Rubicon

[donner]

Does anyone rate this at the moment?

Its fallen about 15-20% from levels that it had held for a long time. They have bought in to TEN and will have to announce their new value for Arborgen when the day comes to report.

I see the NY fund Third Avenue has increased their stake also recently.

I'm picking, post-June 30th this will be re-rated about 30% from these levels.

[Paper Tiger]

up or down?
And more specifically why?

[Westie]

Third ave's stated investment strategy is to invest in co's that are trading at discounts of at least 30% from "readily ascertainable asset values". They are expecting tenon to sell its Nth American distribution business.

[TerryA]

Westie,

>>They are expecting tenon to sell its Nth American distribution business. <<

Didn't Tenon recently buy parts more North American mouldings and distribution business ?

[Westie]

Yes & yes. Read the last quarter report for the international fund on third ave's website. They are picking more assets will be divested.

Tenon has also recently invested more money in its Nth American distribution business.

I haven't yet had the time, but i'd like to research what the carrying value vs the market value of the distribution businesses are. I'm not certain, but I believe Tenon bought private businesses and often these sell at lower multiples than what the market is willing to pay for a similar listed business

[Lizard]

But if they like Tenon, why not buy TEN shares, seeing as you get a much larger share in TEN $ for $ than you do buying RBC?

[Westie]

Read the third ave reports, they believed when buying at around 97c p/s that RBC was selling at a substantial discount to asset value & their largest holding, tenon, was also selling at a discount. So their logic is buy RBC & you get tenon + the other assets of RBC. Kind of two for one.

Don't forget, as substantial shareholders they can wield influence over the decisions of the board/management, so with a substantial holding in RBC, & given RBC's control of tenon, they have influence over both businesses. They'll have little clout if they only held tenon. That's how i understand it anyway. Our perspectives are different from theirs, because their stakeholding is of a different nature.

I'm really interested to see what happens with RBC because they now have GPG, Perry, & Third Ave on board. I've just started reading Marty Whitman's(Third Ave) book "value investing" again, he really hammers the "resource conversion/balance sheet" perspective on investing. So when you look at what RBC & Ten offer (with virtually debt free balance sheets) it makes sense for them to be in RBC

RUBICON’S assets:
• 50.1 stake in Tenon
• 50% stake in Horizon 2, a NZ tree cloning company half-owned by CHH
• 32% stake in Aborgen, a US-based tree biotechnology consortium
• 50% stake in Forestadora Tapebicua, an Argentinian eucalypt forest and timber processing business
• 2.8% stake in listed genomics company Genesis Research and Development

TENON’S assets:
Manufacturing facilities
• three North Island sawmills
• Mt Manganui plywood mill
• Taupo mouldings plant and boards plant
• Kawerau remanufacturing plant
• Ramsay Roundwood supplying post, piles, poles and other landscaping products

Distribution ownership:
• 50% stake in American Wood Moulding, a US moulding and millwork distributor, whose major customer is The Home Depot
• 67% stake in The Empire Company, a US moulding and millwork distributor whose major customer is Lowe’s
• 20% stake in Zenia House, a Danish solid wood furniture, manufacturer and distributor

(the above is a little outdated now with the mill sales & incr investment by ten in the distribution assets)

[neopole]

Rubicon to Change Balance Date to june 30.

thats just around the corner.
when would investors likely see the numbers?
anyone?

[donner]

Last year they reported on the last possible day. Don't think it will be different this year.

[Westie]

just about touching the 52 week high :)

[ari]

quote:Last year they reported on the last possible day. Don't think it will be different this year.
Not till late August, and that is for 15mth period.

[Paper Tiger]

The full year report is available here (http://stocknessmonster.com/news-item?S=RBC&E=NZSE&N=119673)

[Taijon]

The second to last paragraph reads:

Shareholders will be aware that Rubicon itself had $71 million of cash on itsbalance sheet at the end of the financial year. Rubicon has a strong trackrecord of using its cash to maximise value for shareholders. We have not beenafraid to invest capital where that is appropriate (our continued funding ofArborGen and our takeover of Tenon are good examples of this) and we havealso returned cash to shareholders when that has been the best use of ourcapital (we returned $60 million of cash to shareholders by way of anon-market buy-back in our first year of operation). Shareholders should beconfident that we will adopt the same disciplined approach we have shown inthe past to the use of our current cash balance.

I find this "trust us we know what we are doing on your behalf" approach a bit disappointing. I was hoping for another capital return but it looks as if the company is going to be around for quite a few years yet.

Any comments?

[donner]

I see they seem to be setting up Horizon 2 as the manufacturing arm of Arborgen. Much the same way if a biotech discovers a medicine they have to produce the pills or tubes or ointment on a mass scale in a factory somewhere.

Arbo is very close to being commercial and there is one passage there that suggests a NASDAQ float or some kind of capital restructurign is on their minds.

They also say it will now be treated as a business not a JV. But don't reveal a valuation. Looking forward to the hard copy to see what the valuation will be. And what GEN have missed out on.

[donner]

I find this para. particularly intriguing.

In last year's Annual Report we noted that our shares were trading at closeto the Company's book value, and that our goal was to have Rubicon trading atsubstantially above the asset values recorded in our annual financialstatements. We have made considerable progress towards this objective in theyear, with Rubicon shares ending the period trading at a 24% premium to ourhistoric cost book values - a clear statement of the faith that ourshareholders now have in Rubicon's future prospects.

Why the mention of historic values here? Shouldn't it be current book values that matter? Therefore is the current 24% premium of historic values at a discount to even greater premium to current bok values?

They have to reveal all in their accounts sometime next month when it comes to the valuation of Arborgen. I expect the current price will be a discount to the current book value. Technically the charts seem to be supporting such a theory. Watch for a break out in about a month or so.

Lets not forget that the NY fund 3rd Avenue see fit to buy it up big in the last quarter. Not to mention GPG or Perry. Hang on to your hats when it comes.