Endeavour
Financial Corp (EDV, TSX)
Another Strong Year Prompts a 100% Dividend Increase
We�ve been following Endeavour since it started trading in 2004 and every year
the company has built shareholder value in a very dramatic fashion. Recently
Endeavour reported that for the year ending June 30, 2008, shareholder equity
increased from US $255 million ($11.57 per share) to US $370 million (CDN
$12.38 per share).
If you�re going to invest in the resource market, there�s no better way to
safeguard your wealth and maximize potential growth then by partnering up with
some of the best minds in the business.
For the retail investor, it�s virtually impossible to get involved in a stock
at the ground floor level. That is to say when the shares are first printed at
five or ten cents and the new entity is still in the idea stage. The big money
is made here, before a property or new business is vended into the deal.
But that�s what this financial advisory firm does. Endeavours� management
builds new resource companies from the ground up. They provide mining
expertise, capital and financing arrangements and invariably build very
successful corporations.
Since Endeavour is building these new companies from scratch, they control
large blocks of seed stock, bought for pennies per share. After a relatively
short period of time, these new companies are invariably worth many dollars per
share.
There are many examples of this. Endeavour has financed some of the resource
market�s biggest winners such as Wheaton River, now Goldcorp, which is the
world�s second biggest gold producer; Bema Gold which went from 25 cents to
more than $6 before it was bought out by Kinross Gold; UrAsia Energy bought out
by Uranium One last year for a return of over 400%. More recently, Endeavour
helped establish Gold Wheaton which went from pennies to trade at around $1.50
before this recent pullback. And that�s just a small representation of what
Endeavour does. Basically, buying low and selling high.
When you have large positions of �penny stock� that�s created at 5 cents per
share and then opens for trading at over a dollar, it�s possible to amass a
small fortune. And you can build a massive fortune as these companies start
growing.
For the average investor, getting in at the ground floor just isn�t going to
happen. However you can still reap the benefits of this successful Endeavour
formula by becoming a shareholder with the brain trust who is building this
huge wealth.
With the recent market downturn the timing on accumulating more shares now
looks very good. Endeavour only has 30.5 million shares outstanding and has a
discounted price to book ratio of 0.50 X. In the U.S., merchant banking firms
have traded up to 12 X book.
As a further sign of confidence and success, the management is buying back
their own shares. Over the last fiscal year the company repurchased 520,000
common shares at an average price of CDN $7.39. (Friday�s closing price was
$5.80.)
Not only is Endeavour a bargain at today�s price but it also has increased
their monthly dividend by 100%! They are now paying 36 cents per year, 6% of
the current price.
Going forward I see continued growth for Endeavour. I�ve mentioned how they
create companies from scratch and build them up but there�s much more to the
company.
Last year the company earned US $48 million of their $108 million in revenues
from their advisory management fees. The advisory fee income looks poised for
growth as Endeavour extends its global reach to mining projects around the
world that need help in developing.
Conclusion
It�s been a tough year for resource stocks but Endeavour has continued to earn
significant revenues from merchant banking (U.S. $60 million) and financial
advisory fees (U.S. $48 million.)
The key benefit of owning this stock is that you�re investing with some of the
world�s top resource sector financiers and developers. Their success in
Endeavour stock is the same as yours and all you have to do is sit back and
cash in your dividends.
In my opinion this is the safest and best way to invest in the resource sector.
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Endeavour Financial
Vanguard Shareholder Solutions
Vanguard
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