Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 202177 times)

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #130 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 All we hear is about Blue Goose and the CEO who has been replaced by his brother due to a concussion...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!

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sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #131 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

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #132 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.

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SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #133 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.

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #134 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. 

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #135 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.

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SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #136 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.

Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #137 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%!

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #138 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.

SafetyinNumbers

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #139 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.