PDER - Pardee Resources

[wachtwoord]

When the almond news came out I canceled my outstanding bid under market (I held my position). I'm not happy with the table grapes and any of the renewable investments (even if it would not be fraudulent).

 

But getting caught in a ponzi scheme for a $7.7M investment as a company with high salaries? How can they claim to have done due diligence? This makes me think about my position ...

[SmallCap]

A different thought:

 

the safest time to fly is right after a well-publicized plane crash. the entire industry tightens up their safety standards.

 

They have a long track record of success, is this one significant and publicized failure a call for them to tighten up their thinking or an indicator that they are no longer what they once were?

[bizaro86]

On the other hand, it's very safe to fly with an airline pilot in his airline maintained jet that he's been flying for years. Much less safe to fly with the exact same pilot in a tow glider while he's doing tricks to show off to his new mistress during a Mexico all-inclusive vacation.

 

These guys have a great record investing in Appalachian timber/coal land. And they were able to extend that success to coal land in Colorado. I'm not totally convinced I should trust them to buy solar panels and table grape land in California. And I'm very convinced to NOT trust them buying land in Portugal, so I sold. What possible competitive advantage could they have in that?

 

I was ok with the high salaries and unreasonably large numbers of VPs when the assets were softwood pine plantations making money, but they have no track record in all this other stuff.

 

 

[sarganaga]

The oil and gas investment was at an inopportune time, but at least was in a familiar geographical area. The non Ponzi solar investments only work, according to Pardee management,  because of tax credits. The table grape business potentially has favorable economics, but Pardee management brings no particular expertise to it. What arrogant self evaluation would allow them to think they have value adding abilities to leased land in Portugal to start raising almonds in partnership with a company from California?

 

How in the hell could they possibly need so many "managers" for investments where the company has no operational responsibility? The current efforts do not seem to be shareholder driven, but to further the empire. Hopefully at least the mastermind of the Ponzi investment will be terminated without replacement.

 

 

[ele2996]

The grape growing business will allow management to make annual due diligence trips to Portugal. I believe that Portugal has some wonderful golf courses. Perhaps, members of management are golfers.

[bizaro86]

I don't have an issue with the gas royalties they bought. That looked like a winner initially, and feels like it's in their circle of competence to me. It could still work out if the price gets above the cost of drilling their lands for shale gas.

[writser]

At least uncle Warren lost money on DC Solar too. A bit more, even.

[Foreign Tuffett]

Anyone still holding or following this? What has "Party Resources" been up to recently?

[TwoCitiesCapital]

Anyone still holding or following this? What has "Party Resources" been up to recently?

 

I gave up and sold out back around $180 back in 2018ish, but have been watching it waiting for a re-entry as I still believe in the long-term value of the assets.

 

The fraud has resulted in a pause to make me reconsider the management. No idea how easy it is to fall for this sort of thing, but certainly probably easier for someone managing hundreds of billions across thousands of investments/businesses/uses of capital than for someone managing only a handful....

 

I'd probably be ok with the risk if it below it's 2016 lows of $130, but $165 isnt much lower than where they've traded the whole of the last 5 years and there's good reason for it to be lower so still not attractive in my book.

 

[Foreign Tuffett]

http://www.oddballstocks.com/2020/05/pardee-resources-company-2019-annual.html

 

Does it bother anyone else that PDER's management team seems to have little to no awareness that it has done, and continues to do, some dumb things? I understand that management wants to justify the high G&A expenses by doing deals, but c'mon man!

 

I don't understand the ag investments, or the relationship with the "related party" that runs them. How will they make money with the almond farm in Portugal when the land is leased and they are also paying an "asset manager" based in California?

 

They also really need to have a come to Jesus moment over the investment in the DC Solar ponzi scheme. Instead they say this:

 

"Due to substantial uncertainties, the Company is currently unable to determine the financial impact arising from this complex situation, however, the impact could be as much as $7.2 million, which includes related tax impacts. As mentioned previously, we are pleased with the performance of the balance of our alternative energy assets,which have proven to be reliable, low-risk investments."

So the same management team that invested $7.7 million in a ponzi scheme thinks its other solar investments are "low-risk"? Great.

 

 

[bizaro86]

If you're going to have that many vice presidents you need to have something for them to do.

[thepupil]

Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents.

[bizaro86]

Pardee only has 12 people with the word "president" in their title, out of what appears to be 28 total employees. Seems like a lot to me for a company where the whole point is that they have no operations.

 

[txvalue]

http://www.oddballstocks.com/2020/05/pardee-resources-company-2019-annual.html

 

Does it bother anyone else that PDER's management team seems to have little to no awareness that it has done, and continues to do, some dumb things? I understand that management wants to justify the high G&A expenses by doing deals, but c'mon man!

 

I don't understand the ag investments, or the relationship with the "related party" that runs them. How will they make money with the almond farm in Portugal when the land is leased and they are also paying an "asset manager" based in California?

 

They also really need to have a come to Jesus moment over the investment in the DC Solar ponzi scheme. Instead they say this:

 

"Due to substantial uncertainties, the Company is currently unable to determine the financial impact arising from this complex situation, however, the impact could be as much as $7.2 million, which includes related tax impacts. As mentioned previously, we are pleased with the performance of the balance of our alternative energy assets,which have proven to be reliable, low-risk investments."

So the same management team that invested $7.7 million in a ponzi scheme thinks its other solar investments are "low-risk"? Great.

 

I completely agree. This presented years ago as a company that was a sharp natural resource operator that flew under the radar. They owned large amounts of land with a coal cash cow & timber assets that were worth substantially more than they were on the books for - they were going to use their pristine balance sheet & this impressive cash flow to opportunistically acquire similar things at a discount to add to their multi-use plan for royalties on their land.

 

Fast forward to today: Coal is eventually going away and over the past several years they have wasted huge amounts of time and money on poorly time buybacks, odd new ventures, ponzi schemes, poor acquisitions and high exec comp. Seemingly every move management makes takes them further and further away from the original company mission.

[Foreign Tuffett]

http://www.oddballstocks.com/2020/05/pardee-resources-company-2019-annual.html

 

Does it bother anyone else that PDER's management team seems to have little to no awareness that it has done, and continues to do, some dumb things? I understand that management wants to justify the high G&A expenses by doing deals, but c'mon man!

 

I don't understand the ag investments, or the relationship with the "related party" that runs them. How will they make money with the almond farm in Portugal when the land is leased and they are also paying an "asset manager" based in California?

 

They also really need to have a come to Jesus moment over the investment in the DC Solar ponzi scheme. Instead they say this:

 

"Due to substantial uncertainties, the Company is currently unable to determine the financial impact arising from this complex situation, however, the impact could be as much as $7.2 million, which includes related tax impacts. As mentioned previously, we are pleased with the performance of the balance of our alternative energy assets,which have proven to be reliable, low-risk investments."

So the same management team that invested $7.7 million in a ponzi scheme thinks its other solar investments are "low-risk"? Great.

 

I completely agree. This presented years ago as a company that was a sharp natural resource operator that flew under the radar. They owned large amounts of land with a coal cash cow & timber assets that were worth substantially more than they were on the books for - they were going to use their pristine balance sheet & this impressive cash flow to opportunistically acquire similar things at a discount to add to their multi-use plan for royalties on their land.

 

Fast forward to today: Coal is eventually going away and over the past several years they have wasted huge amounts of time and money on poorly time buybacks, odd new ventures, ponzi schemes, poor acquisitions and high exec comp. Seemingly every move management makes takes them further and further away from the original company mission.

 

Well put.

 

Not to belabor the point, but has management ever put forward anything that even resembles a cogent rationale for the 3 farms deals? Maybe I am just a paranoid conspiracy theorist, but I really wonder about the relationship between PDER and its California "operating partner"/"asset manager" that is considered a related party.

[awindenberger]

 

They also really need to have a come to Jesus moment over the investment in the DC Solar ponzi scheme. Instead they say this:

 

"Due to substantial uncertainties, the Company is currently unable to determine the financial impact arising from this complex situation, however, the impact could be as much as $7.2 million, which includes related tax impacts. As mentioned previously, we are pleased with the performance of the balance of our alternative energy assets,which have proven to be reliable, low-risk investments."

So the same management team that invested $7.7 million in a ponzi scheme thinks its other solar investments are "low-risk"? Great.

 

Solar investments on the whole are generally extremely low risk once construction has been completed. Getting caught up in a massive ponzi scheme that netted Berkshire Hathaway as well seems like bad luck rather than a series of poorly evaluated solar investments.

[Foreign Tuffett]

 

They also really need to have a come to Jesus moment over the investment in the DC Solar ponzi scheme. Instead they say this:

 

"Due to substantial uncertainties, the Company is currently unable to determine the financial impact arising from this complex situation, however, the impact could be as much as $7.2 million, which includes related tax impacts. As mentioned previously, we are pleased with the performance of the balance of our alternative energy assets,which have proven to be reliable, low-risk investments."

So the same management team that invested $7.7 million in a ponzi scheme thinks its other solar investments are "low-risk"? Great.

 

Solar investments on the whole are generally extremely low risk once construction has been completed. Getting caught up in a massive ponzi scheme that netted Berkshire Hathaway as well seems like bad luck rather than a series of poorly evaluated solar investments.

 

You are aware that DC Solar built mobile solar generators, right? It wasn't building utility scale solar projects, which is what you seem to be implying. Google "dc solar mobile solar generator"

 

Yeah, maybe PDER's other solar energy investments are all money good, but my point was that management does not deserve the benefit of the doubt given its recent history of very questionable capital allocation.

[trying to improve]

I find the corporate governance, as it relates to the Board of Directors at Pardee, upsetting.

My understanding is that there are 9 Board members and the total compensation they receive is around $1.1 million to $1.3 million for 2019. That is for a company with a market cap around $85 million.  In terms of diversity, the board appears to be all male, all Caucasian, and an average age of ~ 67 years old.  The youngest member of the Board is 50 and he is the son of the Non-Executive Chairman of the Board.

This, for a company that has under performed the market by a significant amount over the past 10-15 years.

 

 

 

[txvalue]

Over the past several years there has been no revenue growth, and EPS has cratered over the past 10 years. They have a very well compensated team but made essentially no capital investments from 2016 until now.

 

If their resource markets are challenged there have to be acquisitions to be had for distressed prices right? If you expect a bounce back why not buy land/timber, oil/gas, even Met coal instead of these ag investments? Is the fortress balance sheet being preserved just to make sure employees can continue to get their annual raises?

 

This is basically an OK asset wrapped in a package that siphons off a lot of cash each year while bragging that the employee count is lower than years ago because of their efficiency. I think management is coasting off past success that was achieved mostly before the current CEO arrived.

[mjohn707]

This probably won't go up until we all hate it.  Who's the last guy (or gal) holding out on us?

[bizaro86]

This probably won't go up until we all hate it.  Who's the last guy (or gal) holding out on us?

 

This is probably true.

 

More quantitatively, if you mark ag at zero, DCF the coal with a zero terminal value and put reasonable multiples on timber/gas/solar and then deduct the G&A at a very high multiple you get a conservative value. This is pretty cheap now on an asset basis. But 20x their G&A is $136 MM...

 

And the G&A is by far the most secure line item on their income statement imo.

[writser]

This probably won't go up until we all hate it.  Who's the last guy (or gal) holding out on us?

 

hi.

[mjohn707]

This probably won't go up until we all hate it.  Who's the last guy (or gal) holding out on us?

 

hi.

 

Well we should all report to @bagholderquotes probably

[Spekulatius]

This probably won't go up until we all hate it.  Who's the last guy (or gal) holding out on us?

 

I have got one share left. Hanging on with my fingernails.

[mjohn707]

This probably won't go up until we all hate it.  Who's the last guy (or gal) holding out on us?

 

I have got one share left. Hanging on with my fingernails.

 

We need a new share class for long-term baggies a la CSU.TO perhaps