I’m excited about this company and this seems to be a stock that many people simply gloss over. This is a fantastic business trading at a good price. And it’s a financial company that you can actually understand. They aren’t an investment bank with a book full of opaque derivatives. They aren’t sitting on tail risk from bad insurance deals. And they aren’t sitting on hidden losses from bad loans. They do mortgage servicing and they’re really good at it.
Dollar Tree is a quickly growing retailer with a P/E around 18 and revenue growth in the ballpark of 17%/year. I don’t think it’s that cheap right now but it’s on my radar since it is a quality business with very high returns on capital.
I found out about this company from Oddball Stocks, which is a great blog with a great writeup on Senvest. It trades at a ~31% discount to book value.
Previously I wrote that:
It looks like I was right on the first count as Resource Capital sold in the ballpark of 2 million shares. I was kind of wrong on the second count.
Pinetree trades on the Toronto Stock Exchange at around $0.51/share.
Pinetree says that its “net asset value” is around $1.28/share or less as it publishes a NAV calcualtion every month. This is a big, big discount to NAV.
It’s also in a terrible business and has bad management. It definitely qualifies as a cigar butt.
Noront is in the process of getting a loan from its largest shareholder (RCF, a hedge fund with many mining professionals on its staff). Overall, this looks a lot like a convertible junk bond. The effective interest rate is really high once you sort out the financial engineering. This makes sense as Noront has negative cash flow and is not safe to lend to. The lender needs to be compensated for the risks on its loan.
Setting aside the trickiness of the loan for a second, I think that it is somewhat of a good sign that RCF decided to lend money to Noront. It shows faith in Noront. If it turns out that the nickel and chromite projects are not economic (and this could well happen), then RCF could lose a lot of money on its loan and be left with assets that aren’t worth that much.
Here’s my extremely superficial analysis of NovaGold. NovaGold’s main asset is its Donlin Gold joint venture with Barrick. Barrick has pretty much come out and said that it doesn’t think that the deposit is worth pursuing. Therefore, this stock is doomed. I don’t care if Seth Klarman owns it.
