Share Name Share Symbol Market Type Share ISIN Share Description
Elderstreet LSE:EDV London Ordinary Share GB0002867140 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 63.00p 61.00p 65.00p 63.00p 63.00p 63.00p 0 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 0.7 0.3 0.8 78.8 23.47

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03/5/201611:03Endeavor : New Mining Investment Bank171

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Elderstreet Daily Update: Elderstreet is listed in the General Financial sector of the London Stock Exchange with ticker EDV. The last closing price for Elderstreet was 63p.
Elderstreet has a 4 week average price of 61.40p and a 12 week average price of 59.76p.
The 1 year high share price is 64.75p while the 1 year low share price is currently 52.50p.
There are currently 37,251,866 shares in issue and the average daily traded volume is 2,036 shares. The market capitalisation of Elderstreet is £23,468,675.58.
mikkydhu: I don't know what interest in UUU is still retained by EDV, but the takeover of UUU announced today should do no harm to EDV's share price.
energyi: 12 CORE POSITIONS- what are they?? "The merchant banking transactions (excluding the early stage opportunities) consisted of approximately 12 core positions which generated approximately 53% of total investment income" - - Here's a link to a write-up on EDV, I suggest you read it: Basically EDV is a cheap way to go long on metals and mining since the stock is selling at about a 30% discount from its Net Asset Value, or the value of the investments it holds in its portfolio. The discount to NAV might partly be explained by the hefty fees paid to EDV's investment advisors (or portfolio managers if you will) Endeavour Financial. In 2004, the fee was $3M on assets of $75M and in 2003 the fee was $4M on assets of $45M. The fee is two-tiered: 1) an investment advisory fee, calculated as 2% on the first $50 million of net assets, 1.5% on the next $50 million of net assets, and 1% on net assets in excess of $100 million, payable as to 1/12th monthly. 2) The investment advisor also receives an annualized performance fee of 20% of the Corporation¡¦s net income from operations in excess of a 15% return on the weighted average Shareholders¡¦ Equity during the fiscal period. Notice that this fee structure is a lot like a hedge fund, although this alone is no guarentee that the advisory services add any value to EDV, it is nevertheless an indicator that EDV believes that this is the case. Indeed two distinguishing traits of Endeavour Financial compared to your typical mutual fund managers are 1) They invest a lot in private opportunities, hence acting a lot more like a VC firm, with an intimate (EDV sits on the board of 40% of its invetsments) and specific knowledge of the junior mining industry and 2) an active investment approach with a high turnover of assets (in 2004 EDV sold $44M worth of its portfolio and invested $55M worth in new opportunities). Ok now that I've set the context EDV sits in, let me explain why I believe there might be a short-term opportunity here with a potential upside of 10-15% to be earned in just a few days (I've been long this stock for a while but intend to doubel my position this week - you can play it however you want, short term trade or long term) The company publishes its Net Asset Value (NAV) on its website every month (7-14 days from end of month) and I believe that EDV will report an increase in NAV in the range of 20-25% for February, something that EDV's stock has failed to discount (at least entierly) since its stock is up only 10% since the beginning of the month. Furthermore considering EDV's high volatility I believe a small position could be established at 3.45 -3.50$ (5% below current levels) within the week. How exactly do I know that? Well as might be expected, EDV's share price will be strongly correlated to the performance of its investments; furthermore the market's expectations as to its "present" and future performance will stick closely to that of the sector of investments it is weighted in. Originally EDV was strongly invested in Gold and other precious metals, and EDV's performance in 2003 mirrored closely that of the Phily Gold and Silver Index ^XAU To this day EDV is strongly weighted in Gold and Precious Metals stock (in their 2004 annual report they again provide the XAU index as a backdrop for analysis), however in 2004 EDV has likely diversified its holdings to include more base/industrial metals and mining stocks, as evidenced by their annual reports for the last 2 years (I included excerpts at the end of the write up). Furthermore I do not believe that the ^XAU index ever was an appropriate framework for EDV since the latter has a strong focus on junior mining companies, which are inherently more risky and hence offer better returns on a sector bull market than their XAU counterparts. I believe that a better framework is the S&P/TSX CANADIAN MINING INDEX, ^GSPTTMN, although EDV's portfolio is only 20% weighted in North American stocks, I believe that the smaller and more diversified nature of ^GSPTTMN's components more closely reflects EDV's current portfolio. This is evidenced by the close correlation of EDV to that index in the past 2 years: In February the ^GSPTTMN index has rallied 25% (mainly because of a broad rally in industrial metals while the gold index has only rallied 8%, mirroring EDV's roughly 10% appreciation sicne February) To be more specific I've extracted EDV's Core Merchant Banking Positions from their 2004 annual and included a $2,5M position in AV.V announced in January:Here is the Performance for the month of February February January December 12Months Jan03-04: BGO.TO: 5% 0% (13%) 68% BGC.TO: 50% (13%) (10%) 150% CMM.V: 15% (13%) (4%) 10% NNO.TO 8% 14% 1% 27% SLW.TO 25% (8%) (1%) WRM.TO 4% 6% 0% 20% AV.V: 25% Average Return 19% (2.5%) (4.5%) 50% EDV NAV: ? (0.005%) (2.5%) 0% ^GSPTTMN 24% 1% 2% 25% I do not know to what extent these positions are representative of EDV's portfolio because the weights of these investmenst arent provided. However I note that 4 of the 6 were also mentionned as core merchant banking positions in 2003 (hence 2 positions were initiated sometime in 2004, these are CMM.V and SLW.TO ), 75% of the 2003 portfolio was turned over in 2004 and two major positions were shed at some point during the year GGG.TO (down 40%) and OXS.L (down 20%).You can draw your own conclusions from the relative performance of the portfolio to that of EDV's NAV. However I believe that the portfolio as it was announced in the annual report which came out last month could be very relavant as it is up to date and could make up 50-60% of the publicly traded securities which are used in the NAV calculation I intend to buy 2000 more shares at 3.45 in the next 7 days hence doubling up my position. Also the chairman purchased 20,000 shares in the open market at 3.40$ on February 11th, he had no holdings previously. ...MORE:
energyi: Weekly chart, Semi-log scale, High C$4.88, Low C$1.53, Last Trade C$2.56 (June 18 close) Our initial report on Endeavour was issued May 8, 2004 just as the price of gold re-tested the US$378 "support area". Endeavour had suffered a dramatic falling-over-the-cliff sell-off as many junior-sector resource stocks experienced lower liquidity, sporadic panic selling and apparent capitulation of late-comer investors suffering rapid and severe losses. Endeavour's share price was $2.53 then, and is there again now ($2.56) after having worked its way back to the $3.00 area where significant technical resistance was encountered. So what are the prospects going forward for the sector, and Endeavour particularly? Endeavour has an aggressive business strategy which, combined with the nature of the mining equity market, results in short-term earnings volatility. Because of the diversified nature of its portfolio of merchant banking investments, which includes a mix of resource commodities and a combination of debt and equity instruments, it provides a useful proxy for the junior resource market. Also, it should be noted that Endeavour's investment strategy is focused on high quality assets with strong management teams, and with clear potential for high returns through their structured investments. When Endeavour finances mining companies to fund their project development, strategic initiatives and growth, we can benefit from a management team that has done their homework and structured its investment exposure appropriately. This generally means a compelling and timely entry price (downside protection), and better than average upside potential. Given we accept the premise that Endeavour offers us the built-in advantages of diversification, cream-of-the-crop selection, sophisticated professional management, exceptional deal-flow and access to global institutional and industry contacts, we really need only concern ourselves with the timeliness of such specific exposure to the resource and precious metals sectors. Likely, it would be hard to match Endeavour's ability to select winners and realize on their potential. @:
wobblechops: Exceptional Growth, Sector Volatility Endeavour Mining Capital (EDV-TSX) Weekly chart, Semi-log scale, High C$4.88, Low C$1.53, Last Trade C$2.53 (May 7 close) (CHART) Ø Managed by some of the industry's most powerful & experienced mining professionals Ø Operates as a highly entrepreneurial merchant banker Ø Extensive network of contacts and vast industry experience generates prime deal flow Ø Creates synergistic opportunities by pulling together companies, projects and people Ø Originates and invests in formative stage deals, prior to retail access/knowledge Ø Under-estimated by analysts as a mutual fund of small and mid-sized gold companies Ø Shareholders gain the advantage of investing side-by-side at the ground-floor level Ø Share price offers excellent near term value and exceptional growth potential over time Ø Rising resource-price environment offers tremendous bonus upside to shareholders Ø Technical analysis suggests price becoming oversold, with likely nearby strong support __________________________________________________________________________________________________ Please see important disclaimers at the end of this report. Technicals (Also see Technical Analysis in the Supplementary section at the end of this report on some basics of "TA" use). The weekly chart shown on page one highlights the dramatic falling-over-the-cliff sell-off occurring as the price of gold re-tests the US$378 support area and junior-sector resource stocks get trounced amidst lower liquidity, sporadic panic selling and apparent capitulation by late-comer investors suffering rapid and severe losses. While never prudent to attempt catching a "falling knife", the backdrop of what we see as a correction within a long term gold "bull market" offers a compelling, timely opportunity to accumulate particularly well-positioned, solid-value deals. The green On-Balance-Volume (OBV) indicator in the upper chart window supports the fact that there is no "distribution" of any size taking place - only some general low-volume selling. MACD is currently bearish, and has been for the last 11 weeks since it crossed its signal line. Relative Strength (RSI) is now at the 14-week value of 30, an extreme only seen twice before, coinciding with market lows and past buying opportunities. (CHART) Daily chart, Semi-log scale, High C$4.83, Low C$0.35, Last Trade C$2.53 (May 7 close) The daily chart above shows the current value of the RSI is 19.00. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought /oversold area. The MACD crossed below its signal line 18 days ago and remains bearish, but is in an oversold range. Wait for prices to move higher before considering any long positions. There have been no divergence signals within the last 5 days. On 5/7/2004, Endeavour closed below the lower band by 2.6%. This combined with the steep downtrend suggests that the downward trend in prices has a good chance of continuing. However, a short-term pull-back inside the bands is likely. Making the picture somewhat unclear is the fact that Bollinger Bands are 101% wider than normal. The large width of the bands suggest high volatility as compared to Endeavour's normal range. Therefore, the probability of volatility decreasing and prices entering (or remaining in) a trading range has increased for the near-term. Fundamentals Endeavour Mining Capital Corporation (EDV-TSX): Endeavour Mining Capital Corp. is a publicly traded mining merchant banking company. The Corporation, established in the Cayman Islands, provides finance to mining companies to fund their project development, strategic initiatives and growth. An international team of experienced professionals with a demonstrated performance history manages the Corporation. Endeavour Financial, a leading investment banking firm focused on the global mining industry, acts as the Investment Advisor. The management team at Endeavour Mining Capital uses their experience, market intelligence and proprietary deal flow to originate and invest in a series of potentially high-return transactions. As of February 29, 2004, Endeavour had an investment capital base of US$$88.3 million. Their capital is invested in a series of transactions, such as private placements, convertible debentures, bridge loans and other forms of mine finance. The Corporation seeks to generate superior earnings through interest earned, fees charged and capital appreciation. Currently, the Corporation is highly leveraged to Gold with additional investments in other minerals including Diamonds, PGM's and Base Metals. The scope of investment is limited only to management's area of specialist expertise - mining. Oil & Gas and other strategic opportunities may figure more prominently going forward as the necessary talent and connections are attracted to the Endeavour Group's critical mass and growing reputation. Second quarter highlights • Net loss of $2.4 million or $0.10 per share for the quarter • Net income of $24.5 million or $1.21 per share for the six month period • First regular semi-annual cash dividend of CDN$0.035 paid Corporate data (as of January 12, 2004) Exchange Listing: The Toronto Stock Exchange Symbol: EDV CUSIP: G3040R109 Issued Shares: 23,120,578 Fully-Diluted Shares: 27,683,078 Investment Objectives of Endeavour Endeavour's primary investment objective is to achieve superior earnings by investing in transactions having potentially high returns in the mining sector. Endeavour's investments are carried out according to an opportunistic and disciplined process that has been developed to maximize returns while minimizing risk, taking advantage of investment opportunities identified from the industry contacts of its Board of Directors and the Investment Advisor. To achieve these objectives and to limit overall portfolio risk, Endeavour employs, when appropriate, the following strategies: • Investments are focused on the mining and mining related industries. Endeavour invests in early stage exploration and development companies, as well as intermediate and senior companies. • Endeavour obtains in-depth knowledge of the target company and a working relationship with existing and/or proposed management. • Transactions generally take the form of equity or debt with equity rights attached. Endeavour may employ a wide range of investment instruments, including equity, bridge loans, secured loans, unsecured loans, convertible debentures, warrants and options, royalties, net profit interests and other hybrid instruments. • Investment can be made in both public and private companies. • Endeavour seeks to obtain a 30% or better internal rate of return on transactions, based on reasonable projections. • Endeavour seeks to maintain limits of 20% of the investment capital base (at the time of the investment) in any one transaction. • Endeavour seeks investments where it has the ability to monitor the investment until it is realized. • Endeavour seeks multiple exit strategies for optimal realization of value of structured transactions. • Endeavour is prepared to take short positions in securities that trade on recognized securities exchanges or quotation services, provided that the short sales meet minimum regulatory margin requirements. • Endeavour will generally not acquire greater than 10% of the issued and outstanding shares in any one company From time to time, the Board of Directors of Endeavour may authorize any particular investment or series of investments which may not comply with these strategies. While management does not view Endeavour's business as cyclical, the value of its assets in the mining sector may fluctuate with the market for securities in that sector and the demand for precious and base metals. Recent Results March 26, 2004 - Endeavour announced a net loss of US$2.4 million or US$0.11 per share (or approximately CDN$0.15 per share) for the second quarter ended February 29, 2004. This compares with net income of US$7.9 million or US$0.51 per share (or approximately CDN$0.76 per share) reported for the quarter ended February 28, 2003. As of February 29, 2004, the net asset value per share was US$3.63 (or approximately CDN$4.85). The Corporation realized gains on investments of US$2.9 million during the second-quarter, however, these gains were offset by unrealized losses on investments held of US$5.6 million. The Corporation remains highly leveraged to its core merchant banking positions and management accounts indicate that during March 2004 the Corporation generated investment gains of approximately US$6 million to bring the net asset value per share to approximately CDN$5.05, as of the market close on March 26, 2004. For the six-month period ended February 29, 2004, the Corporation recorded net income of US$24.5 million or US$1.21 per share (or approximately CDN$1.61 per share). This compares with net income of US$3.8 million or US$0.25 per share (or approximately CDN$0.37) reported for the six-month period ended February 28, 2003. March 19, 2004 - Endeavour announces that it has obtained the Toronto Stock Exchange approval for the listing of 3,625,000 share purchase warrants of the Corporation issued in a private placement which closed on November 10, 2003. The warrants commenced trading on the Toronto Stock Exchange under the symbol EDV.WT on Tuesday, March 23, 2004. Each whole warrant entitles the holder, upon exercise, to purchase one share of the Corporation at an exercise price of CDN$5.50. The warrants expire at 5:00 p.m. (Toronto time) on November 10, 2008. Liquidity and Capital Resources At February 29, 2004 the Corporation held assets totaling $88.3 million comprised mainly of investments (89%) and cash and cash equivalents (10%) compared to assets held at August 31, 2003 of $46.5 million comprised mainly of investments (87%) and cash and cash equivalents (13%). The liabilities of the Corporation totalled $4.3 million as of February 29, 2004 of which $4.1 million was the performance fee accrual, $0.1 million was payable to the investment advisor, and $0.1 million was for other accrued expenses. The increase of $42.3 million in Shareholders' Equity in the Corporation to $84.0 million at February 29, 2004 from $41.7 million as at August 31, 2003 is attributable to operations that generated $24.5 million of net income or 58% of the increase, and net financing activities that generated $17.8 million in Shareholders' Equity or 42% of the increase. During the six month period ended February 29, 2004 the Corporation received net proceeds of CDN$23.5 million ($18.1 million) from a private placement of 7.25 million units at CDN$3.45 per unit. Each unit consisted of one common share and one-half of a common share purchase warrant. Each whole common share purchase warrant entitles its holder to acquire one common share of Endeavour at a price of CDN$5.50 per common share on or before November 10, 2008. On February 27, 2004, the Corporation paid its first regular semi-annual cash dividend of CDN$0.035 per share. Outlook The Corporation will continue with its strategy of originating and investing in potentially high-return merchant banking and investment transactions focused on the resource industry. As shown by the Corporation's fiscal 2002, fiscal 2003 and six-months to February 29, 2004 financial performance, Endeavour has produced strong results. While earnings volatility should be anticipated, management believes that the long-term upwards trends in the metal and commodity markets remain favorable and that its superior deal flow and access to potentially high return transactions will result in the continued growth of the Corporation's investment capital base. Endeavour's Investments (CHART) The Continuing Bull Market in Gold Fundamentally, core positions in gold shares, from the seniors to exploration companies, should be maintained. Considerable amounts of money have been raised for exploration, and the management and geological skills of many companies are outstanding. This will result in some discoveries which, even in a dull gold market, can result in a market play. Even in the 20-year bear market in gold, we have seen many discoveries and many exciting times in the gold markets. Of course if the gold markets turn out to be dull, we will have a much harder time making the kind of money we made in the past couple of years. These last few weeks have been the toughest in quite some time for gold bulls. When we take a good look at the longer-term picture, what this decline seems to be suggesting is that we are in a serious correction, but the long-term bull market for gold likely remains very much in place. Gold tumbled on Friday due to the sharp advance in the dollar, dropping to its lowest close in 6 months. The effect of this drop and the sharp fall in the general stock market combined to cause a steep decline in precious metal stocks. Both gold and the US$, which have an inverse relationship with each other, are at a critical juncture. The 3-year gold chart shows we are on an important support level and very close to the lower boundary of the long-term uptrend in force since the start of the bull market. In addition, although now below the 200-day moving average, this indicator is still rising steadily and the RSI and MACD lines are showing an oversold condition. Although normally an opportune time to buy, there are a couple of factors that give grounds for caution. The first is the "double top" formed by gold when it made twin peaks in January and April. Such a formation is frequently indicative of an intermediate trend change. The second cause for concern is the $US, which is very close to breaking out of its long-term down trend. (CHART) The $US's long-term downtrend is obvious on the 3-year dollar index chart, where we can see that the 91 – 93 area is a critically important resistance zone. The long-term downtrend line is currently at about 91. A move above about 93 signals a breakout from the downtrend, and also indicates that resistance from past trading at around this level is being overcome. Also, there would be a significant break above the 200-day moving average, now also at about 91. What are the chances of the $US breaking out upside? We need to look at the 6-month chart for the dollar (next page). A few days ago the $US rolled over and looked like it was turning back by the strong combination of the falling 200-day moving average, long-term trendline resistance and resistance from past trading, which may yet happen. However Friday's rise was substantial and puts it in position to break higher. It is noteworthy that it coincided with a bond and REIT cave-in. There are both technical and fundamental considerations lending support to a $US break higher at this juncture. Technically, we have had a 5-wave sequence down in the $US since its bear market started, which means that even if the $US bear market continues, we could have a significant 3-wave countertrend rally. Fundamentally, an argument supporting a rising $US at this time is a potential scramble for dollars by debtors across the board seeking to pay down debts and de-leverage ahead of the impending interest rate rises. Even if the rate rises are not that great, the enormity of the debts and the magnitude of the carry trade in bonds and the extent of leveraging virtually guarantee a crisis – hence the risk of a $US spike, however unsustainable. (CHART) There is considerable risk to precious metals prices if the $US succeeds in breaking out of its downtrend. The impact on precious metals stocks could be amplified by a plunge in the broad markets. So, although we would appear to be at a "buy spot" now in precious metals and the stocks, there is also very considerable danger and caution is the watchword. We will want to see the $US back off below about 88.50 before it will look safe to move back in. That would mean missing by a goodly percentage the lows that are likely for various opportunities, like Endeavour, Northern Orion, Entrée Gold, Knight, Grandcru and others we follow. Tight stop-losses could be used in the liquid traders under these technical support levels to protect against wrong-headed positions. China's Growing Demands China is now the number-one consumer in the world of copper, platinum, zinc, steel and iron. They produce more steel than Japan and the United States combined. There are now more cell phone users in China than in the U.S. Almost every Chinese organization owns businesses and deploys investment capital. Capitalism is at the forefront of their daily focus – almost an obsession. The Chinese are also not shy of taking risks and speculating in commodities and the stock market. The U.S. and Europe consume about 1/3 of an ounce of gold per capita annually, mostly for jewelry. When China catches up on a per capita basis that demand alone would be equal to 5 times the global mine production of gold annually. Even a 5 or 10% demand increase over annual mine supply is huge in terms of the relatively small gold market, and this will be 50 times that. And that is just jewelry demand. Because the Chinese currency was destroyed back in the late 40's this generation knows the value of gold as a currency and store of wealth. Self-sufficiency and a healthy innate mistrust of government financial policies would also serve well the complacent North American investor. The investment demand from China alone will change the gold supply/demand equation for decades to come. Every year mining companies have to replace about 85 million ozs of production from reserves or risk mining themselves out of existence. That's the equivalent of finding 12 seven million-oz deposits every year. There's maybe been one such discovery over the last 2 years, so from a longer-term supply viewpoint a severe squeeze is developing. DISCLAIMER Growth Stocks Weekly is an independent electronic publication committed to providing our subscribers with factual information on selected publicly traded companies, business, and economics. All companies are chosen on the basis of certain financial analysis, and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible with the added aid of technical analysis. Growth Stocks Weekly and its editors do not accept compensation from public companies featured in this publication. 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wobblechops: In the almost three years GoldEditor has been following the bull market in gold, no company seems to get as much attention from newsletter writers as Endeavour Mining Capital - EDV: TSX. It has almost become a proxy for the junior gold market. Many investors have decided to put their money with this team of financial wizards as opposed to making their own stock picks. And even with all the positive press on Endeavour, the stock continues to trade at only 1.2x trailing twelve month earnings, says Gold Newsletter editor Brien Lundin. He updates us on the numbers below. Endeavour Mining Capital (EDV.TSXV) (866-801-0779) When I updated you on Endeavour a couple of months ago, I noted that the company "offered excellent value in the near-term and exceptional growth potential over time." The stock is up 24% since then, but still appears dramatically undervalued. How undervalued? Consider its latest earnings report, for the quarter ended November 30. The company reported net income of US$26.9 million, or US$1.54 per share (which is approximately C$2.00 per share). Yes, that's for one quarter. This stunning result compares with a net loss of US$0.26 per share (or approximately C$0.34 per share) for the same quarter in 2002. The latest results reflect total investment income of US$32.5 million for the quarter, with operating expenses of US$5.6 million, leading to an operating margin of 83% during the period. The earnings are comprised of US$5.9 million of realized gains, and unrealized gains of US$26.6 million during the quarter. Given the success of its investments, and a recent C$25 million equity financing, Endeavour's CEO, Neil Woodyer, notes that the company's investment capital base now stands at US$87.0 million, or approximately C$4.90 per share, "expanding our ability to make additional investments and commitments." As I've said before, the beauty of Endeavour is that it allows individual investors to stand alongside some of the industry's most accomplished and powerful institutional investors - to "get in the room" where many of today's biggest resource deals are being put together. The primary roadblock for Endeavour has been the fact that its earnings come primarily from appreciation in its shareholdings, which result from the mergers, acquisitions and early-stage financings it participates in. While this "deal flow" is a business that the company's principals are well versed in, some analysts are hesitant to project current results far into the future. In short, the market tends to treat each quarter's numbers, as remarkable as they may be, as extraordinary results, insisting that Endeavour prove it can do it again. The good news: Endeavour has proven it can do it again...and again...and again. In fact, the company's trailing 12-month earnings stand at C$3.81 per share. With a P/E of 1.12, it may not seem like the market is catching on to Endeavour's potential. But believe me, it is. And, with the deals this powerhouse has in the pipeline right now, your chance to get on board could soon pass by. Endeavour Mining Capital Recent Share Price: ...........................................................C$4.40 Stop Loss: ..........................................................................C$3.65 Shares Outstanding: ..................................................23.1 million Market Cap:........................................................C$101.6 million Shares Outstanding Fully Diluted: ............................................................27.7 million Market Cap Fully Diluted: .....................................................C$121.9 million GOLD NEWSLETTER FEBRUARY 2004
wobblechops: Déjà Vu: More Slam Dunk Capital Gains Ahead! It seems like only yesterday, but actually it was four months ago that I sent readers of Online Investors News the story about Endeavour. Not only did the news unfold as predicted, it was even better! This year, we can expect more positive growth from this awakening giant. Back in September of last year I told readers that "This sleeper stock is about to wake up!" The stock was at $3 then and since it hit a high of $4.72 a couple of weeks ago. The stock as settled back a bit now, at about $4.00. If you missed out on the last opportunity for a capital gain, you now have another chance. For those of you who are unfamiliar with Endeavour, they provide financing to mining companies so they can fund project development, strategic initiatives and growth. One of their client's is Wheaton River , which went from obscurity to one of the most actively traded stocks on the TSX in less then two years. Endeavour offers investors a distinctly unique way to invest in developing and growth oriented mining and precious metals companies. The management are well seasoned, top names in the mining/finance business. Their depth of experience gives the average investor an opportunity to reap the benefits of getting in on opportunities at the earliest stages. Since Endeavour creates many of their deals from the ground floor, they receive "cheap" paper or options which they can sell into the market at much higher prices. The results of their accomplishments may not be apparent every quarter as Endeavour does not reveal how much paper they hold on any given company at any given time. However looking at the facts and figures, it seems evident their business model is very sound given returns on equity of approximately 71% this year and that their investment capital base has grown 75% this year to approximately US$42 million. Recently the company announced their first quarter results which ended November 30th. Income was US$ 26.9 million or $1.54 per share (about $2 CDN). The stock is now $4 and they made $2/share in the quarter! That equals 0.5 PE (price/earnings) ratio. Trailing 12 month earnings are $3.81. This company could easily trade 3-5 x earnings. In addition, they announced that shareholders will get an annual dividend of 7 cents per share (3.5 cents every 6 months) which will supplement some already very good capital gains. Though this is all good news, you may wonder – what will the future bring? Well consider this. Endeavour's Net Asset Value is $4.90 and its trading well under that right now by 90 cents. BMO Nesbitt Burns gold research is one of the most respected in North America - followed by all the major investors and mining companies. In their Jan 12 2004 issue they show that gold companies right now, as an industry have a premium of 16% to NAV. That breaks downs to a 4% premium for junior producers and a 31% premium for senior and intermediate producers. Let's go with the more conservative 4%, even though the bulk of EDV holdings is probably (because we never know) intermediate producers like Wheaton River, Bema Gold, Oxus etc. If EDV reported their NAV on Nov. 30/03 as CAD$4.90, then their stock would warrant a valuation of CAD$5.10. At 16% premium the stock would be at $5.68. The report had two interesting observations - Wheaton River had the largest increase in valuation, going from a 26% discount to a 62% premium. This was my first pick in the new gold era two and a half years ago, and I believe this is one of Endeavour's largest positions! The stock was up 163% in 2003, and if you owned the warrants like EDV did, you could almost double that. Second, BMO said that the valuation for junior companies was rising at the same pace as senior companies, so Endeavour is not losing any value in the gold market by buying smaller companies. Consider that by far, Endeavour has more earnings power than these gold companies. The company had return on equity of 71% in 2003 and 87% in 2002. There are no mining companies of which I am aware that could crow about that. So it stands to reason, to me anyway, that EDV would have a higher multiple. The highest NAV multiples in the BMO research was Goldcorp (GG:NYSE) at 1.68x NAV and Wheaton River (WHT:AMEX) at 1.62x NAV. But being conservative, EDV would have a share price of CAD$7.84 with a 1.6x NAV. NAV should be a floor, not a ceiling. From my own research I see that management is sowing the seeds of even higher profitability. EDV has done a lot of super cheap financings with penny stocks, grooming them for when they find big blockbuster assets. I see some EDV people going on the board of several small companies, and then those companies announce big financings - so I assume EDV is getting lots of that super cheap financing paper, plus their trademark warrants. I believe that they now have a ton of paper in UFM, FIL.H, BUC and many others in (though we can't be sure because they don't say what they own) which they will one day vend in quality assets that will justify a much higher valuation for those companies - and therefore for EDV as well. Conclusion The Brain Trust of Endeavour Mining is an international team of mining, investment, and banking professionals who have the worldwide contacts and know how to bring profitable mining deals together. As opposed to investing in a typical gold producing company, EDV can provide in depth intelligence of the mining market as a whole, provide financial management, and capital to help guide deals to a profitable conclusion just like we saw with the Wheaton/Luismin deal. This is quite a bit different then waiting on drill results and mine expansion to provide growth. With Endeavour's international contacts and results to date, deal flow should not be a problem going forward. I believe in the very near future Endeavour shares will be trading at a premium to their net asset value. Market pros hold a significant portion of EDV's shares. Norm Lamarche, one of the most respected resource fund managers in Canada , has made Endeavour his number four holding within the CIBC precious metal fund. This $71 million fund is up 72% in the last six months and 62% over the last two years. Other firms who are shareholders include Orion, Griffiths McBurney, First Associates, and Canaccord who collectively hold about one third of Endeavour's shares outstanding! Obviously, the market pros can see the writing on the wall. 2004 should provide more slam dunk capital gains for investors.
energyi: Endeavour Mining Capital ... (EDV.TSXV) In spite of the impressive earnings generated by this merchant banking company in the six month's ended February 28, Endeavour's share price continues to languish. After a $4 million loss in the first quarter, Endeavour bounced back to earn $7.9 million of net income in the second quarter. That equates to $0.51 per share for the quarter. The second quarter's impressive performance is more indicative of what to expect from this company than that of the first quarter. That's because the first quarter was the company's initial period as a public company, during which time it was forced to clean up a lot of the baggage that came in with the merger that took the company public last September. The investing public still doesn't know quite what to make of Endeavour, with many seeing it as sort of a mutual fund of gold mining assets. Granted, the company has been hardly transparent with respect to its holdings, making it difficult for investors to feel comfortable holding it as a mutual fund. Part of the reason for its veiled approach was that Endeavour was selling many of the positions that came in through the merger, and wanted the selling to be low key. In reality, Endeavour is much more than a mutual fund. The experience and talent of the management group is exceptional, and they have been focused on putting together deals that will create value. The group has completed several very successful transactions over the past year, and I have every confidence that they will be able to continue the level of deal-generation necessary to meet or exceed the earnings produced in the second quarter. However, it may take a bit more time before the market is able to accept these earnings as non-exceptional, reliable returns. In the meantime, investing in Endeavour puts your money into the hands of one of the more capable management teams in the business, one that is extremely bullish on gold and focused on providing significant leverage to the metal. This isn't a drill-hole speculation, by any means. In contrast, it's a "smart money" investment that will get you in on the earliest stages of some of the blockbuster deals that will characterize this bull market. Endeavour Mining Capital Recent Share Price: ........C$1.80 ... Stop-Loss: ...........C$1.45 Shares Outstanding: 15.6 million Market Cap: .......C$28.1 million Shares Outstanding Fully Diluted: .........16.2 million ... Market Cap Fully Diluted: C$29.2 million
wobblechops: energyi, so what do you estimate is a fair share price for EDV based on the above? cheer's Wobble. ps Thanks for posting your work above. How do you fancy attending the AGM on the 28th, lol Cayman Islands "oh yes" nice business trip.
energyi: ROUGH ESTIMATES OF HOLDINGS... Using Stock prices as of 8/31/2002 These positions are: (WRM.t)Wheaton River Minerals Ltd. $4.0 million = (C$1.28 /C$1.50): 4,687,000 shs (THT.t) Thistle Mining Inc. $2.8 million = (C$0.54 /C$1.50): 7,778,000 shs (BGO.t) Bema Gold Corporation $2.4 million = (C$2.07 /C$1.50): 1,739,000 shs Test: BGO.t (C$2.07 /C$1.50): $1.38 / compare: BGO: $1.36 = = = Estimate not right? -from the Aug.2002 Filing of WRM: (5) Mr. Giustra also owns 800,000 2001 Warrants and exercises control over 600,000 Special Warrants. (6) Endeavour Capital Corporation also owns 2,015,000 Common Shares, 5,060,000 2001 Warrants and 1,000,000 Special Warrants. Endeavour Capital Corporation is managed by Endeavour Financial Corporation. Mr. Woodyer is Managing Director of Endeavour Financial Corporation and Mr. Giustra is Chairman of Endeavour Financial Corporation. WRM/ Wheaton: Common shares.....: 2,015,000 Wts.5/03 at C$0.75: 5,060,000 ... "2001 wts": until 23 May 2003 Common ('02 plmt) : 1,000,000 ... 2002 Special wts Wts.?/07?at C$1.65: 0,500,000 ... 2002 Special wts SUMMARY: EDV controls about 8mn shs: or abt. 0.5WRM per EDV share! Note: The 2001 Warrants are exercisable at a price of $0.75 per share and expire on May 23, 2003.
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