Craven House Capital Share Discussion Threads

[rusty9717] 10/12/2020 14:03

Another Pajak blinder.
Struggle to find a worse CEO and there are plenty to choose from.
Once had decent investment in a hotel about 5 years ago.
Rest are a total car crash.

[baner] 09/12/2020 12:00

what a clown company this is !! pathetic announcement this morning . they seems to be absolutely desperate to push the share price north. mr pajak has an additional reason to be ashamed of himself.

[rusty9717] 08/7/2020 12:02

Glad I got out of these quite a while ago.
Mr Pajak one of the most arrogant CEOs I have met which is quite surprising considering his performance on nearly every investment has been absolute dog dirt.
Speaking in riddles delivering nothing.

[baner] 02/6/2020 09:44

the website interests Pajak paid $8m for very recently (in the midst of the Corona depressions) are now valued at ca $3m - maybe not a personal record for Pajak, but still an absolutely terrible transaction initiated by him. any one surprised?

[cjohn] 05/5/2020 17:07

The websites are surely worth even less than worthless. A negative value, in my view.

Sadly, M Pajak genuinely seems to believe in his new e-commerce departure. So probably not aware of the value destruction.

[baner] 05/5/2020 08:41

first the BOD give away $8m of CH shares for a group of "worthless" websites and now they de-list the bulk of the company´s assets for no good reasons at all. clearly the directors of Craven House must be aware that they destroy values for the company and its shareholders - which is in direct conflict with their fiduciary duties. i expect we will see some legal actions taking place against these persons in the near future.

[baner] 18/2/2020 09:10

Cjohn

u r welcome! they have waived all entitlement to a fee so now they must take the NAV from 10 upwards in order to earn one. clearly they seem to have a plan in place convincing enough for new investors to pay 10 for their shares. my impression is they are loading the gun in order to move assets and attention over from africa and similar places, to north america and maybe europe. no doubt this would be positive for investors, allowing us to better understand the potential value, and liquidity, of the assets. to bring new money in at 10 one would assume they have presented a credible plan to invest funds in a way taking the 10 to a higher value soon. why would investors otherwise put new money into the company at this price?

[cjohn] 18/2/2020 08:46

Baner "In the jan 2, 2020 Update the company confirm the 1.66m ”performance fee” has been waived. Full stop"

Well thanks very much for the correction. I appreciate it. I don't know how I missed that. It just shows the value of conversation, particularly with people with a different perspective.

I'm assuming they'll take the performance fee at some point!

[baner] 18/2/2020 08:27

CJohn

In the jan 2, 2020 Update the company confirm the 1.66m ”performance fee” has been waived. Full stop.

[daicaprice] 18/2/2020 07:59

Another $2m raised on same terms.

DC

[cjohn] 17/2/2020 23:31

Hi Baner,

this is from the latest annual report:

".. the Investment Manager is entitled to receive a management performance fee equal to 20% of the increase in the net asset value per share above the prior 'high-water mark', subject to a hurdle rate of at least 5%. The Investment Manager agreed to waive payment of the performance fee in the prior two periods (May 2017 and May 2018). For the year to May 2019 the Investment Manager has been awarded a performance fee of $1.66m, which has been accrued under trade payables. This fee is calculated on the increase in NAV per share from the previous 'high-water mark' of $6.57 in May 2016 to the NAV per share of $9.89 per share as of May 2019. As has been the case with all prior performance fees, the Investment Manager will accept payment of fees in shares of Craven at $12.50 per share."

So the "performance fee" was waived in the prior two periods (up to May 17 and May 18), but will be taken for the period up to May 2019.

Overall, of course, the total fee taken will be similar (slightly less as NAV has dropped a little this year) to what would have been taken, if they'd taken the fee in 2018 or 2017.

[baner] 17/2/2020 19:27

the "performance" fee has been waived so no shares to be issued at 12.50.

[cjohn] 15/2/2020 21:34

Hi Baner,

You are right. Gyllenhammer will have had a thorough look at the assets, including DLC's land in Brazil, its SA food manufacturer etc.

Obviously, if you don't like illiquid assets, CRV and DLC are not for you. I, personally, would not put any store by mark to market valuations of DLC; which as you know are a reflection of the latest tiny trades in the shares.

As you're probbaly aware, the $1.66m "success fee" for increase in NAV is being taken in CRV shares, each share to be valued at $12.50 ie at a very significant premium to the current CRV market price. (I admit I don't like management being paid either. It's one of life's small miseries that they won't work for free.)

I'm not sure why you think shareholders can't benefit from a rise in the share price. How could management go about not "allow" -ing that?


Should they follow your suggestion and liquidate the assets and return cash? A number of the assets are really not at that stage. Strategically, it would be a very
strange decision. I honestly don't think it would maximise shareholder value.

[baner] 14/2/2020 17:17

hi CJohn,

i was referring to the latest audited accounts in which the DLC shares are valued at 27c. the "market price" today is rather below 10c. this asset is more or less totally illiquid. what the underlying assets in the company really are worth.......who knows. idle land in Brazil is another illiquid asset and i would personally not bet on a food manufacturer in S.A.

i am sure mr Gillenhammer has had a good look at the assets and found them reasonably OK, however does this guarantee that the management actually will allow shareholders to benefit from this? the recent charge of $1.66m for a "success fee" no doubt raise some concerns in that respect!

i believe that if the board really are keen to fulfil their duties towards all shareholders, they should liquidate the assets in an orderly way and then distribute the cash to shareholders pro rata.

[cjohn] 14/2/2020 16:36

Hi Baner, this is what they say at the latest Portfolio and NAV update on DLC, dated the 2nd January:

….. The valuation ascribed to CIH's shareholding in DLC in CRV's financial statements reflects the published share price of DLC's shares as of 30 November multiplied by the number of shares owned by CIH. The valuation of DLC has decreased as a result in a drop in the mark-to-market valuation of the shares on the 30 November vs. the 31 May. Whilst the share price reduced from CAD$0.27 to CAD$0.12 during this period……


So DLC is valued at 12 cents in the latest portfolio update. ($3.956k down from $8,757k)

A market price of 27 cents is itself at a significant discount to DLC's asset value.

We can have some added confidence in the reality of balance sheet asset values because of the very substantial interest of P Gyllenhammer in the company. As I'm sure you're aware, Gyllenhammer, is not a total idiot and will have done extensive investigations of the reliability of asset valuations.

[baner] 13/2/2020 16:39

but to get to the 10/share they have valued DLC at 27c/share ! the "market" price if any is rather below 10c and who knows what the value of the african factory and the land in brazil is for real.......

of course they should use the placing cash to buy back shares - they sell at 10 and buy at 4 - the best deal this team has managed to make for years! but i assume they "have identified even better investments"..........so help us all.

[cjohn] 13/2/2020 11:14

Ok thanks for your thoughts, Baner.

I took a look at Kalimtgis's biography. It seems pretty standard with some appointments to solid positions in well-known banks etc etc Typical progression from lowly researcher to executive roles.

Blimey, if they lost "trillions" the whole of the US financial system would have collapsed!



CRV is usually highly illiquid, with exorbitant spreads. Something PI's have complained about unendingly. I know from my own occasional attempts that picking up anything larger than pretty small amounts can shift the share price dramatically.

I agree with you that share buybacks make good sense. We just need an asset sale to give us some cash. (Could the placing cash be used for buy backs?)

Close to $10 per share is the balance sheet value. To take just one example, CRV's holding in DLC is marked to market. At the last results, DLC's share price had dropped notably, market valuing DLC at well below its net asset value.

[baner] 13/2/2020 09:52

CJOHN

Kalimtgis i believe was part of a trading group at one of the major US Banks - that lost "trillions" on stupid betting. he has been in and out of a number of financial entities - never a good sign. probably a good salesperson though.

late last year there were rather big volumes (hundreds of thousands) traded at around $2 per share. they who bought these shares must be very pleased with the current Placing.........so much for the "thin trade".

given the managers track record in recent years - where will they find a better opportunity than to buy $10 for $3-4?

where do you see additional values in excess of the claimed $10/share ?

[cjohn] 12/2/2020 13:18

baner
12 Feb '20 - 09:09 - 175 of 177
0 0 0
i did some research on mr Evan K - not too impressive..........



Would you care to share what you have found?


Kalimtgis is already a substantial holder, so the transaction counts as a related party transaction.


You're right to say, Knitcraft, that the shares are very tightly held. Any sustained buying pushes the share price up very rapidly. As today's dramatic share price rise on quite small volumes demonstrates.

This is the obvious reason why Kalimtgis and others involved in the placing wouldn't try to acquire very large numbers of shares in the open market. They would calculate that 1. It would most likely be impossible. 2. If it were possible, it would likely end up being more expensive per share than through such a placing.


You mention the promise of share buy backs. As I understand it, these were to happen,

1. If there was cash available after asset sales.
2. There was no other better use for the spare capital in the eyes of management.

Neither of these conditions have been fulfilled. (Though 2, of course, is a matter of management's opinion.)


One important factor to bear in mind is that the audited NAV probably significantly under-states real-life NAV, (look at the mark-to-market valuation given to DLC holdings at the last results, for starters.) irrespective of any potential future transactions.

[knitcraft] 12/2/2020 10:14

There are never any shares available to buy in the market!!

[daicaprice] 12/2/2020 09:22

Yup that just about sums up what’s been asked here and elsewhere regarding Craven House.

DC

[baner] 12/2/2020 09:09

i did some research on mr Evan K - not too impressive............the whole thing is a mystery - why is he not buying stock in the market at 40% of the issue price? is he in possession of further inside information - if so, how can the company issue new shares outside of existing shareholders? and why has the company not commenced with its stated buy back program when the shares have been trading at 25% of the claimed NAV?

[baner] 12/2/2020 08:37

DC

you are absolutely right - the BOD of this company are not really interested in informing their shareholders what plans they have, in order to deliver value to the owners. in my view the current directors should be thrown out and be replaced with more professional and shareholder-friendly people.