{"id":334110,"date":"2011-05-30T10:59:00","date_gmt":"2011-05-30T15:59:00","guid":{"rendered":"https:\/\/www.investmentexecutive.com\/uncategorized\/news-58300\/"},"modified":"2019-10-30T02:03:27","modified_gmt":"2019-10-30T06:03:27","slug":"news-58300","status":"publish","type":"post","link":"https:\/\/www.investmentexecutive.com\/newspaper_\/news-newspaper\/news-58300\/","title":{"rendered":"Investing to weather the coming storms"},"content":{"rendered":"<p>The sale of mutual fund and financial planning giant DundeeWealth Inc. to Bank of Nova Scotia that was completed in early February has placed Ned Goodman, the founder and president of the former\u2019s parent company, Dundee Corp., in an enviable position. (All three companies are based in Toronto.) <BR><BR>The sale of DundeeWealth has rewarded Dundee with a hoard of Scotiabank common and preferred shares as part of the payment exchanged for Dundee\u2019s 48% stake in DundeeWealth. If Goodman, whose family controls 80% of Dundee, desires, he could simply bask in a river of steady dividend income from the Scotiabank shares. But the entrepreneurial and tenacious Goodman is not content to rest and merely rake in dividends. <BR><BR>Since engineering the takeover deal that valued DundeeWealth at $3.2 billion, Goodman, 73, has been applying his formidable energy to discovering, financing and nurturing young companies dealing in hard assets such as gold, base metals, energy, agriculture and land. He believes these are the sectors best equipped to survive the looming threats of worldwide currency depreciation and the accompanying inflation. <BR><BR>\u201cThe world does not have sufficient resources,\u201d says Goodman, \u201cto fulfil the growth in demand [resulting from] population increases and the rising middle class in emerging markets. A lot more must be discovered, developed and brought to market.\u201d<BR><BR>He says the stimulative measures used by governments to ward off the financial crisis that began in 2008 will have \u201cunintended consequences\u201d as a result of the increased money supply \u2014 and inflation is one of those key dangers. Goodman is putting his faith in hard assets that typically retain their value in inflationary times.<BR><BR>\u201cIf you produce too much of anything,\u201d says Goodman, \u201cit goes down in value \u2014 that includes cars, watches or paper currency.\u201d <BR><BR>Debt-ridden countries such as the U.S. are not admitting it, he adds, but they have an interest in depreciating their currencies as a means of devaluing their massive debts. At the same time, there is growing demand for natural resources as heavily populated countries such as China and India become wealthier and look to secure future commodity supplies. <BR><BR>A talented combination of geo-logist and merchant banker, Goodman has amassed his fortune by getting in on the ground floor of Canadian mining success stories such as Kinross Gold Corp., Corona Gold Corp. and Franco-Nevada Corp., as well as by nurturing DundeeWealth to the point at which its top-performing fund family, Dynamic Funds Ltd., had more than $30 billion in assets under management before the Scotiabank takeover.<BR><BR>Goodman has risk-taking in his bones, but is enjoying it more than ever now that he has the security that comes with playing with a safety net. The $21-a-share price paid by Scotiabank, largely paid in Scotiabank common and preferred shares, left Dundee with what Goodman estimates to be about $1.4 billion in \u201cScotia paper\u201d throwing off about $60 million a year in dividends. <BR><BR>\u201cThroughout my career, I\u2019ve always been willing to wait until the fat pitch shows up,\u201d says Goodman. \u201cI\u2019m always at bat, and constantly seeing things go by. When the offer is unbelievably good, I sell something and buy something else.\u201d<BR><BR>Right now, Scotiabank shares are a good place to hold money, he says, but they\u2019re highly liquid should he wish to sell. The shares pay a higher yield than the money market and the bank has a 180-year history of healthy returns.@page_break@\u201cThis is the first time in my life I\u2019ve had such a level of steady cash flow, and it feels comfortable,\u201d says Goodman. \u201cI\u2019ve spent my life buying, building and selling companies. I no longer have to worry that I might have to scramble and sell something to meet the payroll.\u201d <BR><BR>One area that Goodman wants to focus on is helping to finance resources deals that tend not to interest the big bank-owned securities firms. To do this, he wants to expand the business of <b>Dundee Capital Markets Inc. <\/b>, a DundeeWealth subsidiary that was spun off as a public company when DundeeWealth was sold to Scotiabank. Dundee has a 48% stake in Dundee Capital, a full-service securities dealer involved in research, sales and trading of securities, investment banking and the provision of financing and advisory services to public and private companies. <BR><BR>\u201cThere are a lot of companies looking for capital and a lot of good deals out there,\u201d Goodman says. \u201cWe don\u2019t just want to be an underwriter of companies; we want to be a participant in the equity issues we do. We won\u2019t do an underwriting of a company we wouldn\u2019t own ourselves.\u201d <BR><BR>The rising prices for commodities such as oil, gold and other metals is making properties that once were uneconomical worth looking at, Goodman says: \u201cA lot of companies are looking for capital. We\u2019ve built a research team of mining engineers, geologists and geophysicists, and picked a niche the banks are not interested in, and will finance and buy things the banks don\u2019t want to touch.\u201d<BR><BR>As a big underwriter of flow-through shares through Dundee and predecessor companies, Goodman has seen virtually all the exploration plays in Canada.<BR><BR>\u201cIt\u2019s like having quasi-inside information,\u201d he says. \u201cWe have a deep knowledge of companies at an early stage, before most people know anything about them.\u201d <BR><BR>Dundee also has other arrows in its quiver. Investments include a 54% interest in Eurogas Corp., an oil and natural gas company; 23% of Dundee Precious Metals Inc., a global mining company with operations in such areas as Namibia and Armenia; and 25% of Breakwater Resources Ltd., a producer of zinc, copper, lead and precious metals. <BR><BR>Dundee also carries out third-party asset-management activities through both <b>Ned Goodman Investment Counsel Ltd. <\/b> and Dundee Real Estate Asset Management, the asset-management division of 70%-owned <b>Dundee Realty Corp. <\/b> Dundee Realty has large holdings of commercial real estate, including land and housing projects in Western Canada and condominium projects in Toronto\u2019s Distillery District and downtown, as well as in Vancouver\u2019s Corktown. In total, Dundee has about $12 billion in AUM and assets under administration. <BR><BR>The assets managed by Ned Goodman Investment Counsel include Dynamic Focus+ Resource Fund, bought by Scotiabank with the purchase of DundeeWealth. The fund has had a stellar track record, showing an average annual return of 16.8% for the five years ended April 30, vs its category average of 5.6%. <BR><BR>Another project benefiting from Goodman\u2019s investment-management touch is <b>Dundee Global Resource Fund<\/b>, a private investment fund to which Dundee Corp. has committed $500 million and is hoping to raise at least an equivalent amount from large investors around the world, including pension funds and sovereign wealth funds. Goodman has been knocking on doors in China and the Middle East. <BR><BR>CMP Gold Trust, a publicly listed, closed-end fund that invests in bullion and securities, is also managed by Goodman, as is a private hedge fund called Ravensden Alternative Group.<BR><BR>Goodman is relishing the idea of casting his net around the globe, seeking investors, assembling strong management and good properties, providing early-stage financing and watching the alchemy happen. <BR><BR>\u201cWork is good for me; I get tired if I don\u2019t work,\u201d he says. \u201cRetirement is a terrible disease.\u201d\t<b>IE<\/b><BR><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dundee Corp.\u2019s Ned Goodman seeks hard assets to cope with the inflation and currency devaluation that he sees on the horizon<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3021],"tags":[2403],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/334110"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=334110"}],"version-history":[{"count":1,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/334110\/revisions"}],"predecessor-version":[{"id":374048,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/334110\/revisions\/374048"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=334110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=334110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=334110"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=334110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}