A little DD (JDM explained)Just doing a little research and thought I would pass this on. JDM phenom had me intrigued as I was invested in another junior with mineral fields. This is a little dated as 2010 financials are not out....
Mountainboy shows up in the 2009 Pathway Flow though limited partnership financials as an investment. Prospective investors by units in increments of $10,000. From what I can see is the partnership eventually terminates and investors then receive units in their mutual funds (IMPORTANT RE: LIQUIDITY). JDM charges a 10% fee so your 10K is worth 9K but the benefit is associated with the tax benefit of flow throughs. Investors from quebec get a substantial tax benefit in flow-throughs..... something to watch for IMO. Generally speaking and my opinion of course is people invest in the partnerships for the tax benefits and maybe not so much returns of the underlying assets. Even if the partnership value is even (no gain) investors still benefit due to the tax benefit.
I suspect the recent P.P will show up as another pathway investment. I'll bet dime on dollar there is a pretty good churn rate as JDM receives 10% on new investments (Churn = investment turnover/reinvestment)
This is from the 2009 financials:
To provide for potential liquidity and long-term capital growth, on or before April 30, 2011, the
General Partner is authorized to implement a mutual fund rollover transaction (the “liquidity
alternative”) in which the assets of the Partnership will be transferred to a mutual fund, on a tax
deferred basis, in exchange for shares of a mutual fund, following which such shares of the mutual
fund will be distributed to the limited partners, pro rata, on a tax deferred basis.
Here's my conclusions and opinion (do your own due diligence)
1. Partnership termination dates are important to watch. I suspect this is when the initial investments become liquid and redeemable by the investor.
2. In order to meet any liquidity needs the fund will blow out shares regardless of price (do you think people might reload in another partnership? again for tax benefits?)
3. JDM makes money on the initial investments and management fees. I suspect the 10% upfront fee is a big driver and not so much fund appreciation.
4. JDM is investing other peoples money. Selling maybe totally motivated by other factors and not the underlying or potential value of MTB.
5. MTB's approach to raise capital through issuance of flow throughs with one primary group is risky in my opinion as it relates to creating shareholder value. I think liquidity needs at JDM can surpress stock price and they will use positive news to sell into ( kind of hard to sell a large volume of shares on the open market without news and without burying the stock price).
Finally, I think MTB is poised for growth. I won't let the selling pressure discourage me as these results should attract and open the door to more diversified investing. I hope Management reads my post as I'm not sure they fully appreciate what this is doing for general investor sentiment.
Good luck. My opinion only.