Dragon Ukrainian Property

Just exited my Dragon Ukrainian Property position at a touch over 15p.  This is a pretty disappointing result.  It is far less than the company’s NAV which is more than double this amount.

The tender offer has been accepted by over 50% (59.61%) of the shareholders at 15p.  This means it will happen.  The remaining shareholders have until August the first to tender (brokers may have earlier deadlines)   If more than 75% accept it’s likely the company will be delisted, if 90% accept the minority gets squeezed out.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

London Property Is Leading The Downturn

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More


Looking at who owns what, 90% will not be achieved and 75% seems very unlikely, but not impossible.

I think they were able to achieve this in part due to their RNS saying they would put another $5m into the oblon residences – drawing out capital returns.  This could, of course, be a bluff on the part of management.

One of my few investing rules is I don’t go into companies with dominant shareholders (45%+).  As a little guy I simply do not trust I will be treated fairly so I stay away.  This has both saved and cost me quite a bit over the years…  As with all rules, I will bend on occasion, but not this time.

I could be missing out – one likely option is another offer at a fairer price in 12-24 months time.  Another option is a change in investing mandate/fall in the share price, though I think this is less likely.  I suspect the remainder will be tightly held so there will be few interested sellers. Ukraine is a volatile environment to hold and I wouldn’t want to hold long term at this price, even though most of the property is in the safer east.   I’m also increasingly nervous about delisting.

Not overly happy at this – I dont enjoy selling things for less than they are worth but in this case I think its the best way to proceed.  Best way to do it is look for a bid north of 15p, or if you have to tender.

Made about 14% on my post in May.

https://deepvalueinvestments.wordpress.com/2017/05/31/dupd-almost-free-put-option-on-offer/comment-page-1/#comment-403

I am up 33% against the post in February 2016.  This isnt as good as it sounds as I had to wait much longer after the capital return…

https://deepvalueinvestments.wordpress.com/2016/02/05/dupd-it-trading-at-near-cash-value-discount-of-75/

I am struggling a bit for new ideas with markets looking pretty fairly valued.  Ideas are, as ever, appreciated.