Rod

I came up with similar numbers on an ev/ebitda analysis. I didn't think of the hotel valuation separately. For me the big question is whether initial guidance was just wrong, and 75-100 will never be reached, or the issue is more the ramp time, in which case we might still get there but slower. Either way we don't really have enough info. I was also struggling with the appropriate multiple to use. I also centred on 10 but ran 8 and 12 for interest. These are hard and trophy assets which might argue for a higher multiple than the average equity analyst (me) would be comfortable assuming. I think based on projections from Dundee we could have a high confidence that EBITDA will come in at somewhere between 50M and 100M when fully ramped. Multiples I've seen for hotel and casino properties range between 10 and 12. So that gives a valuation range of 500M on the low end to 1200M on the high end. Debt plus preferreds plus a little for additional capital contribution is 700M. So the equity value could be anywhere from 0 to 500M. Dundee, I believe has 37%, giving a value to them of 0 to 185M or $0 to $3 per share. I don't think I could narrow this range down at this point. We really do need to wait and see. Encouraging factors are the very tight hotel market in Vancouver, the growth of tourism, the uniqueness of the property, the low land lease rate, and the high current valuations and investor interest in commercial properties in Vancouver.

I think in a case where the preferred has matured it needs to be paid off or extended by a vote. Otherwise the company would be taken into bankruptcy.

I would call Dundee Wealth a resounding success.

I would like to see them sell off everything outside of mining and wealth management. Those are the two areas where the Goodmans have expertise and past success. With the money raised they could first redeem the E prefs then launch significant and ongoing buybacks of the B and D prefs as well as the common. Then gradually move into making new investments in the mining sector as well as expand related asset management.

I think Ned's letters got more grandiose as time went by. But to be fair, I don't think he ever made any risky bets on extreme scenarios through Dundee. The investments seem to have been made more to benefit from a tail wind of inflation in areas such as real estate and natural resources. The various investments that were made strike me as what you might get if you gave a teenager $1 Billion and asked him to buy some "stuff" he thought would be good. The theme seems to be "investing is easy". It's hard to understand why Dundee thought that they were the right ones to launch an organic food brand (Blue Goose), or invest in oil exploration in Chad. Why did they buy into Union Group when they can't even verify what the company owns anymore? Dundee 360 has never seemed more than a shell that they were writing down almost immediately after buying it. And Parq Vancouver, which could be successful, is a real estate development, something I don't think Dundee has any experience in. Dundee's past successes have been in wealth management and mining. I don't think it's a coincidence that these are the two areas that David and Jonathan Goodman have been focusing the company's future on. At the very least it shows a return to sensible capital allocation. The only notable success in recent years has been the growth and spinoff of Dream Unlimited. When you include the value of that company Dundee's results improve from awful to merely bad.

One question that's never been properly answered is how this disaster came about. For about 20 years Dundee had a great record of value growth under Ned Goodman et al. This culminated in the sale of Dundee Wealth to Bank of Nova Scotia. The BNS shares were sold and the investment spree began under CEO Ned leading to massive misallocation of capital. What happened to Ned?? Was this a case of hubris brought on by a very long record of success? Did Ned lose his marbles?? I guess nobody wants to ask this question on conference calls directly to Ned's sons out of fear of being rude. But surely it must be on people's minds. Does anyone have some insight into this question? Ned himself has been very low profile the last few years. Usually he is very outspoken.

I hope we see significant assets sales soon. Right now when I look at the stock I hear that screaming sound that the shot down planes make in old WWII movies.

I have one of the crappy PDFs of this book. I think it's a good book, but not great. I would say it's overrated actually. Good for it's time, but there are better books available now. I think if it were easily available it wouldn't be thought of as highly as it is.

There are also significant tax loss carryforwards that should have some value.

It all depends on what you value. My aim as an investor is to beat the market by a large margin, which I have for over 20 years. I don't aim to be famous or seen as a great success like Tom Brady. I would prefer to be anonymous. I already live off my investments, but I would like to have more just for the added security. I would also like to build up tens of millions that I could donate to favourite causes later in life. I don't desire luxuries. I have lived very frugally my entire life and have found that I enjoy simple things that cost little. Investing has always been an interesting challenge and a means to support me beyond all else. I spend about 1 week a month doing investment research and the rest of the time pursuing other interests. If/when I have more money I may choose to go the passive ETF route and retire from active investing so I can devote that 1 week a month to other things.

Can't see anything to envy in this video. I prefer having my time to myself, a nice place to ride my bike, and a good book to read. I bet I'm happier than Tom Brady when I do that ;)

On Union, the impairment was made in the 4q and in the 1q call they simply noted that ICC's share price had risen and so they'd moved the value up marginally. Whether they have any way of extracting the value of ICC, I don't know. On Blue Goose, the land was damaged in the fire but as of the 4q call they could not assess the extent due to snow cover (ironic) and this was not updated on the 1q call. My uninformed guess given that this is grazing land (not, for example, standing timber) is that the value should not be permanently impaired by a fire. Grass grows back fast and fires can be part of the regenerative process. Correct me if I am wildly wrong (which is quite possible). Does anyone know what's happened to Canadian grazing land and rights prices since 2006? I don't think that the land is damaged. The biggest cost issue was that Blue Goose would need to pay for supplemental feed in the interim, which is a major expense, hence the decision to reduce the herd size. Farmland in the Caribou region of BC averages $2,500 per acre. https://www.fcc-fac.ca/fcc/about-fcc/reports/2017-farmland-values-report-e.pdf Blue Goose owns about 45,000 acres. "Blue Goose owns over 45,000 acres of farm land in British Columbia, and is a recognized consumer brand with beef, chicken, and fish products distributed to over 640 retail locations across Canada, making Blue Goose well-positioned to capitalize on the high-growth organic food market." So a $100 million value would seem likely.

That's because they're puttable, which in effect means they rank senior to the other prefs. The YTM would be sky high if they traded much below par! Interestingly they are also convertible at the company's option into common at the current price, which enhances the value of the other prefs IMHO and is potentially very dilutive to the common given the current market cap. Actually the E shares are convertible into common at the current price or $2, whichever is greater. You might think the E holders would be a little worried about that with the common currently below $2.

You can hear audio of the AGM at this link: Commentary and Q/A begin at 10 minute mark.

Agreed on Delonex. Apparently they expect a well to be drilled this calendar year, so a reasonably near term potential catalyst. Do you mind sharing his response to being pushed on the prefs? I understand the company not buying back the common at this point. I don't understand insiders staying out of the market -- not even a nibble -- and I really don't understand why the company doesn't at least make an attempt at taking out some of those prefs. Instead, they're talking about building out a merchant banking business. Do they seriously think they can outlay capital in any manner that competes with the risk-free return they'd get from buying the prefs? Of course there's very likely not enough liquidity for them to buy much anyway, and I don't know the costs of maintaining a buyback program. Maybe those are big factors. But my guess is that they overestimate their ability as investors/businessmen and are simply being irrational. I believe that Richard McIntyre exercised 45,000 rights in April. Unless I am misunderstanding this, that would represent a commitment of about $90,000

Parq Vancouver could be a big win as well. It's opening into one of the best hotel markets in North America. Commercial properties are selling for very high valuations. It's hard to believe that there aren't Chinese investors taking an interest in it. And, hopefully this isn't culturally insensitive, but a gold building in Vancouver with a large casino... Can you think of anything more appealing to Chinese investors?

This is probably not the answer you're looking for, but to my mind it doesn't matter what business you own if you're choice is to pay the intrinsic value. By definition, you will get the same return out of each one.

I’m split half and half between B prefs and common. I’ve been reinvesting the dividends from the prefs into common. I don’t average down—I set a position size at the beginning, so reinvesting divs is all I can do. Feels good to get a 12% yield then reinvest that in assets that seem to be worth at least double or triple the price I’m paying.

Costs are way lower than 59M. I think that number includes capital investment into Parq Vancouver

I certainly got the impression that Jonathan is going to be more aggressive on the restructuring front than David was. Agree with you about lots of opportunities to create value. The upside versus downside on this stock is very attractive.

Probability that I'm the patsy is increasing every day! ;) Ugly results. I expected the Blue Goose writeoff. The Union Group impairment was a surprise and I think should be viewed as a permanent loss of capital, despite their commentary about future revaluations. I must say that, aside from publicly traded securities, I value all of their holdings at a very substantial discount -- but it's still amazing to see them go to zero one by one. Interesting call today. An analyst from Intrepid Capital (which has a legacy position in Dundee via its Endurance Fund) challenged Jon Goodman to give any examples where Dundee has actually added value over the past few years, and openly pushed for liquidation. Not going to happen, although management is embarking on a strategic review of their holdings and was guiding to end of summer as a date by which we should expect to see some disposals. My other takeaway from the call was that we shouldn't expect too much out of Parq too soon. They expect EBITDA to be $50-$75 million this year, ramping up to $100 in coming years. But they'll be putting another $20-25 million of capital into the project in the very near term, and will continue paying exorbitant interest during the ramp-up period. Dundee was hit pretty hard by natural disasters in 2017: Blue Goose had TWO major fires, one in the Tender Choice plant and the other a major fire in the cattle ranch in BC. Also, Union Group had a dam under construction washed away by floods in Peru. I think that may have had a large impact on Union Group and led directly to the writedown. Throw in a CEO concussion for good measure... If I remember correctly the refinancing of Parq doesn't need to wait until the project has fully ramped. I believe they are planning to do it this year.

I beat you by 1 cent--bought a little at $1.98. I don't think the sellers are engaged in any long term thinking here. In fact, I feel that about the market generally. I've seen a lot of stocks that just sit there at very cheap prices and nobody wants them because they don't see any immediate catalyst. In seems to me we are in one of those markets where investors refuse to look more than a few months ahead and want immediate returns. Reminds me of the late 1990s.

Interesting story. You can see a little of Warren Buffett and Ed Thorp in Jerry.

I always use DLR an DLR.U to move cash between currencies at a very low cost.

The language in the AIF is not clear (or even accurate?). Look at the Series 2 prospectus. The rate is calculated as follows: - The payment period for the dividend just declared runs from December 31 to March 30, which is 90 days. - The "floating rate calculation date" (FRCD) is 30 days prior to December 31, so December 1 - The T-bill rate is the 3-month average yield from the auction immediately prior to the FRCD. This auction was on Nov 28, with avg yield 0.87. (see https://www.bankofcanada.ca/rates/interest-rates/t-bill-yields/selected-treasury-bill-yields-10-year-lookup/ ) - The dividend paid is then (4.10 + 0.87)/100 * 90/365 * 25 = 0.30637 Well, that explains it. Thank you. Note to future self: "check the prospectus".