Share Investor

Saturday, August 28, 2010

Michael Hill International: Tall Tales & Rumours

A little birdy told me something interesting this morning that got my mind in an overactive and speculative mood.

The move by the Hill family earlier this week to take a larger share of Michael Hill International [MHI.NZX] got me a bit hot under the collar but I put a question to an accountant client of mine this morning and asked him what he thought of the move.

He told me that when a large holder of such a stake in a business consolidates its shareholding and seeks to increase it, it is more likely an indication that the protagonist is trying to make the shareholding more attractive to a possible buyer, rather than wanting to take control of the company themselves.

My source told me when he was a director at Whitcoulls and Graehme Hart was running the show this was the approach Hart took before he sold the company to Blue Star Group.

Of course this is just more idyll speculation on my part but after thinking about the scenario it makes more sense than the reason the Emma Hill gave for wanting to take a mere 2.1% more in the company:

"...the family wants to take advantage of a depressed share price to take control. We've always wanted to buy a bigger stake in the company, and we think the stock is undervalued right now. It is just opportunistic with the right price coming at the right time."

If that is indeed the case why not pitch for a bigger stake than 2.1% more. Why not go for gold if the share price is such a bargain? (which it is I might add).

I am not saying that the Hill's are going to sell their stake any time soon but my accountant friend's thoughts should be considerd by the market because I think there is some merit in what he told me.

That is just between you and me though.

Disc I own MHI shares in the Share Investor Portfolio

Michael Hill International @ Share Investor

Hill Family makes Claytons Takeover bid for Michael Hill International
Michael Hill International Ltd: 2010 Full Year Profit Analysis
Long Term View: Michael Hill International Ltd
Michael Hill International: 2010 half year profit commentary
Michael Hill Makeover kicks off
Michael Hill International: 2009 full year profit commentary
Toughen Up: What I have learned from the hard times
Stock of the Week: Michael Hill International
Michael Hill TV3 60 Minutes Interview
Long VS Short: Michael Hill International
Marketwatch: Michael Hill International
Michael Hill's profit shines
Michael Hill takes on the windy city
Why did you buy that stock? [Michael Hill International]
MHI has defined growth strategy
MHI profit sparkles

Discuss MHI @ Share Investor Forum

Download MHI Company Reports

Buy Toughen Up: What I've Learned About Surviving Tough Times

Toughen Up - Fishpond.co.nz

c Share Investor 2010

Thornton Report 2: Allan Hubbard Guilty as Charged

In the ongoing saga of Allan Hubbard and his crumbling business empire there were further revelations yesterday when the second report from statutory managers Grant Thornton came out.

It appears that Mr Hubbard has been running his Hubbard Management Funds (HMF) business, Aorangi Securities and a number of other investment vehicles in a slack, fraudulent and underhanded manner. In those respects it makes him as bad as your Hotchins, Watsons, Bryers and their filthy thieving ilk.

On first look though, what appears different is that Hubbard looks to have been motivated by the "Robin Hood" factor. That is, he was using other peoples money to lend to those who "needed" it.

All very altruistic sounding at first glance but bound to end in tears when incoming funds and assets didn't match outgoings.

There have been claims made in the second report that Aorangi Securities has been borrowing money on call while lending the proceeds to second rate and overvalued farming assets, the bulk of which are connected to the Hubbards - nothing altruistic going on there.

Aorangi made interest free loans to a charitable trust that the Hubbards have a financial investment in and that trust was being charged 10% interest on those loans - very dodgy.

Investment values overstated by 25% in the Hubbard Management Funds business with $13 million of assets allocated to investors in the fund that apparently don't exist - looking very bad here.

An overstatement of cash at hand at HMF of more than $5.5 million.

Inter-party lending that advantages Mr Hubbard and his financial interests over his investors is a good indication that he was covering his own ass in the event of a meltdown.

Mr Hubbard's businesses all suffered from a lack of full detailed documentation.

It is clear now while Mr Hubbard did not set out to deliberately fleece investors as other finance company heads have over the last 3 years, Mr Hubbard is no saint.

I have until now largely reserved my judgement on Hubbard and his predicament but if you read the report you can come only to the conclusion that Hubbard has been a naughty boy and supporters need to take a good hard look at themselves if they wish to continue to back Mr Hubbard in the face of the reality of his offenses thus far revealed.

Yep, it isn't right that the other thieves out there have largely been untouched by authorities but the object of our interest here is Allan Hubbard and we now should wait for the additional detail that will come out from the Serious Fraud Office and the Statutory managers of Hubbard's business and personal financial dealings.

Related Share Investor Reading

Download Grant Thornton Report 1
Download Grant Thornton Report 2

Allan Hubbard: Full TV3 Interview - July 16 2010
Thornton Report: Allan Hubbard's Aorangi Securities
Whatever happened to? Muriel Dunn
Bothered by Simon Botherway
Allied Farmers: Prosecutions should be on the cards
Allied Farmers Fraud passes with little fanfare
Allied Farmers: What's it Worth?
Hanover, Allied Farmers deal more of the same
Jane Diplock Q & A Interview
Hanover's "White Knights" are really daylight robbers
Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

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From Fishpond.co.nz

Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz

c Share Investor 2010

Friday, August 27, 2010

Hidden Gems: Teamtalk Ltd

I own a 17 shares in the Share Investor Portfolio and they are mostly larger companies which are well known to investors and to the public in general.

While doing a Long Term View series post yesterday I had come down to doing some of the smaller companies listed on the NZX . Largely most of these are penny dreadful losers or companies that have very patchy results and pasts but when I came down to calculating the long-term returns for Teamtalk Ltd [TTK.NZX] I found to my surprise that this tiny little Telecom sector company with less than a $50 million market capitalisation is one of the better investments listed on the NZX.

With an annual net return of 17.61% (including dividends and tax credits)for the last 6 or so years since listing and a nearly 7% annual gross return, Teamtalk outperforms most other listed NZX companies by a large margin.

The company began in 1994 as Managing Director David Ware, annoyed by the poor service and lack of professionalism from telecommunications companies, set out to start his own.

They struggled through the deregulation of the Telecoms sector in the 1990s and the bankruptcy of their owner in 1999 and ended up buying the company themselves and listed it in 2004.

The company has performed well since then and by management's reckoning see a positive future for thew company ahead.

The company is not for me because I don't fully understand what they do but it might be well worth looking at if you are well versed in this sector.

You could well do alot worse.

Teamtalk Ltd @ Share Investor

Long Term View: Teamtalk Ltd

Discuss TTK @ Share Investor Forum
Download TTK Company Reports
TTK Prospectus

From Fishpond.co.nz

Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz

c Share Investor 2010