URB.A - Urbana

[orion]

I´m still holding some shares of Urbana and like the discount to NAV (~$2.64 NAV vs. ~$1.50 price) but was a little bit surprised to find a new Barrick Gold Holding in their portfolio. Any ideas why they think they have an edge in gold stocks???

[gg]

The simple answer is that they don't have an edge on ANY stocks -- Caldwell's stock-picking track record is pretty terrible

[WhoIsWarren]

I´m still holding some shares of Urbana and like the discount to NAV (~$2.64 NAV vs. ~$1.50 price) but was a little bit surprised to find a new Barrick Gold Holding in their portfolio. Any ideas why they think they have an edge in gold stocks???

 

I talked to CEO Tom Caldwell about two years ago -- nice man by the way -- and haven't looked at the company since.  I therefore won't know the story as well as others, but from memory he's just an opportunistic type.  He had (has?) a few bank stocks I think.  Gold as an asset class is out of favour nowadays.  I imagine is 'edge' is no more than that.

[orion]

Toronto, Ontario – August 27, 2013 – Urbana Corporation ("Urbana") (TSX: URB.A) announced today that the Toronto Stock Exchange (the "TSX") has accepted its notice of intention to conduct a normal course issuer bid to enable it to purchase up to 5,394,023 of its non-voting Class A shares (the "Class A Shares"), representing 10% of the public float, pursuant to TSX rules.

 

NAV (August 23) $2.64 vs. ~$1.56 share price

 

 

[orion]

Just found this in their Interim Management Report:

 

Mining Claims

Urbana owns rights to mineral properties (74 claims) in Northern Quebec (Urban Township).

The capitalized cost of this resource property and related expenditures was written down to a

nominal value in 2009. In 2012, a company conducting mineral exploration activities in the 4

general area (approximately 10 kilometers from Urbana’s holdings) reported positive results.

This event may, at some future date, enhance the value of Urbana’s claim group.

http://www.urbanacorp.com/Documents/2012_interim_MRFP.pdf

Page 3

 

How did they end up owning mining claims, while investing in exchanges at that time?

[giofranchi]

The simple answer is that they don't have an edge on ANY stocks -- Caldwell's stock-picking track record is pretty terrible

 

I didn’t know Urbana… Anyway, as you can see from the file in attachment, Urbana has compounded NAV at 15.39% annual since 2002.

I wonder how Mr. Caldwell could have succeeded in trouncing the indices since 2002 without any edge and with a pretty terrible stock-picking track record… What am I missing here?

 

giofranchi

Compound_Returns_July_31_13.pdf

[WhoIsWarren]

I didn’t know Urbana… Anyway, as you can see from the file in attachment, Urbana has compounded NAV at 15.39% annual since 2002.

I wonder how Mr. Caldwell could have succeeded in trouncing the indices since 2002 without any edge and with a pretty terrible track record… What am I missing here?

 

giofranchi

 

Maybe he has an edge, maybe he doesn't. But I think partly your answer has to do with another thread that's had a lot of responses the last few days -- the one about Bob Rodriquez and portfolio concentration and performance.  Urbana has been very concentrated, not only in terms of the number of stocks held but also because its assets were predominantly exchange stocks.  So there is a great possibility that his record is entirely down to luck -- 10 years is a very short time in terms of being able to gain statistical confidence.  Who knows how long is 'long enough', but I've seen reference to 100 years somewhere or other!

 

Perhaps someone else on the board can speak more eloquently (and more knowledgeably) about this than I.....

[giofranchi]

So there is a great possibility that his record is entirely down to luck -- 10 years is a very short time in terms of being able to gain statistical confidence.  Who knows how long is 'long enough', but I've seen reference to 100 years somewhere or other!

 

15.39% annual is little more than 9 percentage points better than the S&P500 each year for 10 years.

I don’t believe in luck… not, at least, in this kind of luck… I have only seen it in statistical papers… Does someone know PERSONALLY a “lucky idiot”, who has managed to beat the market by 9 percentage points on average for 10 years?

I do not (no matter what statistical papers say).

 

giofranchi

 

[Hielko]

The simple answer is that they don't have an edge on ANY stocks -- Caldwell's stock-picking track record is pretty terrible

 

I didn’t know Urbana… Anyway, as you can see from the file in attachment, Urbana has compounded NAV at 15.39% annual since 2002.

I wonder how Mr. Caldwell could have succeeded in trouncing the indices since 2002 without any edge and with a pretty terrible stock-picking track record… What am I missing here?

 

giofranchi

His whole track record is almost one single bet: investing in private stock exchanges ~10 year ago. Maybe a good pick with an edge, or just lucky to be in the right sector... Besides these big bets he owned various leveraged gold ETF's in the past. Luckily small positions, but imo total crap.

 

The one thing that he does that does provide alpha for sure is buying back shares at a discount, but most of that edge is absorbed by expenses and the management fee.

[giofranchi]

His whole track record is almost one single bet: investing in private stock exchanges ~10 year ago. Maybe a good pick with an edge, or just lucky to be in the right sector... Besides these big bets he owned various leveraged gold ETF's in the past. Luckily small positions, but imo total crap.

 

The one thing that he does that does provide alpha for sure is buying back shares at a discount, but most of that edge is absorbed by expenses and the management fee.

 

Well, if you look at its NAV on August 23rd, 2013, it seems that it is losing considerable money on its stock exchange investments… Instead, it has considerable paper profits on its financial investments (BAC, CBOE Holdings, MS, etc.)…

 

giofranchi

nav_august_23_13.pdf

[WhoIsWarren]

Does someone know PERSONALLY a “lucky idiot”, who has managed to beat the market by 9 percentage points on average for 10 years?

 

I do not (no matter what statistical papers say).

 

giofranchi

 

That's funny.

 

Are you in some way suggesting that lucky people walk around the world with "I'm a lucky idiot" signs above their heads  ;D

 

You probably do know some lucky people who have produced some extraordinary results.  You just don't know yet whether they're lucky or not.

 

Was Bill Miller such a lucky guy for all those years until 2005/06??  We'll never know, will we.....

 

[Hielko]

His whole track record is almost one single bet: investing in private stock exchanges ~10 year ago. Maybe a good pick with an edge, or just lucky to be in the right sector... Besides these big bets he owned various leveraged gold ETF's in the past. Luckily small positions, but imo total crap.

 

The one thing that he does that does provide alpha for sure is buying back shares at a discount, but most of that edge is absorbed by expenses and the management fee.

 

Well, if you look at its NAV on August 23rd, 2013, it seems that it is losing considerable money on its stock exchange investments… Instead, it has considerable paper profits on its financial investments (BAC, CBOE Holdings, MS, etc.)…

 

giofranchi

Thats because the cost basis of those positions was probably updated when CBOE en NYX went public. See one of the earlier NAV reports on how the performance was achieved: http://www.urbanacorp.com/Documents/NAV/nav_dec_15_06.pdf

 

The fact that he still holds those positions after the thesis has played out shows imo only that he cares more about maintaining the fund and generating fees than returning capital when there are no good idea anymore. And that he made some money on the other positions: hard not to make money when all those investments are all post financial crisis.

[giofranchi]

Thats because the cost basis of those positions was probably updated when CBOE en NYX went public. See one of the earlier NAV reports on how the performance was achieved: http://www.urbanacorp.com/Documents/NAV/nav_dec_15_06.pdf

 

The fact that he still holds those positions after the thesis has played out shows imo only that he cares more about maintaining the fund and generating fees than returning capital when there are no good idea anymore. And that he made some money on the other positions: hard not to make money when all those investments are all post financial crisis.

 

Ok, thank you! :)

 

giofranchi

[giofranchi]

Does someone know PERSONALLY a “lucky idiot”, who has managed to beat the market by 9 percentage points on average for 10 years?

 

I do not (no matter what statistical papers say).

 

giofranchi

 

That's funny.

 

Are you in some way suggesting that lucky people walk around the world with "I'm a lucky idiot" signs above their heads  ;D

 

You probably do know some lucky people who have produced some extraordinary results.  You just don't know yet whether they're lucky or not.

 

Was Bill Miller such a lucky guy for all those years until 2005/06??  We'll never know, will we.....

 

Well, I think I am suggesting that 9% above the S&P500 return for 10 years is something I have never seen just out of good luck… I really don’t know people who are producing extraordinary results without careful thinking, planning, great devotion to their work and continuous enhancement of their knowledge and skills.

Of course, I cannot speak for Mr. Miller and others… There are many reasons why great performance might suddenly cease to be sustained, and most of them have nothing to do with luck.

 

giofranchi

 

[WhoIsWarren]

I'd like to introduce you to Richard Lustig (7-time lottery winner).

 

http://www.huffingtonpost.com/2012/11/28/richard-lustig-7-time-lottery-winner-how-to-win-powerball-jackpot_n_2203717.html

 

"Seven-time Lottery Game Grand Prize winner Richard Lustig has some advice on how to increase one's odds of winning. "Luck has nothing to do with it," he told WKMG Orlando.  He advises treating the lottery like it's a job, playing each and every week, according to WKMG."

 

I just found this example in 5 seconds with a google search.  Use your imagination.....I'm sure you can come up with "Lucky Idiots" of your own....  ;D ;D

[Hielko]

Well, I think I am suggesting that 9% above the S&P500 return for 10 years is something I have never seen just out of good luck…

Is every single investor who got rich by investing in Buffett/Berkshire really smarter than investors investing in (lets say) Bernie Maddoff? You don't think that there are some lucky investors who choice for for Buffett while some unlucky investors went for Maddoff?

[giofranchi]

I'd like to introduce you to Richard Lustig (7-time lottery winner).

 

http://www.huffingtonpost.com/2012/11/28/richard-lustig-7-time-lottery-winner-how-to-win-powerball-jackpot_n_2203717.html

 

"Seven-time Lottery Game Grand Prize winner Richard Lustig has some advice on how to increase one's odds of winning. "Luck has nothing to do with it," he told WKMG Orlando.  He advises treating the lottery like it's a job, playing each and every week, according to WKMG."

 

I just found this example in 5 seconds with a google search.  Use your imagination.....I'm sure you can come up with "Lucky Idiots" of your own....  ;D ;D

 

There is a reason I wrote PERSONALLY: because practically everything you find on Google is the exception, not the rule! ;)

Moreover, business and investing are not a lottery… at least I hope!

I am not saying that luck isn’t important, it clearly is! But, although many times it is very tempting to do so, I think in business and investing it is always dangerous to dismiss someone just as a “lucky idiot”… There is most probably something else you might not be aware of!

 

giofranchi

 

[giofranchi]

Well, I think I am suggesting that 9% above the S&P500 return for 10 years is something I have never seen just out of good luck…

Is every single investor who got rich by investing in Buffett/Berkshire really smarter than investors investing in (lets say) Bernie Maddoff? You don't think that there are some lucky investors who choice for for Buffett while some unlucky investors went for Maddoff?

 

No, I don't think so... I might be wrong, but to invest on your own you must be a businessman. Everything else is simply amateurish... And if you are a serious businessman, you study what works in business and what doesn't. Most of all you spend your days studying management, the traits of great managers. There certainly are patterns that can be recognized and that you want to see. If I don’t see those patterns, I always walk away. That’s why I don’t invest in BAC, even when everybody is making a lot of money out of it.

 

giofranchi

[krazeenyc]

His whole track record is almost one single bet: investing in private stock exchanges ~10 year ago. Maybe a good pick with an edge, or just lucky to be in the right sector... Besides these big bets he owned various leveraged gold ETF's in the past. Luckily small positions, but imo total crap.

 

The one thing that he does that does provide alpha for sure is buying back shares at a discount, but most of that edge is absorbed by expenses and the management fee.

 

Well, if you look at its NAV on August 23rd, 2013, it seems that it is losing considerable money on its stock exchange investments… Instead, it has considerable paper profits on its financial investments (BAC, CBOE Holdings, MS, etc.)…

 

giofranchi

Thats because the cost basis of those positions was probably updated when CBOE en NYX went public. See one of the earlier NAV reports on how the performance was achieved: http://www.urbanacorp.com/Documents/NAV/nav_dec_15_06.pdf

 

The fact that he still holds those positions after the thesis has played out shows imo only that he cares more about maintaining the fund and generating fees than returning capital when there are no good idea anymore. And that he made some money on the other positions: hard not to make money when all those investments are all post financial crisis.

 

Somehow I missed this company, I think b/c it's based in Canada. Shame on me.

I think this statement is at least half wrong. It looks like he's not a total idiot and is not focused solely on generating fees. He's bought back 25,000,000 shares at about 1/2 of book over the last 3 years. That is a wonderful way to generated returns.

[JBird]

Well, I think I am suggesting that 9% above the S&P500 return for 10 years is something I have never seen just out of good luck…

Is every single investor who got rich by investing in Buffett/Berkshire really smarter than investors investing in (lets say) Bernie Maddoff? You don't think that there are some lucky investors who choice for for Buffett while some unlucky investors went for Maddoff?

 

"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."

- Charlie Munger

 

I'll grant that Berkshire investors on the whole probably weren't more intelligent than the rest. The Madoff investors though were stupid. It doesn't take bad luck to get bad results from investing in a firm that a) does not use a custodian, and b) uses a tin-pot "auditor" which had publicly stated it wasn't an auditor.

 

http://money.cnn.com/2008/12/17/news/companies/madoff.auditor.fortune/

[Chris DeMuth Jr]

My sense is that URB.A deserves a discount to NAV, but deserves less of a discount than it gets -- http://seekingalpha.com/article/1096981-buy-1-for-0-50-and-own-the-bombay-stock-exchange-for-free-with-urbana-corp. 

[ItsAValueTrap]

The Madoff investors though were stupid.

 

That's so easy to say in hindsight.

 

Regarding the "tinpot" auditor, I don't think it's a good filter.  A lot of the major accounting firms failed to detect major frauds.  If you think that auditors will detect fraud.....

[JBird]

The Madoff investors though were stupid.

 

That's so easy to say in hindsight.

 

Regarding the "tinpot" auditor, I don't think it's a good filter.  A lot of the major accounting firms failed to detect major frauds.  If you think that auditors will detect fraud.....

 

A custodian makes it virtually impossible for an investor to be defrauded. When is it prudent to invest in a firm without one?

 

Of course auditors fail in their duty; this does not have any bearing on my point. Again, the Madoff investors were trusting a firm to audit that had publicly stated that it was not an auditor. See previous link.

 

 

[rukawa]

http://www.theglobeandmail.com/globe-investor/investment-ideas/urbana-offers-top-tier-businesses-at-one-bargain-price/article18033453/

[bizaro86]

Any thoughts on why they've reduced the buyback the last three months?

 

http://www.urbanacorp.com/Documents/NCIB_Apr_30_14.pdf

 

It's hugely accretive to NAV, which combined with the large discount and reasonable holdings was my thesis. In past years he's kept it up until the authorization ran out, but he's taken a pause recently, which I found interesting. Maybe coincides with the need to use cash to pay the new dividend, which gets cash valued at $0.65 away from the company and into shareholders hands.