rjstc Posted November 20, 2012 Share Posted November 20, 2012 Curious if anyone has any experience/thoughts about this company. Trades under NYSE as MIL. Trading at about 2PE with about 3% yield. Thanks Link to comment Share on other sites More sharing options...
turar Posted November 20, 2012 Share Posted November 20, 2012 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/ttt-terra-nova-royalty/ http://seekingalpha.com/article/290755-15-for-15-years-michael-j-smith-s-outstanding-track-record http://seekingalpha.com/article/287939-terra-nova-has-noble-aspirations Link to comment Share on other sites More sharing options...
west Posted November 20, 2012 Share Posted November 20, 2012 Just an initial observation here. It looks like they're only a 2 P/E because they had a "Negative goodwill" item of $230m last quarter. If you adjust that out, my gut feeling is, from just glancing at this year versus prior years, your P/E is going to be more like in the 10x+ range. Link to comment Share on other sites More sharing options...
tng Posted November 20, 2012 Share Posted November 20, 2012 I've been in and out a few times. Michael Smith has done very well for his investors, but he is not very open. He doesn't say much. But his track record speaks for itself. If you can get it for around or below book value, you will likely do well. Like Berkshire or Fairfax, you need to have complete trust in the manager of these types of companies. Many investors find it harder to have this type of confidence in Smith because Smith doesn't say much, but then again Buffett was like that in his earlier years. Link to comment Share on other sites More sharing options...
JRH Posted November 20, 2012 Share Posted November 20, 2012 I've been in and out a couple times, as well. The negative goodwill was from their purchase of Compton Petroleum. They also got a significant interest in the Pea Ridge mine in Missouri for a pittance last year. Smith appears to be good at buying assets very cheap. The deals often take multiple years to finally consummate, you usually don't have visibility into deals until they happen, and you seldom find out what took so much time. Some of them might best be described as lottery tickets in their low-risk, high-possible-but-not-certain-upside characteristics. Lots of financial engineering - spin-offs, mergers, buybacks, tenders, asset monetization, etc... In the time I've been involved, I would say most of the value is created through "one time" actions. Don't buy them for their P/E - buying them for their price/asset value ratio is a good idea if you can get an idea what that is. I'm sure book is an incomplete estimation of asset value. Some unknowns and probably some things they don't want to mark up until the right time. I've seen educated speculation that successful re-opening of Pea Ridge could easily add another $5/share to book. And of course, there are probably more deals in the works, though timing is unknown. MFC at 2/3 of stated book is merely a "good" opportunity in a time of great opportunities, in my personal opinion. Possible upside from Pea Ridge and any future deals do sweeten the deal. I've also seen MFC get totally ignored for long periods of time, which suggests we may see better entry prices again, but I definitely wouldn't hesitate to park money here at the right price. Link to comment Share on other sites More sharing options...
finetrader Posted November 21, 2012 Share Posted November 21, 2012 Agree with everything written above. But I think M.Smith is becoming more and more open, and with a NYSE listing it has to show more on the financial statements. As an exemple, in the latest quaterly report, he explains every project currently underway. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted November 21, 2012 Share Posted November 21, 2012 His ability to "compound" book value at a high rate is only because his spinoffs were designed to really depress the post-spinoff price. Most of the gains in book value at MFC financial were from revealing hidden value in its assets. When MFC Financial broke off from its parent, the parent company gave the spinoff some really sweet deals but these deals were carried on MFC Financial's books at 0 value. Smith's integrity and lack of transparency in the past has been questionable. (Maybe a much more extreme version of John Malone.) Retail shareholders in ETR:KHD (the concrete engineering company), another company associated with Smith, were pillaged in a rights offering that retail investors could not participate in. His track record in allocating capital with high rates of return has been mediocre. He has been sitting on tons of cash and putting it into areas with low rates of return (e.g. commodities trading). A spinoff would be an extremely interesting opportunity to make money if you have balls... but it doesn't look like it will happen. 2- Unfortunately the iron ore royalty is not worth so much now with the Wabush mine having operational problems and low iron ore prices. Link to comment Share on other sites More sharing options...
rjstc Posted November 21, 2012 Author Share Posted November 21, 2012 Thanks for the info. Link to comment Share on other sites More sharing options...
johnheiderscheit Posted November 21, 2012 Share Posted November 21, 2012 I was hosed in the KHD deal. The yahoo MIL board, surprisingly, has several commentators who follow the company closely and thus is well worth going through from top to bottom. Historically with Mr. Smith you not only have to guess correctly on whether the company will make money but you also have to guess correctly on to whom Mr. Smith will allocate the profits. Now that he is on the NYSE that may change, but I doubt it. Link to comment Share on other sites More sharing options...
JRH Posted November 21, 2012 Share Posted November 21, 2012 I was hosed in the KHD deal. The yahoo MIL board, surprisingly, has several commentators who follow the company closely and thus is well worth going through from top to bottom. Historically with Mr. Smith you not only have to guess correctly on whether the company will make money but you also have to guess correctly on to whom Mr. Smith will allocate the profits. Now that he is on the NYSE that may change, but I doubt it. Fair points regarding the risk that the principals (Smith, etc...) will profit but the shareholders won't see it all. Both the KHD deal and the MFC spin-off and subsequent re-merger are good examples of skimming off the top (to various degrees). Link to comment Share on other sites More sharing options...
Hawk4value Posted November 21, 2012 Share Posted November 21, 2012 An MIL investment is certainly opague, its certainly a jockey bet, and its certainly a slow patient slog. But, what you do have is a very talented, patient, focused, bulldog with substantial ownership interest who has a 25-30 year track record of making money for his partners. He is certainly a Malone type in that his corporate structure and deals are focused on minimizing taxes. But he is a balance sheet investor not a growth investor. For the commodities space this is exactly what I want. He is also like Zell in that he is a vulture/value investor who can doggedly pursue a deal for years until the price is right. A real grave dancer. He is as cheap as they come and I love it. I have been invested with him for several years and I have substantially increased my position over time. It was the most rational way I could think of to invest in the commodity space. For me its one of my hedges against inflation. Link to comment Share on other sites More sharing options...
rjstc Posted November 21, 2012 Author Share Posted November 21, 2012 The reason I was asking about this stock was I just watched an interview with a fellow named Chris White of Greenstone Capital Management Partners. He talked about this stock and one called Discovery Offshore (Oslo: DISC). He sounded pretty sharp. Thanks for all the great posts and discussion. Link to comment Share on other sites More sharing options...
gfp Posted November 21, 2012 Share Posted November 21, 2012 can you share the video where he discusses MFC? Thanks! Link to comment Share on other sites More sharing options...
motownsf Posted November 21, 2012 Share Posted November 21, 2012 Wasn't able to get comfortable with disclosure here after having a toe-hold for awhile. Something doesn't smell right. Link to comment Share on other sites More sharing options...
Parsad Posted November 21, 2012 Share Posted November 21, 2012 Who is the CFO of MFC Industrial? Cheers! Link to comment Share on other sites More sharing options...
gfp Posted November 21, 2012 Share Posted November 21, 2012 Who is the CFO of MFC Industrial? Cheers! Why, it's Michael Smith, of course! (Interim CFO with no apparent rush to hire another) Link to comment Share on other sites More sharing options...
Parsad Posted November 21, 2012 Share Posted November 21, 2012 Who is the CFO of MFC Industrial? Cheers! Why, it's Michael Smith, of course! (Interim CFO with no apparent rush to hire another) That's why I asked. I already knew the answer. ;D I listened to the 3rd quarter webcast, and the man is incredibly smart, polished and has terrific knowledge of business and investing. He may be one of the better CEO's I've ever heard as far as his accounting knowledge is concerned. Heck, his Vancouver office is just a few blocks away. I invested in MFC in my personal account about 10 years ago, when it was still MFC Bancorp. I sold not long after examining the incongruencies between all the right things he was saying and doing, and the optics of the operations that just never made sense to me. I probably lost alot of money by not staying with him, but after investing with Buffett and Watsa, where the words and the optics go hand in hand, I just couldn't justify it. Very good conference call though and worth listening to. You will be wondering the same thing as me...why the hell doesn't he just simplify things and remove the conflicts. Cheers! Link to comment Share on other sites More sharing options...
Parsad Posted November 21, 2012 Share Posted November 21, 2012 Who is the CFO of MFC Industrial? Cheers! Why, it's Michael Smith, of course! (Interim CFO with no apparent rush to hire another) That's why I asked. I already knew the answer. ;D In fact, as far as I can tell, he's Chairman, CEO, CFO and pretty much all of the internal controls! I listened to the 3rd quarter webcast, and the man is incredibly smart, polished and has terrific knowledge of business and investing. He may be one of the better CEO's I've ever heard as far as his accounting knowledge is concerned. Heck, his Vancouver office is just a few blocks away. I invested in MFC in my personal account about 10 years ago, when it was still MFC Bancorp. I sold not long after examining the incongruencies between all the right things he was saying and doing, and the optics of the operations that just never made sense to me. I probably lost alot of money by not staying with him, but after investing with Buffett and Watsa, where the words and the optics go hand in hand, I just couldn't justify it. Very good conference call though and worth listening to. You will be wondering the same thing as me...why the hell doesn't he just simplify things and remove the conflicts. Cheers! Link to comment Share on other sites More sharing options...
rjstc Posted November 21, 2012 Author Share Posted November 21, 2012 Parsad. Do you know of this person or firm? Chris White of Greenstone Capital Management Partners Link to comment Share on other sites More sharing options...
Parsad Posted November 22, 2012 Share Posted November 22, 2012 Parsad. Do you know of this person or firm? Chris White of Greenstone Capital Management Partners Hi Rjstc, No, I don't know of him. Also, Mohnish owned some MFC a long time ago in the Pabrai Funds...don't know why he sold. But Peter Kellogg owns a good chunk of MFC, so make of it what you will...both good and bad I guess?! Cheers! Link to comment Share on other sites More sharing options...
jmaes Posted January 11, 2013 Share Posted January 11, 2013 Does anyone know why the price is going up so much lately? I've seen on the MIL website that Peter Kellogg has increased his stake to 30.9% of shares outstanding (http://www.mfcindustrial.com/SEC). Link to comment Share on other sites More sharing options...
manualofideas Posted January 11, 2013 Share Posted January 11, 2013 This may be the video mentioned: http://www.valueconferences.com/people/instructors/chris-white/ Link to comment Share on other sites More sharing options...
manualofideas Posted January 11, 2013 Share Posted January 11, 2013 Those of you who followed the Compton Petroleum saga will know that MFC got a steal when they acquired Compton recently. In this case, the GAAP gain was no joke. It even understated the tremendous amount of value added to MFC. Several years ago, there was a Value Investors Club write-up when Compton had a market cap of $2 billion. The writer claimed it was worth $10 billion. Of course, times have changed dramatically, but it just gives you a small sense of how valuable Compton could become if natural gas prices creep higher. Link to comment Share on other sites More sharing options...
jmaes Posted January 11, 2013 Share Posted January 11, 2013 Thanks. I'll check out the links you provided. Link to comment Share on other sites More sharing options...
mankap Posted January 12, 2013 Share Posted January 12, 2013 Congrats to all the MIL holders. I got out a little early. Link to comment Share on other sites More sharing options...
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