Tag Archives: URB

URBANA Corp – $URB.to & $URB/A.to

Another two weeks since posting…. a couple started but I don’t think they are good enough to publish yet.

Another very simple idea. Hat tip to DD for the help and data collection.

I originally posted about Urbana 10 years ago here in March of 2011. I ended up selling about 6 months later and posted about it here. Originally, I was overly attracted to the discount to NAV. I don’t believe I appreciated the growth potential in NAV on a per share basis.

Background

Price – $2.99

Shares – 44.2 mil

Market Cap – $134mil CAD

Here is URB/A vs. the TSX over the last 5 years

Urbana Corporation is an investment fund launched and managed by Caldwell Investment Management Ltd. For its equity investment the fund primarily invests in public equity markets of United States and Canada. The fund primarily focuses on U.S. financial companies and Canadian resource companies for equity investments. The fund also focuses on private equity investments.

Private company and start-up investments are usually vetted by the board and generally at arm’s length from Urbana.

Fund Perf

When looking at the performance of the fund, I am thinking about the growth in NAV. Despite the fees and annual dividend, the NAV has grown at quicker pace than the TSX. Below is the average performance in NAV growth.

Discount to NAV

Despite the performance the, shares are trading near the largest discount to NAV in the last 15 years.

Share Structure

There are two classes of shares. 10 mil voting/common shares and 38.9 mil class A or non-voting shares. The share repurchases are from the A shares. There is more liquidity in the A class shares.

They have bought back about half the shares since 2009.

Ownership

As mentioned the Caldwell family owns the majority of the voting shares.

EdgePoint has been selling some class A shares. This could weigh on the shares, but they could also arrange a block trade and buyback the shares.

Portfolio

Portfolio as of March 12, 2021

They are fairly concentrated. The largest 5 public equities make up 34% of assets. The top 5 private investments make up 32% of assets. The largest holding is the Canadian Securities Exchange at 13% of assets. They have had the position for many years and Brendan Caldwell is on the board. The CSE recently announced record trading volume and capital raised in Jan 2021. The marked value of their holdings was recently raised in 2020.

Mineral Properties

The company has a some mineral claims that are carried at zero value. There are 44 claims for 2,852.7 acres. So far, they have not commented on if/when this claim will be crystalized. The last time there was an update was in 2017.

Pros

  • Continue to buy back shares at a discount to NAV.
  • Pays an annual dividend. If the dividend is maintained it yields just over 3%.
  • The Caldwell family about $18 mil worth of the company and should be incentivized to have the shares perform.
  • Potential value in mineral properties.

Cons

  • There is a 2% investment and advisory fee (used to be 1.5%).
  • Dual class share structure.
  • Private investments may not be liquid and can be subjected to judgement by management.

As mentioned, simple idea. I’m comfortable parking some cash here in the A shares. Not a huge position, but enough to move the needle if it runs one way or another.

For those interested, you can hear the Chair & CEO share his thoughts on an audio podcast here.

Am I the only one holding some URB/A?

Thanks,

Dean

*the author is long URB/A

5 Comments

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Urbana…Sold because I screwed up.

Some lessons are expensive. I bought URB.to because it was trading at a discount to NAV and buying back shares. It seemed pretty good. I mean URB used to trade at a premium to NAV. Most recently NAV has dropped but the share price has dropped faster. So there is an even bigger gap. One would think that I should buy more, and maybe I should.

So it begs the question…”why?” Why would there be such a large gap between NAVPS and share price? I think there is no real confidence in management to execute or there is no real confidence in the sector as a whole. It may be true, things change and exchange market could look quite different from today.

I am selling because I blindly bought URB without dissecting why it was so cheap. I feel that the lack of liquidity has something to do with it. I also have no real opinion of the future of the businesses in the fund. So I feel that there are companies out there with clearer visibility. There has been around a 20% discount to NAV since summer 2008. I am selling cheap to buy cheaper.

More to come…

Dean

Disclosure: Author has sold URB.A

3 Comments

Filed under Company Updates

Urbana

This is a simple idea. You have a company trading at a pretty big discount to NAV. Also, you have non-voting shares trading at a larger than normal discount to the voting shares. The CEO (who owns a pretty big chunk of this company) has stated that he is aware of the discount and will continue to buy back shares.

One would think that even the mention of the CEO noticing the discount would close the window. I think liquidity is playing a part here as neither shares (voting and non) are liquid enough for big money to get involved. Also, the NAV hasn’t  rebounded like the overall equity markets. I think there is some worry about the CEO’s recent poor performance. I’m not smart enough to know if he has actually done a bad job. I am just buying at a discount to assets with an CEO who has skin in the game.

Here is a chart that shows the history of URB. This goes back to when Urbana started announcing their NAV in late 2006.

I apologize for the messy chart. You can see that in 2006 and 2007 the shares traded at a premium to NAV. As the shares were at a premium, more were issued. The shares eventually moved into a discount. The discount to NAV is now as high as is was in late 2008 and early 2009. The CEO has focused on buying back shares.

Currently the non-voting shares trade at a 15.7% discount to the voting shares. They did reach as high as 30% in late 2008. The long run average is around 5%.

Obviously there are risks. The value of the holdings of Urbana could drop and take away the discount. There are major competitive pressures on the stock exchanges. But this isn’t an earnings story, this is an asset story. There are several write-ups already available. The numbers are from Friday March 25th, so they might be a little different now.

Frank Voisin

Hardcore Value

Saj Karsan

Kerrisdale Capital

I am taking a position in the non-voting shares.

Dean

Disclosure: Long URB.A

4 Comments

Filed under Company Analysis