Monday, February 24, 2014

Dacha New And Improved Management

For a few years now, Dacha Strategic Metals (DSM) has languished at a massive discount to its book value, and with good reason. Its previous management was a one-trick pony, having invested the bulk of the firm's assets in rare-earth metals. While this made them look like geniuses in the 2011 rare-earths bubble, the subsequent bursting of that bubble revealed these speculators for what they are: poor capital allocators.

If this same management team were still in charge of Dacha, I would probably not be invested in this company, despite the greater-than-50% discount to book value at which it trades. (Note that the bulk of this book value is made up of cash and a bunch of rare-earth metals valued at current market prices, with no leverage involved.)

Fortunately, however, shareholder activism led to the ousting of the destroyers of capital.Read more...

2 comments:

Anonymous said...

Saj we can't read your articles unless we are a Seeking Alpha Pro member?

Saj Karsan said...

Hi Anon,

I think I posted it too early. Seeking Alpha embargoes some of them for 24 hours, but it should be available now.

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