Our cohort HHappy posted the following recommendation on SH ,Stockman news letter, which we agree with completely and while it is off topic thought you migt find of some interest.Lets hope we hear from Anvil today,
"One of my most disappointing picks , which defies logic is Gendis -GDS,A- TSE.This stock I first mentioned at about $12.50 six months ago.It closed on Friday at $5.15 up .15.There are approx.16,800,000 shares outstanding ,of which two US Mutual Funds own 6.5 million shares and the controling family owns approx. 39 % of the shares.Meaning there is a float of close to 2.6 million shares outstanding.On very low volume selling [perhaps due to margin calls] the stock has cratered to this level .
The company is really more of a holding company and I will attempt to again detail the intrinsic values of its parts to justify why I believe the stock is grossly undervalued both now and even more so after development of some of its holdings.
The oldest division is SAAN stores, a 390+ clothing store chain across Canada.Gendis has a;lready announced that sometime in the next year[assuming market conditions improve] that they plan to sell one half of the company in a share IPO which should net Gendis $9.00 a share.
The bulk of the value of Gendis is now tied to oil and natural gas projects.So that part of the decline in Gendis value can be attributed to the drop in oil and natural gas prices and should these prices rebound ,it should be reflected in the value of Gendis stock.
By far, the most potential is in Gendis' holdings in Fort Chicago-TSE.This is the holding company which owns 26% of the Alliance Pipeline consortium which is building a gas pipeline from Northern British Columbia to the US North East. They have received approval from the US Authorities and the Canadian National Energy Board and are awaiting the Canadian Govt. approval which is expected within a month as all requirements have been complied with.They have already announced a multi million dollar contract has been let for construction of the pipe and formal approval of all monies required for the Alliance Pipeline has been approved by a consortium of 45 major international banks Alliance will also own the Aux Sable NGL plant to be constructed in Chicago.
Gendis owns 14,688,610 units of Fort Chicago or 22.25% making it the largest unit holder in Fort Chicago.Thus ,this holding alone [with Fort Chicago closing price of $5.90] justifies the current price of Gendis.It is anticipated that the pipeline and and NGL plant will begin producing cash flow in 2000.The value to Fort Chicago should conservatively achieve 8-10 million dollars annually.Gendis anticipates being able to provide a dividend to its shareholders of .24 to .27 a share with 50% of its share of earnings being kept for other corporate uses.
Gendis is currently pursuing in a court case, with Discovery scheduled to start in late October, enforcement of a deal made to sell their 50% holding in Tundra Oil and Gas, which should net the company 36-39 million dollars.
Gendis also owns 6,253,632 shares of Pioneer Natural Resources-PDX-NYSE [closed at $12.81 US-19.00CDN] approx. $7.00 value per Gendis share.Pioneer sold at $43.00US before oil and gas prices collapsed so there is plenty of upside potential for Gendis if oil and gas prices rise as predicted.
Gendis Real Estate holdings are valued at a minimum of $45-50 million.
Their only debt is a low interest loan to Trilon of $ 118 million.
My sources tell me Gendis has hired a public relations firm in order to better present their story to the investment community and stimulate the market to more properly evaluate their present worth and healthy future prospects.
If I could recommend the stock at $12.50, I certainly think it is a screaming buy at $5.15 but everyone should do their own due dil, apparently I must have missed something in my original call [actually thought at the time there might be a takeover offer]." |
