no_free_lunch Posted November 28, 2013 Share Posted November 28, 2013 Dundee is looking interesting at these levels. I certainly am not an expert on this but have been reading up on it over the past few days. A few notes: - Owner-operator with good long-term track record of ~18% over past 20 years (according to himself). - Currently trades at ~2/3 of book. For several years during the commodity boom it looks like it traded at 1.2-1.3x book, maybe even higher. - Conglomerate, heavily focused on commodity businesses and some financials. - Owned/recommened by horizon kinetics, which is where I got the idea. - History of financial engineering: spinoffs, ipo's, share repurchases, etc. - Has inflationary viewpoint. I view it as a hedge should inflation rear up. - Dual class structure, where the class A has little voting power. There is a decent writeup in the article below: Dundee would best be described as a portfolio company, analogous to Brook - field Asset Management or Leucadia, with primary investments in a wide variety of tangible assets, including precious metals, real estate, agriculture and infrastructure. It manages assets for its own account and also has a significant investment-manage - ment business to invest outside capital. It’s been run with exemplary results for share - holders for over 20 years by Ned Good - man, who retains voting control. http://www.horizonkinetics.com/docs/Value_Investor_May_2013.pdf Link to comment Share on other sites More sharing options...
Spekulatius Posted December 8, 2013 Share Posted December 8, 2013 Interesting company for sure. I read their 2012 annual report, but I am at a loss on how to value this company. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 8, 2013 Share Posted December 8, 2013 I'm not that impressed in how they treat their customers. It goes back to the whole "Where are the customers' yachts?" thing. Dundee has participated in the excesses of the junior mining sector. Ned Goodman sits on a few boards where he takes a fat salary while shareholders have a hard time making money. (To be fair, Dundee is a lot better than some of its peers.) But I would make this argument about 90% of the financial industry... maybe more. Dundee hasn't been generating a lot of value for its customers. But... they may very well continue to make money (depending on how the commodities carnage will play out for them). Even Warren Buffett will invest in investment banks, despite the lackluster integrity of those companies. Horizon Kinetics is clearly classier than Dundee. Horizon's products make sense for its customers. Dundee's products often don't. Look at Goodman Gold Trust GGT.UN (formerly CMP.UN)... it has conflicts of interest. It often buys whatever Dundee underwrites... so Dundee's customers are getting hit with layers and layers of fees. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 8, 2013 Share Posted December 8, 2013 While I'm at it... Why does Murray Stahl like Ascent Capital? Malone's best ideas go into LMCA. He owns more of LMCA than Ascent. You probably want your money in LMCA. Horizon Kinetics versus Dundee: Doesn't he realize that his own company is a better company than Dundee? I would much rather buy something from Horizon than Dundee. Perhaps he doesn't understand what Dundee does. Perhaps he doesn't understand that Ned Goodman has less integrity than himself. Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 8, 2013 Author Share Posted December 8, 2013 I think he likes the price. Dundee is selling well below book value, FMRO well above. I am not too worried about Ned Goodman's integrity. He has made money over a long period for his shareholders (in Dundee). The proof is in the pudding. I have heard arguments against John Malone's integrity as well with all of the various financial wizardry he has pulled. At the end of the day, he has brought the return in, that's what matters. Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 8, 2013 Author Share Posted December 8, 2013 Spekulatius, As far as valuation, I am just comparing it to book. This is admittedly simplistic and as not all investments are publicly traded it does require trust in management. I am relying heavily on their track record and some positive comments from horizon. If you look at the most recent balance sheet (sept 30), you have 2.8B assets, 1B liabilities, so book of 1.8B. The assets are fairly straight-forward, with the exception of $.9B investments, .45B equity accounted investments, .325B resource properties. Roughly half of the investments are publicly listed and carried at fair value, about a quarter are private so that's managements discretion how they're valued, another quarter is debt securities, I am assuming these are marked to market. The equity accounted investments are all publicly listed and reflect market value. The resource properties are at cost less depreciation. I just assume that over time, as the resource sector strengthens they will be worth at least what was paid. So where there is room for error is in the private investments and the resource properties. The book needs to also be adjusted for $230M of preferred shares. When you take that into account, book is around $1.55B. The stock has a current market cap (I believe fully diluted but don't quote me) of $985M. So it is selling at roughly .63x book. In the past, it looks like it sold for as high as 1.3-1.4x book. So my basic thesis is, at some point the commodity cycle will get going again, you then get the double bounce of the investments increasing in value, multiplied by dundee trading at a lesser discount to book. If there was a strong commodity cycle, it looks like it could double to triple. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 8, 2013 Share Posted December 8, 2013 John Malone's "victims" have generally outperformed the market. I wouldn't say the same about Dundee's customers (e.g. GGT.UN). *I'd rather be long Dundee than short it. I'm just not enthusiastic about what they do. It's like buying a tobacco company. Their product is bad for the customer... but the company may make lots and lots of money regardless. 2- This may be a situation where all you have to do is to look at whether or not they are buying back shares...? Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 9, 2013 Author Share Posted December 9, 2013 Here is my calculation of share counts: 2013 Q3 - 51.0M A, 3.1M B shares. 54.1M total shares. 2012 year end - 50.9M A, 3.1M B shares. 54M total shares. 2011 year end - 51.7M A, 3.1M B shares. 54.8M total shares. 2010 year end - 67.6M A, 3.1M B shares. 70.7M total shares. 2009 year end - 71.2M A, 3.1M B shares. 74.3M total shares. 2008 year end - 71.1M A, 3.1M B shares. 74.2M total shares. 2007 year end - 72.4M A, 3.1M B shares. 75.5M total shares. 2006 year end - 72.4M A, 3.1M B shares. 75.5M total shares. (I think a split happened this year, this would be split adjusted). It appears that they have done some large scale share repurchasing in the past but nothing recently. I just view the current situation as a neutral. They have a program in place to buy back shares and they have done it in the past. When the time comes, they will act. In the meanwhile, they might have better uses of capital. Definitely worth keeping an eye on. I will check out GGT when I have some time. Just some notes from when I was digging through the report. These are some of the major recent transactions: Dundee sold their DundeeWealth unit in 2011. They netted $870M on the transaction. Consider that this one transaction alone is about 90% of the current market cap. On February 1, 2011, the Corporation sold its 48% interest in DundeeWealth to Scotiabank, pursuant to an offer made by Scotiabank on November 22, 2010. In exchange, the Corporation received 18,599,028 common shares of Scotiabank valued at $1,046,528,000 and 14,897,209 $25 3.70% 5 - year rate reset preferred shares of Scotiabank valued at $372,430,000. In addition, the Corporation received a cash dividend of $155,982,000 and a dividend - in - kind of 74,484,956 common shares of Dundee Capital Markets pursuant to distributions made by DundeeWealth immediately prior to completion of thetransaction as described above. The Corporation realized a gain of $870,828,000 from the divestment of its investment in DundeeWealth. Also worth noting that shares in Dundee Realty were distributed to shareholders earlier this year. On May 30, 2013, the Corporation completed a corporate restructuring, through a tax efficient plan of arrangement (the “Arrangement”) that effectively distributed the majority of its interest in Dundee Realty Corporation (“Dundee Realty”) to its shareholders, through the creation of DREAM Unlimited Corp. (“DREAM”). The scope of DREAM’s business includes residential land development, housing and condominium development, asset management for three TSX - listed funds, investments in Canadian renewable energy infrastructure and commercial property ownership. The Corporation retained a 29% interest in DREAM under the terms of the Arrangement, providing it with an effective 20% interest in Dundee Realty. Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 9, 2013 Author Share Posted December 9, 2013 If you compare GGT.UN to the gold ETF XGD.to they had very similar performance. Since inception, GGT.UN is down 59% vs 56% for XGD.TO. I grant that it has not performed well and I personally would never invest in it due to the high MER but it doesn't seem to be unusually bad or indicate management problems. Dundee securities is just one of the many businesses. It is sucking wind right now but then the segment it caters to is not doing well. Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 9, 2013 Author Share Posted December 9, 2013 Part of the reason for the large discount may relate to Ned Goodman controlling the voting shares of the company. At least he has a lot of skin in the game. Goodman controls Dundee with 86% of all votes and 10% of the equity owned in the firm. The performance has been excellent: Dundee’s share price growth has outperformed Non-Family firms over 20 years. The Non- Family firms’ share price CAGR from 1993-2012 was 8% compared to 18% for Dundee (Figure 1). Dundee also outperformed their Financials sector peers. Over that period, Dundee’s share price grew from $1.05cents at the start of 1993 to $30.65 at the end of 2012. Link to comment Share on other sites More sharing options...
no_free_lunch Posted December 10, 2013 Author Share Posted December 10, 2013 Chief Executive Officer of Dundee, Ned Goodman, has agreed to join the board of directors of Barrick Gold Corporation ("Barrick"). "I am delighted to have been invited to join the board of Barrick at this time, and I look forward to working with management and the board to return the company to, once again, being the biggest and best gold mining corporation in the world," Mr. Goodman said. Mr. Goodman has also confirmed that he has requested that any fees received by him in his role as a director of Barrick be paid to Dundee Corporation. http://www.marketwatch.com/story/dundee-corporation-announces-appointment-of-ned-goodman-to-barrick-gold-board-2013-12-04-161733559 Link to comment Share on other sites More sharing options...
giofranchi Posted July 15, 2014 Share Posted July 15, 2014 2013 Letter to Shareholders: http://www.dundeecorp.com/pdf/2013-Annual-Report.pdf At a private luncheon I was honoured to attend, I was able to ask Mr. Buffett why in all his writings – annual reports, etc. – he never mentions whether he is optimistic or pessimistic about the stock market. His answer was that he is never either of those. I then asked the obvious, “What are your feelings for investment?” to which he replied that he is “realistic.” When I asked him to expand on “realistic,” he said “realistic” is when he can buy a company that will provide a 15% annual return on the purchase price forever. It is all about the right purchase of the right investment. Page 8 Gio Link to comment Share on other sites More sharing options...
yadayada Posted July 16, 2014 Share Posted July 16, 2014 I think you guys should take a look at dream corp. The spin off from this company. It looked like a classic greenblatt when it went down to 10$ right after the spin off. page 21 more on it: http://ify.valuewalk.com/wp-content/uploads/2014/01/Value-Investor-Insight-12-13-Hartch-Cibelli-Porter.pdf any way to track canadian spin offs? Link to comment Share on other sites More sharing options...
jeremykgold Posted July 16, 2014 Share Posted July 16, 2014 Yikes. Toronto condominiums. I'd be pretty wary of those Link to comment Share on other sites More sharing options...
MrB Posted December 10, 2014 Share Posted December 10, 2014 I had a quick read through Dundee's annual report and Dream's too. It certainly trades at an interesting multiple, but there is a lot of real estate exposure there. For all Ned's worrying there seems to be a disconnect between his view of the world and a total lack of mentioning the possibility that the Canadian/Toronto real estate market is possibly in bubble territory. Not sure if I missed it or anybody knows of his views stated elsewhere? Link to comment Share on other sites More sharing options...
KinAlberta Posted December 10, 2014 Share Posted December 10, 2014 I got taken out of vox 360 a few months back. Typical predatory behaviour (insider value hunting). So, if you can't beat them, you might as well join them. So that's what's got me looking at Dundee. Link to comment Share on other sites More sharing options...
biaggio Posted December 10, 2014 Share Posted December 10, 2014 I had a quick read through Dundee's annual report and Dream's too. It certainly trades at an interesting multiple, but there is a lot of real estate exposure there. For all Ned's worrying there seems to be a disconnect between his view of the world and a total lack of mentioning the possibility that the Canadian/Toronto real estate market is possibly in bubble territory. Not sure if I missed it or anybody knows of his views stated elsewhere? http://dundeecorp.com/pdf/2014-07-18-Sale-of-Securities.pdf "TORONTO, July 18, 2014 — Dundee Corporation (TSX: DC.A) (“Dundee” or the “Corporation”) announced today that it has sold 4,469,000 units of DREAM Office Real Estate Investment Trust and 8,600,000 units of DREAM Global Real Estate Investment Trust, for total gross proceeds of $207,000,000, which will be added to the Corporation’s working capital. " Link to comment Share on other sites More sharing options...
KinAlberta Posted April 5, 2015 Share Posted April 5, 2015 I read where Dundee is in a Chou fund now. Link to comment Share on other sites More sharing options...
sculpin Posted April 21, 2015 Share Posted April 21, 2015 Anyone still following Dundee. Noted that Pender funds now owns it as does Francis Chou in his RRSP fund. New buys Dundee Corp (TSX:DC.A) Chou's only new purchase during the second half of 2014 was 100,000 shares in Dundee Corp, at an average price of C$14.96 per share. Dundee is an asset management company whose core competencies include real estate and infrastructure, energy, resources and agriculture. The stock has declined 26% over the past year and now trades at C$11.73. Net income over the trailing 12 months was C$-119.5 million. The following chart shows the annual net income trend. Link to comment Share on other sites More sharing options...
EricSchleien Posted April 21, 2015 Share Posted April 21, 2015 Yes, I own it for clients. Been my worst performer of the year! Link to comment Share on other sites More sharing options...
sculpin Posted April 22, 2015 Share Posted April 22, 2015 Odd - Ned Goodman seems to be selling a lot of stock around the current price level. https://canadianinsider.com/node/7?ticker=DC Link to comment Share on other sites More sharing options...
kab60 Posted April 22, 2015 Share Posted April 22, 2015 Yes, I own it for clients. Been my worst performer of the year! Care to share some lines om thesis? I plowed through the latest AR but didn't get a grip on value. Lots of different parts and investments, seems very unfocused. Link to comment Share on other sites More sharing options...
colinwalt Posted April 23, 2015 Share Posted April 23, 2015 http://canadianvalueinvesting.com/?p=88 Dundee Corporation How I Like To Buy Conglomerates "Shares trade at a huge discount to book value, mostly thanks to the company’s exposure to both the oil and gas market" "Essentially, an investment in Dundee is a bet on three things: 1. Oil and gas returning to more normal levels–I’d say there’s a good chance of that happening. It might take a year or two, but Dundee has the balance sheet to handle a downturn. 2. Return to former wealth management glory–The company sold its wealth management business to Bank of Nova Scotia back in 2011, signing a three-year non-compete as part of the deal. That expired in 2014, and the company is back in the business. calling it Goodman and Company. It’s small at this point, but management has shown the ability to create a world-class business in the sector before. 3. Real estate development–The company has several projects on the go with partners, including a casino in Vancouver, a ski resort in France, two resorts in Croatia, and “a leisure, tourism and commercial hub within the East Coast Free Economic Zone in the Gangwon Province” in South Korea. It also has a stake in a development to build hotels in Cuba that has already been approved by the government." Link to comment Share on other sites More sharing options...
EricSchleien Posted August 1, 2015 Share Posted August 1, 2015 Their website http://dundeecorp.com/ now has Annual Meeting Slides, Annual Meeting Video, and 2014 Chairman's Letter Letter: http://dundeecorp.com/pdf/2014-overview-and-leadership-views.pdf Annual Meeting Slides: http://dundeecorp.com/pdf/Dundee%20Corporation-AGM-June9-2015.pdf Link to comment Share on other sites More sharing options...
EricSchleien Posted April 1, 2016 Share Posted April 1, 2016 http://finance.yahoo.com/news/dundee-corporation-reports-2015-fourth-231334407.html Link to comment Share on other sites More sharing options...
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