Thursday, March 24, 2011

Urbana, Still Cheap & Doing The Right Thing

Urbana Corp (urb, urb.a) owns a portfolio of stock exchanges with a net asset value of $2.02, yet the voting shares trade for only $1.55. This large discount has lead to investment write ups by respected value investors Saj Karsan and Sahm Adrangi. The 24% discount in the voting shares, decreased from a massive 38% last month as renewed interest in the sector pushed the stock higher. However, the non-voting, class A shares, still remain at an attractive $1.27, a 37% discount to net asset value and management is taking decisive action to help close the gap.

It's important to understand that even if you buy the voting shares you are still in effect giving control to Urbana's President, Tom Caldwell, who owns 45% of the voting shares (as of the 2010 circular). However, Tom has shown great commitment to shareholders by aggressively buying back the non-voting shares. The company has reduced total shares outstanding by approximately 10% since July 2010. In addition, Urbana still has room under their existing buyback.

When I questioned Tom about his commitment to the buyback he replied that

'Normal course issuer bids (buybacks) will be a continuing fact of life for Urbana.'

Given the large discount, I couldn't be happier.

Disclosure: Long Urbana
Update: No position

Click Here for our May 2011 Update.

Click Here for our December 2011 Update. In short, the discount has increased even with a fairly strong buyback. There has been no substantial issuer bid, most likely due to the resulting decrease in fees payable to management. So far this has been a value trap. We continue to urge management to take more meaningful buyback actions. 

Disclaimer: The content contained in this website represents only the opinions of its author(s). We, or clients we advise, may hold long or short positions in securities mentioned in the website. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision.


hardcore value said...

Tom Caldwell still buying!

Thomas S. Caldwell-Urbana Corporation
Urbana Corporation URB.A
3/25/2011 5:07:13 PM
TORONTO, ONTARIO, Mar 25, 2011 (Marketwire via COMTEX News Network) --


Thomas S. Caldwell ("TSC") has acquired 1,005,014 common shares of Urbana Corporation ("Urbana") (TSX:URB.A) pursuant to a private agreement for $1.44 per common share. As a result of this acquisition, TSC now owns 4,231,161 common shares of Urbana representing 42.31% of the issued and outstanding common shares. Additionally, TSC has voting control over 390,361 common shares of Urbana, representing 3.90% of the issued and outstanding common shares, that are subject to previously disclosed voting trust agreements with several other shareholders of Urbana that are employed by Caldwell Financial Ltd. or its subsidiaries, and 137,700 common shares of Urbana, representing 1.38% of the issued and outstanding common shares, that are owned by entities controlled by TSC. In total, TSC currently owns or controls 4,759,222 common shares of Urbana representing 47.59% of the issued and outstanding common shares.

SOURCE: Urbana Corporation

hardcore value said...

great charts on urbana showing the discount to net asset value and the difference between the voting and non voting shares.

hardcore value said...

Urbana Corporation ("Urbana") (TSX:URB.A) announces that NASDAQ OMX Group Inc. and the IntercontinentalExchange Inc. propose to acquire NYSE Euronext ("NYX") for $42.50 in a combination of cash and shares.

The proposed bid represents an approximate premium of 19 percent to the Deutsche Boerse proposal.

Urbana Corporation holds 1,800,000 shares of NYX, representing approximately 40 percent ($62.4 million) of Urbana's investment portfolio.

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