Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?

[sculpin]

How much did the DC management pay for their investment in TauRx? $72mm?

 

Diversification away from speculative energy & mining stocks with an even more speculative shot in the dark biotech investment....

 

http://qz.com/744399/a-new-drug-claims-to-be-the-first-to-halt-the-dementia-of-alzheimers-but-is-it-science-or-spin/

 

Time to sell everything and return the proceeds to shareholders?

 

[scorpioncapital]

This company has two main problems, so simple and yet I wouldn't trust a management that can't figure out something so basic...

 

1. Don't go for long shots and try to avoid pharma.

2. Don't invest in commodities.

3. Don't use excessive leverage.

 

If they did just these 3 things, they could screw up a thousand times , they'd still be ahead of where they are now and I'd forgive any of their operational blunders.

 

Like Buffett says, Mental Models are 80% of the battle :)

 

 

 

[SafetyinNumbers]

I think Dundee invested about 31m US in total but they did it back when the CAD was more equal to the USD.

 

Its been marked up because because of some equity raises at higher valuations (IFRS).

 

This study was negative and there might be some upside still but there will likely be another money raising round at a down valuation study to fund a monotherapy trial. It's not a write off but its disappointing for sure.

 

There is another potential catalyst this year from an investment in Android Industries. They have it marked at about 2x EBITDA on the books so there is potential for upside of maybe $1/share to NAV. Its equity accounted for so there has been no mark up.

[Rod]

I'm curious where your numbers for Android come from. If you are right that is a good catch!

 

From the 2015 AR, I see EBIT of US$24.7M, or about US$5M at Dundee's 20% share. Dundee is reporting their share of net earnings as $3.6M, but that includes a one-time dilution gain due to currency movement of $1.5M. So, on-going net earnings is $2.1M. Dundee carries Android at $28M, which seems reasonable given the earnings (pe ~ 14). Am I missing something here?

 

Speaking of equity accounting misvaluation, I think you can double the value of Paragon Holdings to $120M because the third partner bought in at a price that represents that value. This was highlighted in an interview David Goodman gave BNN summer 2015.

[sculpin]

Good old Dundee - buy high sell low. I wonder how long before they are writing off these latest acquisitions?

 

Earlier this year, Dundee jettisoned its retail wealth management arm, Dundee Goodman Private Wealth. The division, which had around $3.5-billion in AUA, was sold to Echelon Wealth Partners Inc. for $13.5-million, which represents a valuation of approximately 0.4 per cent of assets. If Dundee ends up buying a high-net-worth asset manager, it will likely pay a significantly higher valuation.

 

 

Globe says Dundee on the prowl for growth

 

Dundee Corp (C:DC)

Shares Issued 55,535,173

Last Close DC.A 8/19/2016 $6.16

Monday August 22 2016 - In the News

The Globe and Mail report in its Monday, Aug. 22, edition that Dundee is planning on moving from being a seller of wealth management assets to a buyer, with executives making it clear that acquisitions are in the cards. The Globe's Niall McGee writes that Dundee has ambitions of growing assets under administration (AUA) at Goodman & Co. Investment Counsel, its high-net-worth subsidiary, more than fivefold to $1-billion. Its current AUA is $176-million. Dundee chief executive officer David Goodman says, "To move the needle the way we want to move it, we think an acquisition is the best way to go." He says the firm is looking at doing "small tuck-in" acquisitions and "something more substantial." Dundee vice-president Richard McIntyre says the firm will not rush into a deal. He says finding the right assets that are a good fit is paramount. Mr. McIntyre says: "This is a bit of a numbers game where you have to go out there and do your due diligence and do your research, and dare I say do a bit of dating. If there's compatibility there, it takes two to tango." Portfolio Management director Norman Levine says Dundee's strategy to buy makes sense if its goal is to grow quickly

 

 

http://www.pressreader.com/canada/the-globe-and-mail-bc-edition/20160822/281814283277790

[Rod]

Transaction announced today for Dundee Acquisition. Looks like a good deal to me.  Dundee corp. will back in for 20% as the sponsor of the SPAC. This is worth about $20 million to Dundee or 33 cents per share.

[sculpin]

Guess they needed a quick $38 million however they did sell close to the 52 week low....

Dundee sells 6.1M Dream Unlimited shares

 

Dundee Corp (C:DC)

Shares Issued 55,535,423

Last Close DC.A 11/23/2016 $6.14

Thursday November 24 2016 - News Release

 

Mr. John Vincic reports

 

DUNDEE CORPORATION SELLS SHARES IN DREAM UNLIMITED CORP.

 

In accordance with regulatory requirements, Dundee Corp. has sold 6.1 million Class A subordinate voting shares of Dream Unlimited Corp. Dundee continues to hold 15,536,288 Class A shares of Dream representing an approximate 19.97-per-cent interest.

[gokou3]

Guess they needed a quick $38 million however they did sell close to the 52 week low....

Dundee sells 6.1M Dream Unlimited shares

 

Dundee Corp (C:DC)

Shares Issued 55,535,423

Last Close DC.A 11/23/2016 $6.14

Thursday November 24 2016 - News Release

 

Mr. John Vincic reports

 

DUNDEE CORPORATION SELLS SHARES IN DREAM UNLIMITED CORP.

 

In accordance with regulatory requirements, Dundee Corp. has sold 6.1 million Class A subordinate voting shares of Dream Unlimited Corp. Dundee continues to hold 15,536,288 Class A shares of Dream representing an approximate 19.97-per-cent interest.

 

Sculpin, Thanks for providing updates on this and other preferred share issuers.  I am an owner of the Dream Unlimited Preferred (DRM.PR.A) and own it for its cash-like characteristics (redeemable, higher up in the capital structure --> low risk).  I also own Dundee Series 5 which will be redeemable in 2.5 years for similar reasons.

 

With this sale of Dream by Dundee, do you see any signals from the company -- Is it 1) due to liquidity concern with Dundee or 2) risk ahead for Dream (e.g. RE bubble bursting)?  My view is that unless things got really bad, the preferred shares will still likely do ok given significant amount of common equity underneath the preferred shares for each company.

 

 

 

 

[Cardboard]

They took it down just below 20%. Was it equity accounted?

 

I don't even want to look it up since their MD&A and financial statements give me a headache every time I look at them! And hard to find anything profitable in there.

 

They may have wanted to raise some cash since they are getting tight on their revolver with a recent reduction and they invested recently into that Blue Goose.

 

I still own DC.PR.B and DC.PR.D due to their great yield and with more than enough net assets to cover them.

 

Cardboard

 

 

[Rod]

They took it down just below 20%. Was it equity accounted?

 

I don't even want to look it up since their MD&A and financial statements give me a headache every time I look at them! And hard to find anything profitable in there.

 

They may have wanted to raise some cash since they are getting tight on their revolver with a recent reduction and they invested recently into that Blue Goose.

 

I still own DC.PR.B and DC.PR.D due to their great yield and with more than enough net assets to cover them.

 

Cardboard

 

The DRM shares are valued at market. Agree with you about the preferreds. I own the Ds. They are the better value since they can be converted into the Bs in 2.5 years. Not sure the market realizes that!

[Cardboard]

If any of you is interested into obtaining a high yielding security with relatively low risk, the DC.PR.B have experienced a bizarre selloff in recent days or just before the ex-dividend date on the 14. Nothing comparable in DC.PR.D, DC.PR.E or DC.A.

 

It pays roughly 10.6% depending on what price you may get now with an annual distribution of $1.422. Considering that these are marginable at about the same rate as liquid stocks above $2, that is a very good spread to earn on borrowed money.

 

Cardboard

[sculpin]

GMP - only broker that covers this as far as I know.

 

Will the resource recovery lead to them once again growing NAV and seeing the big discount narrow over the next year? 

Dundee BUY

DC.A-TSX

Last: C$6.03

Target: C$11.00

 

Deep discount to NAV remains

 

We are exiting a period of research restriction on Dundee Corp. (DC.A-TSX) due to an advisory role. Our updated NAV, including Q3/16 results, is now $13.52 (previously $14.88). Our NAV is lower q/q due largely to market depreciation in publicly traded shares of DRM and DPM and a lower management reported carrying value of UHIC. Despite the decline, the discount to NAV remains wide at ~55%. We believe that some investors may be continuing to apply deep discounts to the private investments.

 

DREAM sale eases near-term liquidity concerns

 

At the corporate level, DC.A’s credit line was reduced from $250 million to $125 million as part of an agreement extending the facility to March 14, 2017. At the end of Q3/16, $94 million had been drawn against the facility leaving ~$31 million available. Cash at the corporate level was ~$11 million. Subsequent to the end of the quarter, management announced the sale of 6.1 million shares of DRM at a price of $6.25 per share. The transaction added ~$38.1 million to DC.A’s existing cash balance. In our view, the DRM sale has eased near-term liquidity concerns but we still believe the balance sheet may restrict management’s flexibility going forward. Further asset sales of the liquid public investments remain a possibility.

 

Maintain BUY – NAV discount remains wide

 

UHIC remains the largest NAV contribution. In August, UHIC completed a restructuring to emerge with an essentially debt free balance sheet and with sufficient working capital to pursue an immediate goal of attracting a joint venture partner. This process remains ongoing.

 

In the near term, DC.A’s SPAC has scheduled a Dec. 20 vote on its proposed qualifying transaction with CHC Student Housing Corp. We would view a successful vote favourably and calculate that it could add ~$0.30-$0.40 to our DC.A NAV. Currently, we do not include the SPAC in our NAV calculation.

 

Our undiscounted NAV is $13.52 (previously $14.88). We apply a 20% discount to yield our price target of $11.00 (previously $12.00). We maintain our BUY rating. Please see Figure 1 for our NAV sensitivity analysis.

[Rod]

Anyone interested in following the construction of the Parq Vancouver development should go to this link:

 

http://skyscraperpage.com/forum/showthread.php?t=213941&page=25

 

Lots of up to date pictures. Opening is scheduled for September 2017.

[sculpin]

The destruction of shareholder value in this Dundee subsidiary company has been epic. From $1.50 per share in 2007 to the current $0.03 offer price. From a multi billion $ bungled Spanish offshore natural gas storage to natural gas under Lake Erie to windmills in Africa of all things. Not sure how much DC.A has ploughed into this but it has been substantial....

 

Dundee Energy to review LP's strategic options

 

2017-01-10 20:19 ET - News Release

Shares issued 188,268,994

DEN Close 2017-01-10 C$ 0.035

 

Mr. Bruce Sherley reports

 

DUNDEE ENERGY LIMITED ANNOUNCES INITIATION OF STRATEGIC REVIEW PROCESS FOR DUNDEE ENERGY LIMITED PARTNERSHIP

 

Dundee Energy Ltd.'s board of directors has determined to initiate a process to identify, examine and consider a range of strategic alternatives available with respect to enhancing the value of its investment in Dundee Energy LP (DELP).

 

Strategic alternatives may include, but are not limited to, a debt restructuring, a sale of all or a material portion of the assets of DELP, either in one transaction or in a series of transactions, the outright sale of DELP, or business combination or other transaction involving DELP and a third party, and/or alternative financing initiatives.

 

Dundee Energy has engaged Dundee Capital Partners, an unrelated entity, and CW Leigh Cassidy of Whitewater Inc. as its financial advisers to advise the corporation in connection with this comprehensive review and analysis of strategic alternatives in connection with the process.

 

Dundee Energy has not set a definitive schedule to complete its identification, examination and consideration of strategic alternatives with respect to DELP. Given the nature of the process, the corporation does not intend to provide updates until such time as the board of directors approves a definitive transaction or strategic alternative, or otherwise determines that further disclosure is advisable. Dundee Energy cautions that there are no guarantees that the review of strategic alternatives will result in a transaction, or if a transaction is undertaken, as to its terms or timing. The strategic alternatives review process has not been initiated as a result of receiving any transaction proposal.

 

As previously disclosed, DELP and its lenders have been in continuing discussions regarding the reduction of DELP's borrowings. As a result of these discussions, the terms of DELP's credit facility have been amended to require that DELP reduce borrowings under its operating facilities to $55.0-million by Jan. 13, 2017. This represents a reduction of approximately $3.0-million in borrowings under DELP's operating facilities as at Dec. 31, 2016.

 

About Dundee Energy

 

Dundee Energy is a Canadian-based oil and natural gas company with a mandate to create long-term value for its shareholders through the exploration, development, production and marketing of oil and natural gas, and through other high-impact energy projects. Dundee Energy holds interests, both directly and indirectly, in the largest accumulation of producing oil and gas assets in Ontario, and, through a preferred share investment, in certain exploration and evaluation programs for oil and natural gas offshore Tunisia.

[sculpin]

DC.A closing in once again on its 52 week low. One insider actively selling over the last 2 months....

 

 

Date Transaction

Date Insider Name Ownership

Type Securities Nature of transaction Volume or Value Price

Feb 6/17 Feb 6/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -400 $5.40

Feb 6/17 Feb 2/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -1,800 $5.40

Feb 6/17 Feb 1/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -15,200 $5.40

Jan 31/17 Jan 30/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -300 $5.45

Jan 30/17 Jan 27/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -5,200 $5.45

Jan 30/17 Jan 25/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -8,900 $5.59

Jan 9/17 Jan 3/17 Goodman, Daniel Indirect Ownership Subordinate Voting Shares Class A 10 - Disposition in the public market -1,500 $5.95

[Cardboard]

There is a very wide gap that has now formed in expected return between DC.PR.B and DC.PR.D.

 

I was pointing out in early December that the DC.PR.B had really sold off and were quite attractive in the $13.50 range with a yield of 10.5%. Now they have rallied around 25% since that time and the yield has dropped to 8.5%. However, the DC.PR.D have moved up by only about 13% since that point and now still yield 8.15% which is the highest floater that I know of.

 

What is interesting is that if you assume conversion into the "B"'s in September 2019, the dividend distribution from the "D"'s over a 5 year period plus the appreciation to catch up to the "B"'s represents an annual yield of 12.5%.

 

That is a very wide spread between fixed rate reset preferreds and floaters which on my screen vary from 0.5% to 1.9% using the same math.

 

Cardboard

[sculpin]

2016 results tomorrow...

 

Will be interested on how the clean up of their stable of troubled investments is progressing. Perhaps the rise in the price of oil - hopefully to $60+ by this Summer - may save some of the investment in United Hydrocarbons Intl. Hard to believe that Dundee had invested a total of more than $400mm in this highly speculative exploration junior in the heart of sub Sahara Africa in the country of Chad - this amounts to over $7 per share. For perspective the DC.A current market cap is $234 million at $4/share current price.

 

As at September 30, 2016, the Corporation’s carrying value of its 85% interest in UHIC was $189.5 million, and was net of an

impairment of $215.2 million recognized in the third quarter of the prior year. Additional information regarding UHIC may be

accessed at www.unitedhydrocarbon.com.

 

 

 

Dundee Corp. senior management will host a conference call on Friday, March 31, 2017, at 10 a.m. ET, to discuss the company's fourth quarter and year-end 2016 results.

 

Fourth quarter and year-end 2016 results conference call and webcast

 

Date:  Friday, March 31, 2017

 

Time:  10 a.m. ET

 

Webcast:  at the company's website

 

Live call:  1-888-231-8191 or 1-647-427-7450

 

Replay:  1-855-859-2056 or 1-416-849-0833

 

Replay passcode:  87507054

 

Dundee plans to issue a news release containing the fourth quarter and year-end 2016 results after market close on Thursday, March 30, 2017, and will also post it to the company's website. The conference call will be archived for replay until Friday, April 7, 2017, at midnight. An archive of the audio webcast will also be available at Dundee's website.

[Cardboard]

No doubt that a lot of past mistakes have been made.

 

With year end financials, more write-offs on their investments is a possibility. However, even after assuming drastic further write-offs, the preferreds remain well protected IMO and a very attractive security out there especially the DC.PR.D.

 

As of September 30, they mentioned $14.23/share of net asset value or around $900 million that would have to be eroded before par on the preferreds would be impacted.

 

Carboard

[sculpin]

No doubt that a lot of past mistakes have been made.

 

With year end financials, more write-offs on their investments is a possibility. However, even after assuming drastic further write-offs, the preferreds remain well protected IMO and a very attractive security out there especially the DC.PR.D.

 

As of September 30, they mentioned $14.23/share of net asset value or around $900 million that would have to be eroded before par on the preferreds would be impacted.

 

Carboard

 

Agreed that the prefs are still very secure.  If oil comes back then there may be a chance the net asset value stays above $10. I believe the Taurx is a complete write-off which they have listed at $72mm. As well, the UHIC is carried at $189mm but last financing I believe was at $0.10 and they have just under 600mm shares or 85% - I would guess UHIC is worth <$60mm unless we get Brent > $60bbl by Summer - this would represent a $2/share impairment. Also Dundee Energy is most likely worthless as the Castor appeal failed - unless again oil & southern Ontario natural gas stage a remarkable price recovery soon. Many of the other investments are not strong & continue to bleed - Dundee Sustainable, Blue Goose, Agrimarine, Dundee 360 problems with Parq, on and on. Believe the debt in Dundee Energy & Blue Goose (about $100mm total) would be most likely covered by sale of those assets so total parentco debt is only about $90mm.  DC is an investment conglomerate gone very wrong & should be the poster boy for diworsification and the ills of multiple voting shares controlling publicly traded corporations.

 

That said the pref pricing & even the common at $4 already reflect the disaster that has been their portfolio. My guess is real NAV right now is about $7.50/share but there are a lot of unknowns to the OPMI. Have bought the common at around $4 recently. For those that believe in oil >$70 and that management & the Board of DC are turning over a new leaf then the warrants at $0.75 (Strike $6 til 30 June 2019) are an interesting levered play. All IMHO of course.

[sculpin]

No doubt that a lot of past mistakes have been made.

 

With year end financials, more write-offs on their investments is a possibility. However, even after assuming drastic further write-offs, the preferreds remain well protected IMO and a very attractive security out there especially the DC.PR.D.

 

As of September 30, they mentioned $14.23/share of net asset value or around $900 million that would have to be eroded before par on the preferreds would be impacted.

 

Carboard

 

Agreed that the prefs are still very secure.  If oil comes back then there may be a chance the net asset value stays above $10. I believe the Taurx is a complete write-off which they have listed at $72mm. As well, the UHIC is carried at $189mm but last financing I believe was at $0.10 and they have just under 600mm shares or 85% - I would guess UHIC is worth <$60mm unless we get Brent > $60bbl by Summer - this would represent a $2/share impairment. Also Dundee Energy is most likely worthless as the Castor appeal failed - unless again oil & southern Ontario natural gas stage a remarkable price recovery soon. Many of the other investments are not strong & continue to bleed - Dundee Sustainable, Blue Goose, Agrimarine, Dundee 360 problems with Parq, on and on. Believe the debt in Dundee Energy & Blue Goose (about $100mm total) would be most likely covered by sale of those assets so total parentco debt is only about $90mm.  DC is an investment conglomerate gone very wrong & should be the poster boy for diworsification and the ills of multiple voting shares controlling publicly traded corporations.

 

That said the pref pricing & even the common at $4 already reflect the disaster that has been their portfolio. My guess is real NAV right now is about $7.50/share but there are a lot of unknowns to the OPMI. Have bought the common at around $4 recently. For those that believe in oil >$70 and that management & the Board of DC are turning over a new leaf then the warrants at $0.75 (Strike $6 til 30 June 2019) are an interesting levered play. All IMHO of course.

 

This is a move they had to make and is not too bad in terms of moving the United project into better operating hands and securing some liquidity ($47mm Canadian). The potential upside of the payments on first oil in the respective blocks ($50mm total US $) and the royalty (below) are attractive as well....

United will retain a royalty of 10 per cent on Doba production and a 5-per-cent royalty on all block H production, payable unless the average price of Brent crude oil is less than $45 (U.S.) for a quarter.

 

DC.A was probably a screaming buy under $3 Cdn.

 

 

Dundee to sell United Hydrocarbon Chad to Delonex

 

2017-05-10 08:32 ET - News Release

Shares issued 3,598,203

DC.PR.E Close 2017-05-09 C$ 23.75

 

Mr. Gabriel Ollivier reports

 

UNITED HYDROCARBON INTERNATIONAL CORP. ENTERS INTO AGREEMENT WITH DELONEX

 

Dundee Corp.'s subsidiary, United Hydrocarbon International Corp. (UHIC), has entered into an agreement with Delonex Energy Ltd. pursuant to which Delonex will acquire United Hydrocarbon Chad Ltd. (UHCL), a wholly owned subsidiary of United, and the holder of United's production sharing contract (PSC) in the Republic of Chad.

 

Delonex will pay $35-million (U.S.) on closing of the transaction, and will pay an additional $50-million (U.S.) if first oil is achieved, including $20-million (U.S.) for first oil at Doba and $30-million (U.S.) for first oil at block H. United will retain a royalty of 10 per cent on Doba production and a 5-per-cent royalty on all block H production, payable unless the average price of Brent crude oil is less than $45 (U.S.) for a quarter.

 

Under the terms of the agreement, Delonex has committed $65-million (U.S.) in financing within two years of the closing date for a comprehensive exploration program for the assets in Chad, and has committed, subject to commerciality being achieved, $35-million (U.S.) for development in Doba. The exploration program will include 2-D and 3-D seismic programs and three exploration wells, representing a significant increase in activity compared with UHCL's current obligations.

 

The agreement will benefit Chad by ensuring the rapid exploration and development of Chad's hydrocarbon resources across the PSC and including in block H, where there has been limited activity since the mid-1970s.

 

Delonex is a sub-Saharan oil and gas company focused on exploration, development and production. Delonex is currently active in Ethiopia, Kenya and Mozambique and the proposed transaction in Chad is part of the company's strategy for expanding its portfolio in central and West Africa.

 

Delonex is led by a management team with a proven record in discovering, developing and operating world-class, on-shore basins and building and operating pipeline infrastructure. Its core leadership team previously worked together at Cairn India, where it established a recoverable resource base of 1.2 billion barrels of oil on shore in Rajasthan, India, with plateau production of about 200,000 barrels of oil per day. It also managed the successful financing and execution of integrated upstream and mid-stream development projects with a combined capital spend of over $4-billion (U.S.). The projects included development wells, processing facilities and the world's longest (about 700 kilometres) continuously heated and insulated oil pipeline with an export terminal. Delonex is backed by a group of global investors with extensive oil and gas experience, led by global private equity firm Warburg Pincus and the International Finance Corp. (a part of the World Bank group).

 

The transaction is subject to a number of conditions including approval from the government of Chad and UHIC shareholder approval. A special meeting of UHIC shareholders to approve the agreement is anticipated to be held by June 30, 2017.

 

[sculpin]

2016 results tomorrow...

 

Will be interested on how the clean up of their stable of troubled investments is progressing. Perhaps the rise in the price of oil - hopefully to $60+ by this Summer - may save some of the investment in United Hydrocarbons Intl. Hard to believe that Dundee had invested a total of more than $400mm in this highly speculative exploration junior in the heart of sub Sahara Africa in the country of Chad - this amounts to over $7 per share. For perspective the DC.A current market cap is $234 million at $4/share current price.

 

As at September 30, 2016, the Corporation’s carrying value of its 85% interest in UHIC was $189.5 million, and was net of an

impairment of $215.2 million recognized in the third quarter of the prior year. Additional information regarding UHIC may be

accessed at www.unitedhydrocarbon.com.

 

 

Dundee Corp. senior management will host a conference call on Friday, March 31, 2017, at 10 a.m. ET, to discuss the company's fourth quarter and year-end 2016 results.

 

Fourth quarter and year-end 2016 results conference call and webcast

 

Date:  Friday, March 31, 2017

 

Time:  10 a.m. ET

 

Webcast:  at the company's website

 

Live call:  1-888-231-8191 or 1-647-427-7450

 

Replay:  1-855-859-2056 or 1-416-849-0833

 

Replay passcode:  87507054

 

Dundee plans to issue a news release containing the fourth quarter and year-end 2016 results after market close on Thursday, March 30, 2017, and will also post it to the company's website. The conference call will be archived for replay until Friday, April 7, 2017, at midnight. An archive of the audio webcast will also be available at Dundee's website.

 

 

 

It is incredible the amount of wealth destruction that has taken place here in their investment in UHIC. Already wrote off $215 million and now most likely another $100+ million writeoff coming when they release Q1 on Thursday. This on an current equity market cap of $164mm.

 

Will be interesting to see the proxy circular this year if the Board has awarded themselves with stock options & management with either pay increases or bonuses for such great shareholder value creation....

 

[Cardboard]

If they discount at 2 or 3% a year the $50 M U.S. to be received over 2 to 6 years and put a lot of value on the eventual royalty, they may not write it down at all from the $230 million CAD or so (for which they own 85%).  :o

 

At least now someone is incentivized to develop the assets having spent $35 M U.S. upfront while Dundee was cash poor and saddled with a ton of crappy holdings.

 

They now need to keep on liquidating the firm. It would still trade at a big discount to NAV due to their horrible history but, I would think that it would shrink from here.

 

I would also hope that one or two of their many holdings will perform...

 

Cardboard

[Cardboard]

They reported a profit!!!! And higher net value per share than in December with $12.85 a share...

 

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aDC-2470594&symbol=DC&region=C

 

Cardboard

[sculpin]

They reported a profit!!!! And higher net value per share than in December with $12.85 a share...

 

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aDC-2470594&symbol=DC&region=C

 

Cardboard

 

Yeah about that $12.85 per share.... Aggressive accounting if you ask me but who knows it must fall under GAAP principles. So they carry UHIC for $193mm - well we know they just got about $40mm Cdn cash for this plus upside thru payments & future royalties. If you want to be conservative I would value it at $40mm plus some amount to take into account the option value of the potential payouts & royalties. So knock off a good $150 million from their $12.85 or minus about $2.70 per share. Also Dundee Energy is carried at $22mm while the market value is maybe $1.5mm. Just saying they have nothing to crow about yet. Shares are definitely undervalued but anything over $10/share NAV is really being aggressive.

 

And from the MD&A they are still making highly spec investments although on a much smaller scale. My guess is DC is once again late to the marijuana madness party. Thought these guys were supposed to be value investors....

 

Approximately $2.0 million

of proceeds generated were reinvested into the portfolio, including an investment of $1.5 million in Nuuvera Corp., a Canadian

incorporated private company focused on medicinal cannabis opportunities.

[sculpin]

Commentary from the Intrepid Endurance Fund Q1...

 

The top detractors from Q1 performance were Dundee Corp. (ticker: DC/A CN), Syntel (ticker: SYNT), and Primero

Mining’s 5.75% Convertible Notes (CUSIP: 74164WAB2). Dundee’s performance has been abysmal, and that comment

doesn’t just apply to the stock. The company is involved in many different ventures, but almost nothing has worked

out. We attribute at least half of the unfavorable outcomes to poor decisions by management and the rest to bad luck.

Hindsight is 20/20, and our involvement in Dundee came from trying too hard to find value in an over-picked market.

Our fair value for the stock is based on asset value, in contrast to our typical discounted free cash flow valuation.

We felt comfortable with this approach because the assets were originally anchored by publicly-traded equities that

seemed reasonably valued to us on inspection. Dundee’s cash flow has been negative as the team attempted to nurture

a basket of various nascent businesses into self-sustaining enterprises. It hasn’t worked. We had chances to revisit the

investment as the situation changed and decent investments were exchanged for speculative ones. The mistake is on

me, your Portfolio Manager. We have not added to the holding in over a year and reduced our position last summer at

better prices—a small victory in an otherwise dreadful investment.

 

So where do we go from here? Dundee is a $3.50 stock with $12.25 of book value. That book value continues to

decline as the company’s portfolio is not generating cash flow but Dundee is incurring corporate overhead and financing

costs. Right now the market is implying that every single private company Dundee manages is worth nothing, plus

that the business burns cash at the current rate for another three years. We have urged management to sell Dundee’s

public investments to pay off bank debt and preferred stock, which would reduce cash burn by half. If the company

then catches a break on one of its major private investments, it could mark a turning point for the company’s fortunes.

We’re not holding our breath but aren’t yet inclined to sell Dundee at today’s prices. The Fund’s weight in Dundee is

approximately 1%, so its impact on performance going forward should be more limited.

 

http://www.intrepidcapitalfunds.com/media/pdfs/1q17-intrepid-endurance-commentary-final-approved.PDF