AGM – Bogus excuses for not winding-up UrbanaWhen challenged by shareholders at the AGM to wind-up or privatise Urbana (about 16:00 min. and 21:00 min. in the video), Tom Caldwell gives a number of opposing reasons, none of which hold water. Heres a few: 1. The good thing I didnt listen to shareholders years ago and wind-up line. Caldwell says he didnt wind-up on shareholder recommendation years ago (about 18:00 min) implying that shareholders are better off now because he didnt wind-up then, and that he shouldnt wind-up now when results are poor and the discount is so high. The truth is, looking back over ten years, there were no times (other than possibly a few days in 2012) when shareholders would not have been better off getting NAV on wind-up. To arrive at that conclusion Ive assumed that shareholders would earn a market return (1/3 TSX; 2/3 S&P500) on the NAV received. For most of the time during those 10 years, the benefit to shareholders from a wind-up would have been overwhelming; meaning Caldwell should have listened to shareholders back then as now. With the discount near 50% today, Urbana would need to outperform its benchmark annually by about 4% over the next 10 years just to make up the discount, or 8% over 5 years a completely unrealistic expectation. 2. The too hard to liquidate the private holdings excuse. Caldwell says it would be impractical to wind-up because it would take 2 to 5 years to liquidate the private holdings (16:45 min.). This is false. First, of the $74 million in private holdings, $50 million is in operating businesses which should present no problem to sell. Second, for the remaining $24 million, there is a healthy private equity market in Canada, with lots of money looking for a home, so that, so long as the holdings are reasonably valued (the industry uses standard valuation metrics) they would be able to be readily saleable well within a year. Worst case, a discount of 50% on those remaining assets would only represent 5% of the total portfolio. It's worth noting that if it is expected to take 2-5 years to dispose of holdings at their carrying values, then they are being carried at values above their FMV which is improper.