Some months ago I looked at DGR and I found it impossible to understand all of the cross ownership relationships.... so decided it was too hard for me. My worry with companies which essential are really investment vehicles rather than focused businesses is... what's in it for the retail investor? The register is likely to be very top heavy, the SP doesn't have to reflect the value of the assets held and the corporate structure is likely to be opaque. In short... my suspicion is these things might be set up to suit the main holders and nothing more.
Having said that... I do think there can be value in running the FA ruler over some of the things that such companies hold [if those assets can be bought into independently]. A couple of examples...
Kirkland Lake [KLA] listed last year on the ASX. Its main asset in Oz is the Fosterville gold mine which seems very profitable but KLA has the bulk of its assets in Canada. KLA does appear to be something of an investment vehicle for Eric Sprott. In that regard it holds something like 10% of DEG. Sprott has made a big bet on the conglomerate gold story which was all the rage this time last year. DGO also has about 7% of DEG. Both companies hold instruments which will allow them to increase their holdings.
In recent weeks ALK announced 2 strategic purchases. An 8.8% buy of CAI [Calidus... a gold explorer in WA] and a 12% buy of EXU [Explaurum ... also a WA junior gold explorer].
Both KLA and ALK seem sound enough as investments.... but the real question is how much growth outlook do you get for your buck? KLA currently seems appropriately priced and ALK is a perennial disappointment. On the other hand DEG, CAI and EXU might be undervalued specs which, if they can demonstrate their value, will bring a greater return for the retail investor by buying directly into them. As always it is a gamble.... but at least one can be assured that some hefty due diligence has gone into the moves done by the large corporate interests.
[Disclosure: I sometimes hold DEG, looked hard at CAI but have never bought and I know next to nothing about EXU.... just throwing these things up for the sake of the discussion]
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