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Mass Financial writeup


rogermunibond
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http://www.sumzero.com/postings/2985/guest_view

 

MFCAF long thesis from Zeke Ashton.

 

Of note, Canoro has filed its latest financial statement on SEDAR.  Changed CEOs, the old CEO was demoted and a new guy was promoted.  Looks like Michael Smith is already putting his stamp on Canoro.

 

http://www.stockwatch.com/Quote/Detail.aspx?symbol=CNS&region=C

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smith is def an enigma. generally i prefer ceo's who are open, straight forward, & forth coming, but its hard to argue with his track record

 

In investing, being less open can basicaly mean two things to me:

 

1) the guy wants to keep it's best ideas secrets to buy things cheaper and get more returns

2) the guy wants to hide stuff to shareholders because...well he has something to hide and it doesn't smell good.

 

On surface, Mass might be very cheap, but in the end it's a "if you don't know jewelry, know the jewelrer" situation. I like the value creation ability that he has (long term track record), and if he's a crook, so still he hasn't fully realized his masterplan, so that helps.

 

But I don't like doubts like that. I've learned to let doubts speak louder over time. On the other side, I've lost some very significant lucrative opportunities in the past because of them. I guess that's life, but I hate these dilemma  >:(

 

By the way, thanks Roger.

 

 

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smith is def an enigma. generally i prefer ceo's who are open, straight forward, & forth coming, but its hard to argue with his track record

 

In investing, being less open can basicaly mean two things to me:

 

1) the guy wants to keep it's best ideas secrets to buy things cheaper and get more returns

2) the guy wants to hide stuff to shareholders because...well he has something to hide and it doesn't smell good.

 

 

well, i didnt mean to decribe him in the same either/or reductive terms you did but i can understand your caution.

 

surprisingly, he does do ttt conf calls, so we've learned he's probably not some kind of paranoid recluse. that said, i doubt we''ll be seeing michael smith doing a mad money segment any time soon  :)

 

and as 'open, straight forward, & forth coming' as many of those ceo's seem by comparison i still gotta believe that more than a few of them are classic promoters, both of themslves & their co's stock....not a good thing either.

 

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Good anaylsis partner.  Based off his track record and shareholder letters i tend to agree with the first point you made. One thing i look for in a shareholder letter is a clear thinking process. I hate ceos who only focus on the outcome and not give a process for the desired outcome. Mr. Smith's shareholder letters although short are very informative and get straight to the point. All  the essential info is layed out clearly with a process of things to do for the following year. Again just cause he doesnt write a 10 page letter like markel, ffh, brk, and etc doesnt mean hes not being transparent.  I agree he is secretive as a person no pictures or many articles. I view that as a massive positive because he's hidden from wall street. There is little to no edge because of his secret nature. Which means we are all on equal playing fields.  I believe he wrote one long letter in 2005 because of the company name change. Very transparent and layed out his thinking process very well. Being secretive ( as a person) + awesome track record= Lecuadia circa 1990's.

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Does anyone know what M. Smith's insider ownership status is? It's great that he's creating so much share holder value but I've always had a hard time finding what % of the companies he owns.  Does anyone know?  It doesn't look like her personally owns any of TTT...

 

I've digged a little bit deeper in their last annual report. They convertible bonds and payment in kind outstanding wich will eventually dilute common shareholders. See note 26 on page 51. I haven't seen the details so far

 

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9Mzg0NjEwfENoaWxkSUQ9Mzg2MTc4fFR5cGU9MQ==&t=1

 

 

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I've digged a little bit deeper in their last annual report. They convertible bonds and payment in kind outstanding wich will eventually dilute common shareholders. See note 26 on page 51. I haven't seen the details so far

 

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9Mzg0NjEwfENoaWxkSUQ9Mzg2MTc4fFR5cGU9MQ==&t=1

 

 

 

I'm sorry Partner, can you walk me through this.. I see the note, and I see what it says, but I don't see anything about M. Smith's compensation or ownership attached to that note.  How do you know that note is tied to his compensation/ownership?  Thanks.

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  • 2 weeks later...

NEW YORK, Sept. 27 /PRNewswire-FirstCall/ -- Terra Nova Royalty Corporation

(NYSE: TTT)  ("Terra Nova", "we" or "us") announced today that it has entered

into an agreement with Mass Financial Corp. ("Mass") for Terra Nova to acquire

all of the issued and outstanding shares of Mass by way of a take-over bid

(the "Offer"). The Offer is one Terra Nova share for each Mass share, valuing

the transaction at approximately $225 million. The Offer is based upon the

adjusted book value of each company and values Terra Nova shares at $8.91 per

share. All monetary amounts herein are in U.S. dollars.

 

Mass's business encompasses a broad spectrum of activities related to the

integrated combination of commodities and natural resources, including

trading, commercial trade, proprietary investing and financial services. 

 

Highlights:

 

  * One Terra Nova share for one Mass share

  * Unanimously recommended by both companies' Boards of Directors and Special

    Committees

  * For the purposes of the Offer, the adjusted book value of each party is

    approximately equal; $9.00 per share for Mass and $8.91 per share for

    Terra Nova

  * Creation of a significant well capitalized company with enhanced growth

    opportunities and global capabilities

  * Creation of value for Terra Nova through integration of complementary

    businesses and eliminates overlap in resources segment

  * Permits future tax-efficient dividend policy for Terra Nova

  * After completion of the Offer, Terra Nova intends to effect a fourth

    distribution of the balance of its shares of KHD Humboldt Wedag

    International AG ("KID") (the "Proposed Fourth Distribution") on a tax

    free basis to shareholders.

 

As the issuance of shares pursuant to the Offer and the agreement exceeds 20%

of Terra Nova's issued shares, pursuant to the rules of the NYSE, the same is

subject to approval by Terra Nova's shareholders. The Terra Nova Board

recommends that Terra Nova shareholders vote in favour of the share issuance

pursuant to the Offer and the agreement.  The Terra Nova Board received an

opinion from its financial advisor, Raymond James Ltd., that the Offer is

fair, from a financial point of view, to Terra Nova shareholders.

 

The Mass Board has recommended that Mass shareholders tender to the Offer and

has received an opinion from its financial advisor that the Offer is fair,

from a financial point of view, to Mass shareholders. 

 

The Offer is part of a multi-step transaction, which includes the subsequent

merger of Mass and a Terra Nova subsidiary, designed to effect a combination

with an exchange ratio based upon the fully-diluted net book value of each

company adjusted in the case of Terra Nova to reflect the fair value of its

Wabush royalty interest, the after-tax recovery for past royalty

underpayments, excluding pending claims for interest and costs (the

"Arbitration Award"), the recently completed rights offering (the "Rights

Offering") and the distribution of KID shares on September 23, 2010 (the

"Third Distribution").  In the case of Mass, its net book value was adjusted

to reflect the fair value of its resource interests.  Based upon the foregoing

adjustments, for the purposes of the Offer, the Terra Nova shares were valued

at $8.91 per share.

 

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Guest misterstockwell

That didn't quite work out as expected! However, I took a loss in MFCAF and bought TTT at a discount. Not starting out so well, but time will tell.

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