy as a prudent move we will look for
signs of stability in the portfolio prior to adjusting our neutral stance. We have
reduced our price target to $0.25 from $0.30 previously.

Analysis

 Grenville reported 4Q16 results after market yesterday posting adjusted EBITDA of
$0.7 mln as compared to our $1.2 mln estimate (no consensus estimates available)
– Down sequentially from 3Q16’s $1.4 mln, GRC’s EBITDA was impacted by reduced
royalty and interest revenues of $1.6 mln, down from $2.0 mln in the prior period as
average returns per million invested declined to $136K from $162K in 3Q16. On a
positive note, however, the company continues to effectively reduce operating costs
and also reiterated guidance of a potential $9 mln in contract buyouts of which $5.0
million could be received during 1Q17 with the remainder spread over the Last 3
quarters of 2017. The Company expects this would positively impact Adjusted
EBITDA by up to $5.0 mln and Free Cash Flow by up to $4.1 mln. This would bring
the company’s pro-forma cash balance to $14.5 mln and represent an important
catalyst in our view.

 Still looking for stabilization in portfolio – As of Dec-31-16 the “above target”
portion of GRC’s portfolio improved to 18% from 15% while the “on target” portion
declined to 38% from 43%. Meanwhile, the off-target portion of the portfolio
increased to 29% at the end of 4Q16 from 21% at the end of 3Q16. The “bought
out” bucket declined from 16% to 1% due to the removal of three previously
announced contract buyouts. $4.3 mln in royalties was moved to the loss category
as 2 investments started bankruptcy proceedings after year-end. While the above
noted potential contract buyouts are a positive in our view, the increase in off target
and loss categories represents an offset.

 Moving forward with revamped strategy – In Oct-2016 GRC entered into two joint
ventures for third party co-investment in royalty opportunities sourced by GRC
(Foregrowth-Grenville & Darwin). These partners, which will each invest 25% in new
investments going forward, will enable GRC to achieve greater diversification in
larger investments with less capital than would otherwise be the case (and will be
incremental to GRC’s investments). Two such new investments were closed during
4Q16. We believe this new strategy is a prudent move on Grenville’s part and we
will monitor its progress going forward.

Valuation

Our $0.25 price target is based on a 7.0x 2017E EV/EBITDA multiple (down from 8.0x), a
discount to the royalty peer group of 12.0x due to GRC’s smaller size and current
headwinds in the SME marketplace.


valuedontlie

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #21 on: February 15, 2017, 08:28:39 AM »
Agree a liquidation makes most sense... alternatively, this business model is better suited as a private company... doubt those options will be explored

bskptkl

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #22 on: February 15, 2017, 11:43:47 AM »
True - a liquidation would be bullish and probably a safe way to make a double or so from here - but if management were cheapskates, value minded and could get expenses in order, the stock would have a great chance to re-rate to some multiple of a growing book value. With a small position at $0.16 I am pretty agnostic...

Maybe they need a value minded manager to build up a 10% position and prod them into action. Anybody come to mind?

 


sculpin

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #23 on: October 26, 2017, 12:54:54 PM »
New 52 week low today at $0.10. Book around $0.25/share now. More negative royalty news ahead? Should be liquidated, privatized or sold to a larger royalty entity before management & the Board destroy any leftover value. Comments?

I invested in Grenvill Strategic Royalty (GRC) -  The company is one of a handful of companies funding industrial and technology companies through revenue-based royalties.  They plan to invest in a highly diversified portfolio of companies with 5 years of history , near breakeven financials and robust gross margin using a deal structure that GRC aims to produce a 25% IRR.    The business model is unique and may be attractive to some growth oriented companies as there is no share dilution nor debt incurred. 

A close comparable company is Alaris Royalty (AD) on the TSX - 
Different from AD, GRC invests in smaller companies with no probability yet in exchange for higher IRR.  AD, on the other hand, invests in larger , profitable companies but produces lower IRR.  AD has since 2009 produced approx. 34% CAGR (if dividend reinvested).   GRC is still young and the market is still absorbing its potentials.  If GRC can grow with a diversified portfolio of companies while managing the risks, it is likely that it will enjoy a CAGR that is comparable or possibly better than AD.

GRC shares have weakened in late 2014 after announcing their first write down.  However, the company has recently announced they will commence a monthly dividend that amounts to approximately $0.05/share if paid for 12 months, which would be a yield of slightly better than 7.6% based on $0.65/share.

The royalties are perpetual and there is a robust pipeline of potential investee companies that GRC is assessing.   

I attended their shareholders meeting last year and found the company is run by a team of competent and hardworking individuals.   

More info on their website;
http://www.grenvillesrc.com/investors/

gary17

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #24 on: October 26, 2017, 02:35:35 PM »
New 52 week low today at $0.10. Book around $0.25/share now. More negative royalty news ahead? Should be liquidated, privatized or sold to a larger royalty entity before management & the Board destroy any leftover value. Comments?

I invested in Grenvill Strategic Royalty (GRC) -  The company is one of a handful of companies funding industrial and technology companies through revenue-based royalties.  They plan to invest in a highly diversified portfolio of companies with 5 years of history , near breakeven financials and robust gross margin using a deal structure that GRC aims to produce a 25% IRR.    The business model is unique and may be attractive to some growth oriented companies as there is no share dilution nor debt incurred. 

A close comparable company is Alaris Royalty (AD) on the TSX - 
Different from AD, GRC invests in smaller companies with no probability yet in exchange for higher IRR.  AD, on the other hand, invests in larger , profitable companies but produces lower IRR.  AD has since 2009 produced approx. 34% CAGR (if dividend reinvested).   GRC is still young and the market is still absorbing its potentials.  If GRC can grow with a diversified portfolio of companies while managing the risks, it is likely that it will enjoy a CAGR that is comparable or possibly better than AD.

GRC shares have weakened in late 2014 after announcing their first write down.  However, the company has recently announced they will commence a monthly dividend that amounts to approximately $0.05/share if paid for 12 months, which would be a yield of slightly better than 7.6% based on $0.65/share.

The royalties are perpetual and there is a robust pipeline of potential investee companies that GRC is assessing.   

I attended their shareholders meeting last year and found the company is run by a team of competent and hardworking individuals.   

More info on their website;
http://www.grenvillesrc.com/investors/

I sold quite a while ago when I see one of their royalties starting to have issue, and aftering talkign to one of their competitors--

This will be one of many of my bad investments !

bizaro86

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #25 on: October 27, 2017, 07:49:14 AM »
New 52 week low today at $0.10. Book around $0.25/share now. More negative royalty news ahead? Should be liquidated, privatized or sold to a larger royalty entity before management & the Board destroy any leftover value. Comments?

I invested in Grenvill Strategic Royalty (GRC) -  The company is one of a handful of companies funding industrial and technology companies through revenue-based royalties.  They plan to invest in a highly diversified portfolio of companies with 5 years of history , near breakeven financials and robust gross margin using a deal structure that GRC aims to produce a 25% IRR.    The business model is unique and may be attractive to some growth oriented companies as there is no share dilution nor debt incurred. 

A close comparable company is Alaris Royalty (AD) on the TSX - 
Different from AD, GRC invests in smaller companies with no probability yet in exchange for higher IRR.  AD, on the other hand, invests in larger , profitable companies but produces lower IRR.  AD has since 2009 produced approx. 34% CAGR (if dividend reinvested).   GRC is still young and the market is still absorbing its potentials.  If GRC can grow with a diversified portfolio of companies while managing the risks, it is likely that it will enjoy a CAGR that is comparable or possibly better than AD.

GRC shares have weakened in late 2014 after announcing their first write down.  However, the company has recently announced they will commence a monthly dividend that amounts to approximately $0.05/share if paid for 12 months, which would be a yield of slightly better than 7.6% based on $0.65/share.

The royalties are perpetual and there is a robust pipeline of potential investee companies that GRC is assessing.   

I attended their shareholders meeting last year and found the company is run by a team of competent and hardworking individuals.   

More info on their website;
http://www.grenvillesrc.com/investors/

It should be sold/liquidated.  Needs an activist or management will keep burning shareholder money on this tire fire. No position. I'm not sure there would be much left in a liquidation for common after debt though, because their assets are very illiquid, and seem to be poorly selected, so are probably not worth book value.

doc75

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Re: GRC - Grenville Strategic Royalty Corp
« Reply #26 on: May 31, 2018, 09:30:05 AM »
Is anyone still following this nightmare?  I think there may finally be some positive signs amidst the sea of red flags. 

The CEO / co-founder has stepped down. Recent investments appear more sound, and better scaled, though they're still quite opaque and certainly still risky.  They seem to be opportunistically chasing investments in weed and blockchain, which gives me pause.  In particular a couple of their recent investees are US companies that are going public via RTO on Canadian markets.  This seems a little "scammy" to me, but may work out well for Grenville as they're getting equity or warrants on top of the royalties.

Shareholders are voting today on the purchase  of the remnants of Logiq Asset Management.  The increased scale should help but they'll still be a tiny fish with a bad history, so definitely not out of the woods yet.  The combined entity will have about $20m in outstanding convertible debt due in Dec 19 and no hope of having enough cash to redeem.  I expect they'll try an amend-and-extend.  Insiders have been buying both the debt and the common.