Melcor Developments Ltd T.MRD

Compelling NCIB / DIV

[Thor16]

Company purchased ~250k of stock for cancellation between end of Q1 and today at 40 cents on the dollar compared to book value according to the AGM today.  Keeping in mind each share purchased for cancellation is one less share the dividend needs to be paid on.  Aside from being immediately accretive to NAV if current sales volumes etc continue in their core business you can see what a compelling case this trend can represent for the stock.  Not that this company company is one you'd purchase for dividend purposes however all things considered perhaps the distribution rises in the not too distant future.

[babybunny]

Share buybacks are without a doubt the best possible use of capital for Melcor (and for any company trading at less than half of NAV).  Companies truly dedicated to buybacks, such as Clarke Inc. and Urbana Corp., retire 5% to 10% of their stock each year.     Melcor is constrained by the daily volume rule for NCIBs.  They are allowed to buy back only about 1000 shares per

[Thor16]

Out of curiosity what did the CFO respond? A 10% SIb would increase NAV a lot more than 6% assuming its completed with existing cash and isnt financed with additional debt.

[babybunny]

This was just prior to COVID, when Melcor was trading at close to the current stock price. The CFO stated that the company were trying to repurchase stock, but were held back by the daily volume limit.  She also stated that although block purchases exceeding the daily limit were allowed, and would be welcomed, they rarely have the opportunity to make a block purchase (I believe these need to

[Thor16]

Thanks.  I suspect the Melton family doesn't much have interest in buying back stock.  For them it just increases their position in the company which they already have control and decreases public float.  I could be wrong.  As a minority shareholder obviously it is in our best interest.  If you dialed in to the recent agm I was the one who asked questions about their

[314159]

I own quite a few shares and am very familiar with the company and have corresponded with the investor relations person and attended annual meetings. I discussed share buybacks with them many times over the years to no avail. They are complacent in every way. Q2 should be strong for them. But, we need to keep pressing them.