CEO and President: James Cohen
WSA: Good day from Wall Street. This is Juan Costello, Senior Analyst with The Wall Street Analyzer. Joining us today is James Cohen, CEO and President for Gendis, Incorporated. The company trades on the Toronto Stock Exchange, ticker symbol is GDS. Thanks for joining us again today James.
James Cohen: My pleasure Juan. Good to be here.
WSA: Great, this is an update from our interview back in December. Starting off can you give us a breakdown of your three key business segments?
James Cohen: Certainly. So we are an investment holding company. We have three sectors that we are actively invested in, the first one being commercial real estate. We have a portfolio of properties that are fully leased and you know, they – tenants range from retail operators to a company that actually distributes about 95% of the beer consumed in the province we are located in, which is Manitoba here in Canada, and we have Manitoba Hydro, which is a tenant, and – so, we have – you know, we have very good tenants right down the line.
Then we are actively invested in the energy sector. We have investments in a pipeline company, oil and gas explorers, and also we recently made a small investment in a waste energy company. It is a Canadian company that is – it is sort of in the start-up phase and there – their technology is being utilized in plants ranging from Barbados to the United Kingdom, and that is an area that I am really interested in, the waste energy sector. It is very predominant in Europe, parts of Asia and actually parts of the United States, and it is just sort of taking hold in a number of communities here in Canada.
And thirdly, for the last couple of years we have made some small initial investments in the agribusiness sector. It is another area that I am really interested in. As I have mentioned in past interviews, you know, there is a lot of stories…
James Cohen:…About global population growth, how are we going to feed all these extra mouths coming into the world everyday, and you know, if they are not making any more land. So the existing land has to be utilized more efficiently. So, I am trying to gear the company into, you know, besides real estate, energy and food are two things that we are always going to need and they kind of go hand in hand. So that is what we are looking at investing in going forward and it is quite exciting.
WSA: Good, good and so in terms of your energy business, can you talk about some of the recent results regarding Osum Oilsands Corp.?
James Cohen: Yeah, for sure Juan. We – we invested in Osum back in 2006. So it is going on eight years now. It was August of 2006, and we have been very patient investors. We provided some of the very early money in that company and you know, we have held on to most of our shares. We have lightened up a little bit. It trades on the grey market because it is still a private company. We are hoping that in the next year or so they, you know, they are at some point looking at going public. They don’t have any target date and they have been very cautious on that front.
You know, they want to build the assets to a certain base before any IPO comes forth, but they did announce in June that they had picked up some assets from Shell Canada for about $325 million and this is sort of going to take Osum to the next step because the – the assets are called the Orion project in Alberta and they averaged about 6700 barrels of oil per day from 22 wells in their most recent quarter, and you know, this will bring fairly substantial production into Osum on a daily basis and they plan to grow from there and it is – it is another milestone for that company.
We have about 1.6 million shares of Osum in Gendis and we are under no pressure. So we are just holding onto those for the long term and hopefully one day in the next year or two there will be some announcements we hope that the company is going to look at going public and then our patience will hopefully be rewarded. So there are many hopes in here, but we are being patient and they have got a good management team, very strong board, major investors like the Blackstone Group, Warburg Pincus. There are some sovereign wealth funds from Singapore and South Korea, so, you know, very strong investors in there.
WSA: Right, and so in terms of the agro business side, can you talk a little bit more about the market opportunity there and what are some of the market trends that you are seeing?
James Cohen: For sure. Well, there [are] lots of opportunities. I mean we – we recently actually made a relatively small investment that is into an interesting company called Vive Crop Protection Incorporated and they are a Toronto-based company and we were put in touch with them I guess about two months ago and we just made an investment as I said. They develop and commercialize as they say innovative formulations that enhance the effectiveness of crop protection products and reduce the environmental impact.
So in other words they are a very green company and they are involved in crop protection products, but you know they are sort of gearing away from the ones in the past that were a little more harmful to the environment. They have about 38 patents. It is quite an impressive little company. So we just put some funds into that company. As you know, we have an investment in Input Capital Corp, which is now a public company.
We invested in that in late 2012, put a million dollars into it for a million shares and who went public last year, just last July and the stocks, you know, in the range of $2.5 and we are holding that one for the long term. They are involved in canola, which is a crop in high demand globally, and we have another investment in a Canadian company operating in Brazil. They just opened a plant earlier this year and it is called MBAC Fertilizer Corp, publicly traded company and again sort of a start-up that is just entering into production and all these companies they have I think the commonality is again growing world population, how do we feed all these extra people and you know, it’s something that is almost every other day I am reading articles about the importance of coming up with new innovations to help feed the planet because standards of living are going up, diets are improving, protein consumption is going up and they are not making any more land as we say, so the existing crop land has to – has to somehow operate more efficiently and all these companies are sort of looking at that, so it is interesting.
WSA: Sure, yeah correct, and so switching gears a little bit can you talk about the recent share buyback program?
James Cohen: Yes. We – we just completed the program for last year, which expired earlier this month and we did buyback 500,000 shares of Gendis. The share price has moved up, so I would like to think that the program has worked and we just announced again that we would potentially buy up to 500,000 shares in the coming year. So going out to July of 2015, you know, we are not in the market everyday, but when we see an opportunity to buy and cancel of shares we have done it because even though the share price is up to about $4.09 as of this morning, the net asset value of the company is well over $6. So there is still a discount.
I mean we are up to I guess we’re trading at about 65% of net asset value, which is an improvement because at one time we were probably below 50%. So now it has moved up. I like to think it is a combination of our results, some of our new investments showing fruit, bearing fruit and also the buyback program. So I think we are doing all the right things. We are putting out regular press releases, we are buying stock and some of our investments are starting to show some promise. So I think all those things have contributed to the improvement in the share price and at our annual meeting I actually mentioned that I was very proud to see that if somebody had invested $100 into Gendis five years ago that same $100 would be worth well over $650 today. So our shares have done very well – we are paying a quarterly dividend again. We paid a special dividend a couple of years ago and I think all these things have contributed.
WSA: Good and so what short-term goals and long-term goals are you hoping to accomplish here?
James Cohen: Well, you know, the short-term goals are to continue looking for opportunities in real estate, energy and agribusiness. We are focused on those three areas and we are currently looking at further opportunities. We are very picky and cautious, you know, we are very well financed. We have very low debt. We are a company with assets in the $85 million range. Again at our annual meeting I mentioned that my – one of my shorter medium term goals is to go over the assets to the $100 million level and beyond. So that is kind of the target right now.
I would like to see us hit the $100 million mark in assets and then onward and upward from there. But, you know, it takes time and you have to be very cautious looking at opportunities because we get lots of them across our desks, but you know, the vast majority we take a pass on. So, it is – it is something that does take time, but we are confident we are moving in the right direction.
WSA: And what do you feel James makes Gendis unique?
James Cohen: Well, I think we are fairly unique in that we are a microcap size of company and we are in three distinct areas. I am a big believer in diversification. I know for a lot of years it wasn’t considered a good thing to be in more than one sector, but I do feel that the three areas we are in are somewhat complementary, real estate, energy and agro business. They are three things that we need. We need land, we need energy and we need food. So it is pretty simple. That is a pretty simple strategy, but I think it will put us in good stead going forward.
WSA: Well, great, and so once again joining us today is James Cohen, CEO and President for Gendis Incorporated, which trades on the Toronto Stock Exchange, ticker symbol GDS, currently trading at $4.09 a share, market cap close to $55 million, and before we conclude here James to recap some of your key points, why should investors consider GDS as a good investment opportunity today?
James Cohen: Well, we are – we are a value play company. We look at investments that going forward should return good value to investors and we’re conservative. We are very cautious as I mentioned earlier, we have – we have a lot of room on our bank lines, but we are being very careful. There has been a lot of turmoil over the last couple of years in the world and we kind of take things one-step at a time and we have returned value over the last five years as I mentioned and going forward we hope to be able to do the same.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on our upcoming progress and we like to thank you for taking the time to join us today James and update our investor audience on Gendis Inc. It is always good to have you on.
James Cohen: Okay. Thanks very much Juan.