Share Investor Buying One Million Postie Plus Shares

I have stoically held Postie Plus Ltd [PPG.NZX] shares now for 3-4 years.

I own 2540 shares.

PPG shares have paid me a dividend of about 20 bucks over those years and are now worth a total of $709.80c, a drop of around 50% from the total purchase price of $1463.20.

To say then that it is a bad investment is a major understatement. It is the investment equivalent of backing Paris Hilton, Lindsay Lohan and Charlie Sheen in a movie and expecting them to show up at work every day, and sober no less.

So it is a loser plain and simple and should really have no place in my portfolio one would think?

Well, initially I thought it was such a small part of the overall portfolio I would sell and put it behind me but I hate to lose money but I know that some time in the future when management get their proverbial together and actually make some money somebody is actually going to make me a much better offer than 26c per share.

Well, I am thinking if Jan Cameron can take a big stake in the company then this boy can flash a few shekels around and get a bigger stake in the expectation that the share price will at least double.

With this in mind I am going to splash out $259339.60 to buy 997460 PPG shares to take my stake to 1 million shares. I am going to sell the whole Share Investor Portfolio to make this transaction happen.

The remaining unspent funds I am going to buy Allied Farmers Ltd [ALF.NZX] shares with and maybe a little gold.

I would appreciate any feedback on this.


Postie Plus Group @ Share Investor

Long Term View: Postie Plus Group Ltd
I'm Buying: Redux
What is Jan Cameron up to?
Whats on Rod Duke's shopping list?

Discuss PPG @ Share Investor Forum




c Share Investor 2011

Mark Hotchin Comes Out Swinging

I have been writing about the takeover of the defunct Hanover Finance Company by Allied Farmers Ltd [ALF.NZX] run by Rob Alloway for over a year now. This merger has turned into a disaster for Allied and Rob as he and his fellow directors failed to do due diligence on the assets Hanover had on its books.

Mark Hotchin ran Hanover into the ground by removing a good portion of its cash as dividends for his own pocket, investing in poor quality assets and hocus pocus interrelated lending.

As big a failure Rob and the deal he did with Hotchin was - and it was a whopper - it comes as more than a jaw-dropper to find out that Hotchin has decided yesterday to come out with his gloves off and take an almighty swing at Rob and the way he is managing the assets that were subsumed from Hanover into Allied.

Please keep in mind that most of these so-called assets are of very low quality and are being sold into a market not this depressed since, well, the Great Depression.

Mark let rip yesterday in a letter posted on Hanover.co.nz:

Over the past 12 months, the Board of Hanover Finance Ltd (Hanover) and United Finance Ltd (United) has been alarmed at the decline and continuing erosion in the value of the assets that were transferred to Allied Farmers (Allied) in the debt for equity swap in December 2009. Increasingly we are being contacted by investors who share this view and are asking what action, if any, we are prepared to take.

Apparently investors in assets that Hanover used to operate and own and lost all their money in are now coming to the very same man who lost that money for advice?

The letter goes on to say that former Hanover assets are being flogged off in "fire sale" and that Alloway has been misrepresenting the financial state of the company to investors before the 2009 merger and defaming Hotchin though the media. This is of course true but Mark has a track record with this sort of stuff himself so can clearly spot this bird even without its feathers.

You can stop laughing now if you like but this might get you going again:

We are no longer prepared to sit aside and allow this to happen and will actively campaign on behalf of shareholders, including seeking to have Rob Alloway removed from the Board of Allied.

So Mark is going to bat for investors in Allied, most of them former Hanover investors. Isn't that like putting Bernie Madoff in charge of the prison accounts?

I am absolutely stunned by the gall of this man in the face of what he has done to thousands of investors in Hanover.

By the way, he will be updating us on his Hanover website as this saga develops.

I cant wait.

Allied Farmers @ Share Investor

Allied Farmers Ltd: You said what Rob?
Allied Farmers: Hanover & Allied close mates
Long Term View: Allied Farmers Ltd
Allied Farmers: Rights Issue Decision
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

Discuss ALF @ Share Investor Forum
Download ALF Company Reports

Related Share Investor reading

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
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c Share Investor 2011

Allied Farmers Ltd: You said what Rob?

CEO of Allied Farmers Ltd [ALF.NZX] Rob Alloway, has decided, now that the shite has hit the fan again with another "asset" inherited from the Hanover purchase going tits up, that the blame for the parlous position he and his company and its long suffering investors find themselves in is because Messrs Hotchin and Watson from Hanover overvalued the assets that the company had on its books at the time of the merger of Allied Farmers and Hanover back in late 2009:

Mr Alloway said the value of Matarangi provided in the 30 June 2009 accounts, used by investors to inform the eventually successful vote to merge, was "unrealistic".

Mr Alloway didn't pull any punches in his statement, and said the state of Matarangi was symptomatic of many former Hanover assets:

“This is an unfortunate trend we have seen with most of the property and loan assets that were acquired, and further calls into question the real value of the shareholder support package contributed by Messrs Hotchin and Watson at the time of the Hanover moratorium. The investment community should have expected far better oversight of the moratorium from Hanovers directors, valuers, trustees and auditors.” NBR, 18 November 2010

Back in November 2009 (almost 1 year to this day) though Mr Alloway was singing from a different song sheet with the will of a man who had crossed all his Is, dotted his Ts and had the champagne on ice:

"We've left behind all the problems ... this is goodbye Hanover, Mark and Eric.

We've got all the assets and anything that's worth anything and said goodbye to the rest, they can deal with the problems. Any litigation or exposure they have is theirs." NZ Herald November 21 2009.

Alloway was also confident that Allied was more able to recover Hanover's bad loans than they were and we all know that was about as successful as Bernie Madoff would be at making a comeback as an investment adviser.

I posed this question back in April and then June, why are Alloway and his fellow directors at Allied not being prosecuted for a fraudulent prospectus? Fraudulent because the prospectus contained overvalued assets on the balance sheet that Hanover and Allied investors based their decision on to vote for the two companies to merge.

Mr Alloway clearly admitted today that Hanover's assets were overvalued (what most people including me said back in 2009 and earlier.) or what he calls an "unfortunate trend", and that these overvaluations were what investors based their vote on.

An unfortunate choice of words.

What the ***k is he now saying?

He knows now what he should have known back in 2009 but is blaming Hanover for the mess Allied is now in?

It is called due diligence Rob, you didn't do it properly pre-merger and now you are trying to cop out of the blame that lies on you and your fellow directors at Allied.

At the very least put your hand up and do the right thing and take some responsibility.

Allied Farmers @ Share Investor

Allied Farmers: Hanover & Allied close mates
Long Term View: Allied Farmers Ltd
Allied Farmers: Rights Issue Decision
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

Discuss ALF @ Share Investor Forum
Download ALF Company Reports


Recommended Fishpond Reading



Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2010

Allied Farmers: Hanover & Allied close mates

It is funny what you find when you are googling. While searching Allied Farmers Ltd [ALF.NZX] after their late night profit announcement for 2010 out last Friday, I came across this little gem published in April 2007 on the IRG website:

Allied Farmers (ALF) is being transformed from a livestock and rural services company into a major player in finance. Initially its finance arm aimed to service farmers requiring finance in their farming activity. But with the agreement this week to acquire 100% of the shares in Nationwide Finance for $33m, Allied becomes a major player in the field. Nationwide Finance Limited, part of the Hanover Group, is a diversified finance company providing property and commercial finance. It has total assets of approximately $160m, which will be added to Allied’s current finance subsidiary, Allied Prime Finance to give it scale needed to operate successfully in the finance industry. Finance should offset some of the risks inherent in livestock trading and other rural activities.

The thing is, after the receivership of Allied Nationwide Finance (it changed it name to this after the 2007 purchase and its folding into Allied Prime, Allied's own finance company) on the 23 August 2010, it doesn't appear that many knew that Nationwide had a previous connection to Hanover. The much written about purchase of the failed Hanover Groups assets late in 2009 by Allied Farmers seem to have swallowed all the detail in its wake.

Allied Farmers soon retiring CEO Rob Alloway seems to have had a cosy relationship with directors at Hanover over a number of years and you cant tell me that the fate of Nationwide wasn't obvious before Rob and his fellow directors at Allied Farmers bought Hanover's whole kit and caboodle last December.

In 2004 Deborah Hill Cone wrote a very good piece on Hanover as a whole. In it she describes not only the dubious nature of the majority of Hanover's financial health (it had a credit rating below BBB, junk bond status) lending (inter-party stuff) but specifically on Nationwide Finance:

"... related party transactions and Nationwide Finance's reveal a further $13.8 million.

I initially understood that the December purchase (and the previous months of negotiation) was the first connection to Hanover with Allied Farmers but to find that their relationship goes back almost 3 years before that gets me thinking about all the back slapping and secret deals that must have gone on over the years.

Mr Alloway has mislead Hanover investors (and has done so subsequently several times) and his own Allied Farmers investors pre Hanover over the value of Hanover assets and his long term involvement with Hanover makes the December purchase look even murkier.

Is it a case of mates helping out mates?

Allied Farmers @ Share Investor

Long Term View: Allied Farmers Ltd
Allied Farmers: Rights Issue Decision
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

Discuss ALF @ Share Investor Forum
Download ALF Company Reports


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Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2010

Long Term View: Allied Farmers Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Allied Farmers Ltd [ALF.NZX] has been on a roller-coaster in terms of stock prices and results since its May 2002 listing at $1.50c per share*. With $1.21c in net dividends and 30% more in tax credits, plus a 3:2 share split in 2003 (see chart above) and a new share issue in December 2009 with a dilutionary effect of approx 5500% gives ALF a minus 10820% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) and over the 7 year listing of ALF an annual net return of minus 1352 %.

This is the worst performer by far in the Long Term View series.

This compares to an approx 7% return from the average of all NZX indexes.

* Adjusted price


Long Term View Series


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ASB Capital Preference Shares (A)
ASB Capital Preference Shares (B)
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AMP Ltd
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Briscoe Group Ltd
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Telecom NZ Ltd
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Turners Auctions Ltd
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Westpac Banking Group Ltd


Allied Farmers @ Share Investor


Allied Farmers: Rights Issue Decision
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





c Share Investor 2010

Allied Farmers: Prosecutions should be on the cards

I do not understand why the Securities Commission is not pursuing directors of Allied Farmers Ltd [ALF.NZ] for fraudulent behavior over failure to disclose the true value of assets bought off Hanover Finance in its prospectus issued in November 2009 before the restructuring of Allied and the assuming of new shareholders owned money by Hanover into the Allied group.

Assets assumed by Allied from Hanover are now worth 30% of what they were valued at in the November 2009 prospectus and ALF shares are trading below 6c.

Rob Alloway from Allied is now assessing assets on its books acquired from Hanover:

Yesterday Allied Farmers managing director Rob Alloway said it had completed assessment on a further $69.1 million of loans or around 65 per cent of the loans book acquired from Hanover and would be writing them down by $33.6 million. A further $37.5 million in loans had yet to be assessed.

Excuse me for my ignorance but didn't he and his mates do due diligence on Hanover assets before issuing their prospectus or did Rob merely take Mark Hotchin and Eric Watson's word that there was close to half a billion of assets to be realized for new investors in Allied Finance and existing Allied shareholders.

Of course given the smoke and mirrors nature of Hanover's business their loan book was likely to be one filled with inconsistencies, overvaluations, inter-party loans and poor record keeping but it was up to Rob and Allied and their mates to do sufficient homework so as to give Hanover investors an accurate picture of what they could get out of a sale of Hanover assets to Allied and therefore give them a real choice as to whether they should have agreed to the deal or vote to wind up Hanover.

Grant Samuels wrote an "independent" report into the deal late last year and said:

The Allied Farmers proposal is superior to the status quo and a high risk of receivership for Hanover Finance investors, according to Grant Samuel. NZ Herald

Rubbing salt into the wound the Samuel's report indicates:

Samuel said an alternative cash offer for Hanover was a remote possibility, and if it were to eventuate from another party it would be at a substantial discount to the current book value.
NZ Herald

Samuel's report then was clearly wrong on all counts and the money paid to them for the report came from Allied Farmers pockets.

I criticized their report last year but there seems to be few in the mainstream business media willing to lam-bast these bastards - the big boys protecting themselves again?

I would be loathed to say that the Allied deal done last year was a purposeful conspiracy to get Watson and Hotchin off the hook, but it has (so far?), and those involved in helping; Allied, Samuels, Hanover investors and Allied Farmers shareholders, et al should all feel some shame.

Where the hell are the real independent appraisers willing to call a spade a spade instead of fraudulent reports agreeing with the participants in the deal. Who the hell is protecting the investor, besides their own savvy and financial education?

I just wonder where The Securities Commission and the NZX are on the blatant failure to disclose the true value of Hanover assets in the November 2009 prospectus.

It is their duty to at least make a public statement but what SEC really need to do is break down the door of the Allied Farmers head office, grab the books and do a forensic accounting analysis on the Hanover/Allied deal.

Perhaps then we will find out where the bodies lie.




Allied @ Share Investor

Allied Farmers Fraud passes with little fanfare
Allied Farmers: What's it Worth?
Hanover, Allied Farmers deal more of the same


Related Share Investor reading

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

Discuss this topic @ Share Investor Forum - Register free


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c Share Investor 2010