PNP - Pinetree Capital

[ItsAValueTrap]

Currently trading at around $0.52 cents.

 

Liquidation value around $1.28/share or less.

http://www.marketwatch.com/story/pinetree-capital-ltd-announces-unaudited-february-28-2013-net-asset-value-per-share-of-128-2013-03-15-8173130?reflink=MW_news_stmp

 

I feel like I am missing something here... is this real?!?!

 

---

The longer story:

 

http://glennchan.wordpress.com/2012/03/20/aberdeen-aab-pinetree-pnp-northfield-capital-nfd-a/

 

Pinetree is definitely a cigar butt.  The CEO was massively overpaid in the past.  And Pinetree has stopped its share repurchase program.

Back in the day, the CEO bought shares at a high price and Pinetree did a secondary offering when it traded at a ridiculous premium to its NAV.  Later on, the CEO was selling share of Pinetree at a low price.  To a small degree, the guy bought high and sold low.

The overall strategy of Pinetree is to grow assets under management so that Sheldon Inwentash can make more money.  Compensation is hedge fund-esque and I believe the watermark was reset.

 

*Disclosure:  I currently own a very small amount of this terribly managed company.

[ItsAValueTrap]

I will add:

 

The effective interest rate on the convertible debt is very high.

 

A sane strategy is to not use any margin at all.

But some people are idiots and leverage their investment in juniors with broker margin.

Pinetree takes this one step further.

 

Like I said... grow AUM --> Mr. Inwentash makes more money.

[hyten1]

ItsValueTrap

 

well from the little that i know, its a VC firm

 

how can you be sure of the liguidation value of $1.28

 

are all their investment holdings publicly traded or with reliable define liquidation values? i would be very skeptical of their NAV would need to look at their portfolio.

 

hy

[Guest Dazel]

 

 

It's a Value Trap,

 

You are hedged...Altius is sitting on the cash to take them out at .10 cents on the dollar when the margin call comes...kidding of course...I don't know the company...good luck.

 

 

Dazel.

[ItsAValueTrap]

They own hundreds of stocks, usually through private placement though sometimes on the open market.  Most of their assets are in juniors that are publicly traded.  It is NOT a good business.  If you own hundreds of juniors, you are an idiot and you will probably lose money.  In aggregate, I expect the junior exploration sector to lose money even if commodity prices go up.

 

They deserve a discount to NAV due to the fee structure, much like how closed end funds trade at a discount.  But this much of a discount?!?!

 

2- You might have problems liquidating their assets.  They own a big chunk of some juniors and you may not be able to liquidate without market impact.

 

good luck

thanks :)

[Guest Dazel]

 

 

Trap,

 

 

I am not going to do the work...but Buffett did very well buying large portfolio's as he saw positions that he could not buy in the open market but could buy at cents on the dollar from a seller in distress. The companies that they would own (commodities) have been decimated and are illiquid for someone with fairly big pockets...

I would only ask one question if I was there...would they be open to getting bought out.....if they are not they may sell one of their illiquid positions at discount to raise capital..this is not in your favor.

 

Dazel.

[ItsAValueTrap]

http://www.barelkarsan.com/2013/07/pinetree-capitals-debt-in-free-fall-now.html

 

The debt is probably more attractive than the equity.  It has a ~20% yield to maturity or something like that (give or take several percent).

[Phoenix01]

ValueTrap,

 

Have you gone any further with your investigation?

[ItsAValueTrap]

Have you gone any further with your investigation?

 

1- Inwentash has been (surprisingly) kicked out.  I don't know how good/bad the new management team will be.

 

2- Their portfolio is really, really bad.  I haven't looked into Anysphere, a big Pinetree holding, but Anysphere seems like a really really bad stock.  A bunch of people on Twitter and SeekingAlpha (keubiko) talk about it.

 

They also own lots of junior mining garbage.  They own hundreds of juniors, so you can be fairly certain that the portfolio is crap.

 

3- The debt is interesting.  However, I didn't want to buy it for silly reasons: I think that my trading costs for the debt are way too high.  The market doesn't seem transparent.  I do not feel like giving money to my broker.

 

4- Kobex Capital is similar but much simpler and will result in less stress.  Most of their assets are in cash, not junior mining garbage.  Corporate governance is fine- I think the people are good, though their overhead is much higher than what it needs to be.  I'd look at Kobex first before Pinetree.  I own shares of Kobex.

 

*No position.

[Phoenix01]

ValueTrap, thank you for the info.