Brief Company History: In 1947 Frederick Allen Boylen incorporated Macho River Gold mines to enter the business of mineral exploration with the focus on the Urban Township in Quebec. Through several incarnations the company became Urbana and has been led by its chairman Thomas Caldwell since 1980. It remained relatively dormant for 23 years with small funds being thrown at exploring the Urban Township property in Quebec. Around 2003, under the leadership of Thomas Caldwell Urbana transformed to a pooled fund concentrated in a single asset class: securities exchanges that were going public or merging. In 2005 it changed its principal business activity from mineral exploration to investment. Over time, Urbana has become much more diversified in asset classes and geographic scope. In its current state it is an investment holding company that focuses on a portfolio of publicly traded securities and private exchanges/investments.

Getting into Exchanges: Over the course of 2003-2004 Urbana spent approx. 5.7M CAD to buy 3 seats of the NYSE in anticipation of demutualization and the IPO. In 2005 when the demutualization happened the shares were worth $12M and then $23M by March 2006.

A good Idea taken too far: With this insight (demutualization of exchanges) taken to an extreme Caldwell raised $200M in 2007 to go on a buying spree of private and public exchanges with almost half of this amount invested in NYSE shares. Other exchanges picked up on this buying spree where stakes in the Bombay Stock Exchange and CBOE. Due to the inopportune timing of the purchases and the rise of alternative trading systems most of the NYSE purchase was sold at the loss in the years following the crisis. The CBOE Holdings ended up faring better over this time period as futures exchanges are more of a closed trading system and some shares are still held.

Key Players: Thomas Caldwell (73) and his son Brendan (46) own approx. 55% of the common voting shares thereby establishing hard control of the holding company and having some skin in the game. As of the most recent close price this economic interest is worth approx. $17M. Paradoxically the pair also own 86% of Caldwell Financial, the parent company of the fund’s investment manager (Caldwell Investment Management-CIM) thus it is important to also establish whether they are fleecing the company. Over the past 12 months the fund has paid $4M in investment management fees to CIM, $1.3M in administrative cost for the use of Caldwell’s Financial office, investor relation services & accounting services and $0.35M in trading cost to Caldwell Securities. This total of $5.65M Is approximately $2.5% of net average net assets ($221M) over this period. The model for stewardship is obviously Berkshire Hathaway where the manager participates in equity together with shareholders but 2.5% is not entirely out of whack considering most of these services are absolutely necessary and the Caldwell’s have delivered on NAV per share growth over this period (see below).

Are they Caldwells good capital allocators? Above average but not out of this world. They have had some huge wins such as NYSE before demutualized, CBOE Holdings (Cost $5M, Fair Value $19M), Teck Resources in 2016 (up 330% over holding period in later 2015 till present), Bank of America (Cost $12M, Fair Value $26) Real Matters (see below) but also their fair share of misses (Bombay Stock Exchange, AGF, Bermuda Stock Exchange).
Caldwell has made it clear that he does not intend on liquidating the fund in order to resolve the discount to NAV issue. He is of the view that the advantages of permanent capital and affording daily liquidity to current shareholders outweigh the disadvantages and I tend to agree with him. From October 1, 2002, the date when Caldwell Investment Management started managing Urbana’s investment portfolio, to June 30, 2017, the CAGR of Urbana’s net assets per share has been 16.2%. During the same period, the CAGR of the S&P/TSX Index was 9.1% and the CAGR of the DJIA Index was 10.0%.

Urbana Township: Urbana Corp has owned mineral claims in Urbana Township located in Urbana-Barry Greenstone belt in Quebec for decades giving it rights to 44 claims ( 2,756.31 acres) in a very active belt of gold deposits. Urbana entered into an exploration partnership with Beaufield Resources in November 2014 to further explore the area. It spend 460K on mining expenses in 2016 and 180K in 2015. The Intention is to do a deal with a mining partner (JV, royalties) as opposed to becoming a fully-fledged miner but no ore body tonnage has been proven as yet. I pulled up annual reports as far I could find on SEDAR (1997) and even then, the company spoke of exploration on the same parcel of land and had spend $200k to buy out a minority shareholder to hold all 48 Claims or the urban township so I wouldn’t quite bet the house on their prospects. A winter drilling program found 13.0 g/t gold and 0.8% copper over 1.23 metres on the parcel of land. Through conversations with geologist and investor relations presentations this find is apparently promising but still far from conclusive. I believe the way to view this is as a free option as long as exploration costs are kept at a minimal.

Dividend: $0.05 per share in each of the past 3 years but In Jan 2017 Urbana paid the regular $0.05 dividend and a special $0.05.

Shares Outstanding: 10 Million common shares (voting) and 40 Million Class A shares (non voting). Repurchased approx. 37M shares over the past 10 years. Reducing share count by almost 40%, all at discounts to NAV.

The opportunity: Shares are currently trading at a 31% discount to NAV/ Potential upside of 45% if the gap to close. The discount has been slowly decreasing over the past few years.

Why should the discount close? Although there is no way to be certain, 3 major events are happening over the next 6 months that will make the companies portfolio more liquid and possibly enhance investor confidence.


1. Urbana’s renewal of the NCIB to purchase up to approx. 4M of its non-voting Class A shares, representing 10% of the public float.
2. An Urbana holding, Real Matters went public in May 2017. The company is a Canadian effort to digitize the mortgage appraisal process. Urbana’s purchases started in Dec 2013 with 5 total financings in the private market at a cost of $12.8M and current market value of $29.5M (12% of Assets) as of Sept 15th 2017. It becomes freely tradeable on November 7th when the lockup period ends.
3. The Bombay Stock Exchange went public in Feb 2017, Urbana was able to sell 26% of its holding with the balance subject to lockup provisions. On Feb 1 2018 the balance is able to be fully sold. This balance of is currently $23M (9.3% of assets).
-Urbana’s Portfolio is currently 58.5% liquid public market equities and 41.5% illiquid. The above transactions would make the split 80% in favour of public equities. Of the remaining 20% of private assets, the main stakes are in the Canadian Securities Exchange (4.25% of assets), 2 Private Equity Funds that have been performing quite well (Radar Capital I & II- 3.8% of assets and Highview Financial Holdings (an outsourced CIO office – 3.26% of assets).

1. As the portfolio becomes more liquid, the capital is allocated poorly.
2. The Caldwells abuse their hard control of the company.

*Fun fact: In 2016 Caldwell took out a newspaper ad to apologize for punching a classmate 65 years ago. See story here . Also both Thomas and Brendan have a great sense of humor which is always a good thing.
*All dollar figures are CAD. See here for NAV breakdown

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