Pinetree Capital (PNP) update

I’ve sold out of Pinetree at 45 cents/share and above.  While it still trades at a discount to the market value of its assets, Pinetree’s management is truly awful as discussed in my previous post on the company.

I would much rather own Altius Minerals (or Northfield Capital) over Pinetree.  Both Altius and Northfield have similar assets as they also have most of their assets in juniors and mining-related investments.  However, management at Altius and Northfield is among the best in the field while Pinetree’s management is among the worst.  I really don’t understand why Pinetree isn’t buying back more of its debentures or shares.  It’s stupid to pass on easy money, yet management is doing it.  Now management is trying to pay the debenture holders to relax one of the covenants on the debt (presumably so that Pinetree can take massive risks so that Sheldon Inwentash can try to collect his 20% of any profits).

I will point out that Pinetree’s debentures are more attractive than the stock (which I probably should have bought in the first place).  However, Americans aren’t allowed to buy the debt.  I haven’t bought the debt either.  Apparently TD Waterhouse won’t let use limit orders to buy debentures (and I can’t buy the debt through Interactive Brokers).  I simply assume that order execution will be terrible with a market order so I stay away.

I first wrote about Pinetree when it was trading at 51 cents/share.  Today it closed at 43 cents/share.  I happen to have made a tiny amount of money on my Pinetree position since I bought more as the stock fell.  The discount to net asset value has actually gone down since Pinetree’s assets have fallen a lot.  If you take the closing price of the stock over the NAV reported in the latest press release, the ratio has gone from 0.40 previously to 0.54 now.  (The NAV reported in Pinetree’s press releases likely overstate the value of private holdings, so don’t take it as gospel.)  For now, I am done with this terrible stock.


Barel Karsan has some excellent posts on Pinetree’s debentures on Seeking Alpha (linked to from his blog).

One thought on “Pinetree Capital (PNP) update

  1. This blog was an important stop on my way to finding and eventually investing in PineTree’s debt, so I thank you for writing. Totally agree with you on management. I decided to take the consent fee in cash rather than shares (despite the higher payout) partly because management appears to show no regard for shareholder value.

    By the way, nice post on GME yesterday. I used to own it when it was a lot lower…obviously I sold too soon! Hindsight. Again, I agree with you on management. They seem to have the ability to create businesses with moats where none previously existed, so I would be wary of shorting at a P/FCF of something like 12!

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