Melcor Development
Real estate developer with better economics
Melcor development is a real estate company almost exclusively on western Canada. The special part of this company is the value creation flywheel.
“There is not the slightest doubt in my mind that the population of Western Canada is going to grow at an ever increasing rate, and it will be our responsibility to assist in the provision of sufficient good quality housing.” 1968 annual report – Stan Melton
Quick History
Melcor is a 100 years old company, Founded by Louis Timothy Melton. In 1923 it was set up and specialised in West Edmonton Real Estate, in selling residential building lots.
Under his son Stan, from 1945 to 1973, the company expanded to include commercial real estate, mortgages, insurance, appraisals, property management and, ultimately, land development and home construction.
The company bought land to participate in the oil boom. It failed, but ended up having good urban development land in Edmonton.
In 1968 it was listed on the Vancouver stock exchange. I don’t have the full history since 1968 but it was a decent compounder until 2007. Please note that it also pays a growing dividend since 1990 and until 2014 where it stagnated, with recent increases in 2023.
But, as we see below, book value per share is up and up, so I think that the recent stagnating performance is due to sentiment shifts. The book value per share growth is quite steady.
A quick comparison between share price and book value per share (below) shows extreme undervaluation at the moment. Investors hate value at the moment. That’s it, end the write up here, it’s a wrap. Compounder+ Value = Value investing!!
Ok, Let’s continue with the history of the company, followed by business analysis (Paywall - free trial available). Also, stay tuned for some public quick earnings updates on my holdings and ideas.
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