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John Polomny
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John Polomny is an individual investor and speculator seeking unique, overlooked, and well researched opportunities and speculations from all over the world.
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  • Mongolia Growth Group August Shareholder Letter 4 comments
    Sep 23, 2012 8:38 PM

    I forgot to publish this info when it came out a couple of weeks ago.

    MGG:

    During August of 2012, MGG continued to experience growth in operations, including a new monthly high in revenues at our property division. MGG did not purchase any property assets during the month, but continued to dispose of "held for sale" assets, which is something of a first for our company in that the portfolio actually shrank slightly. We are still actively involved in researching a number of sizable property assets that we are looking to purchase, but there can be no certainty that we will be able to agree on acceptable terms for a transaction.

    Division Pre-Tax Profit (Loss) Before Stock Option Expense
    Property $98,288
    Insurance $217,001
    Corporate $(419,872)
    Certain highlights from the quarter include;

    Property Results
    • Acquired $5,288,756 of investment property
    • Rental revenues increased to $383,920 (excluding intercompany revenues of $62,914 from Mandal), a 0.2% increase over the first quarter of 2012
    • Quarter end vacancies remained relatively constant at 4.47% vs. 4.03% of rentable properties in the first quarter

    Insurance Results
    • Net premiums earned of $118,682, a 65% increase over first quarter 2012
    • Incurred total insurance claims of $15,096

    Corporate Information
    • Has grown to 73 total employees (65 Mongolian and 8 foreign)

    The recent financials are continuing to move in the right direction. The book value is now $1.52 per share and continues to increase each quarter. Although there has been negative news about the political situation in Mongolia it has had no real effect on the company's business. However the negative news does have an effect on the share price because a negative perception is created in peoples minds.

    Disclosure: I am long OTCPK:MNGGF.

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Comments (4)
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  • bazooooka
    , contributor
    Comments (3686) | Send Message
     
    John,

     

    How much of they spent total on properties since inception. Their 100M+ market cap seems high for a company only doing single digit millions in rental revenues and premiums.

     

    Is this a play on their real estate (mostly) and do you expect the real estate to appreciate by triple digits in short order otherwise the premium to book seems high compared to other emerging real estate plays.
    24 Sep 2012, 02:12 AM Reply Like
  • John Polomny
    , contributor
    Comments (591) | Send Message
     
    Author’s reply » This is a play on real estate and appreciation of real estate in UB due to several factors that I presume will happen.

     

    1.) Continued urbanization of the population
    2.) Lack of space to build out the city due to topography of the surrounding area.
    3.) I presume the country will follow the same kind of property appreciation curve that other resource rich countries like Kazakhstan and Qatar followed. Inevitably there will be a property bubble. Hopefully management will be astute enough to exit during this period.
    4.) As the Mongolia story gains further traction outside Mongolia there are a limited number of vehicles that investors can use to piggyback on the growth in the country. As contributor Karibu has noted that means a certain amount of greater fool appreciation. That's why this is a speculation not an investment.
    24 Sep 2012, 09:35 AM Reply Like
  • MarginOfSaftety
    , contributor
    Comments (9) | Send Message
     
    The book has mostly increased over time due to higher and higher placements. The stock still sells at 2x book.
    15 Oct 2012, 03:43 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    Funny and smart audio interview with Harris Kupperman, CEO of Mongolia Growth Group (MNGGF.PK) by Ian Cassel (http://bit.ly/R1Xirt) on MicroCapClub: http://bit.ly/Trc8WS
    17 Dec 2012, 10:27 AM Reply Like
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