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
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Allied Farmers: Prosecutions should be on the cards
Allied Farmers Fraud passes with little fanfare
Allied Farmers: What's it Worth?
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Jane Diplock Q & A Interview
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Financial 101: Learn before you leap
Kevin's Blog


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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

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Long Term View: Teamtalk 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.

Teamtalk Ltd [TTK.NZX] has been a great investment for shareholders since its May 2004 listing at $1.75c per share (see TTK prospectus for more detail) . With $1.25c in net dividends and another 30% of that figure gained for those eligible for associated tax credits gives TTK (see NZX chart above) a 111% 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 nearly 6.3 year listing of TTK an annual net return of 17.61%.

This compares to an annual return from the average of all NZX indexes of 2.38%.




Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
ANZ Banking Group Ltd
Briscoe Group Ltd
Cavalier Corporation Ltd
Comvita Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Infratil Ltd
Kirkcaldie & Stains Ltd
Kiwi Income Property Trust Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
Methven Ltd
Mowbray Collectables Ltd
NZ Oil & Gas Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Nuplex Industries Ltd
PGG Wrightson Ltd
Port Of Tauranga Ltd
Postie Plus Group Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sealegs Corp Ltd
Scott Technology Ltd
Skellerup Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Smiths City Group Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
Trustpower Ltd
Turners Auctions Ltd
Turners & Growers Ltd
The Warehouse Group Ltd
Vector Ltd
Wakefield Health Ltd

Teamtalk Ltd @ Share Investor

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


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Hill Family makes Claytons Takeover bid for Michael Hill International

The announcement today that the Hill family, the largest shareholder of the publicly listed Michael Hill International [MHI.NZX] is looking to consolidate and increase its family shareholding in the company from 48% to 50.1% of the company is a significant move by the family and ditto has significance for shareholders, for a number of reasons.

At 50.1 % the family would have majority control as a voting block to look after themselves rather than other shareholders. I am not saying the will put that in practice but majority holding will mean they can if they wish to do so.

The possible move to a 50.1% shareholding would also require an exemption to the Takeovers Act that normally requires offers for additional shares at this shareholding level be made to all shareholders.

This move is also contrary to the move made by the company to split the shares at the end of 2007 to increase liquidity in the trading of the shares on the stockmarket.

You can look at this move in two ways.

Firstly that it is a positive move by the family that they see value in the company at current share prices and are willing to stump up some cash to buy a bigger stake in the company. A good move when the company is under some pressure from a retail slump and the shares are trading at a good discount to the long-term outlook for the company.

Secondly, and a view that I tend to lean towards, is that the move is a rather cynical one because it is going to impact negatively on minority shareholders because the family will have more control over the company without having to make an offer to all shareholders for full control and they are seeking an exemption through the NZX and a vote put to shareholders at the November 5 annual meeting to achieve their purpose.

Michael Hill International has thus far proven a good corporate citizen and has treated MHI shareholders in a fair and balanced manner in terms of business operations and has been a good long-term investment for shareholders.

Should this claytons move to take over the company by the Hill family and its interests be accepted by the NZX and its operations and then voted approval by shareholders (it must be kept in mind that the family already has a 48% voting block and it wont take too many minority shareholders to vote in their favour or opt not to vote at all for their plan to realise gold) without a full offer made to take the company over, then the small shareholder is going to get shafted again.

I will be voting against the Hill's proposal and I urge other MHI shareholders to do the same.


Disc I own MHI shares in the Share Investor Portfolio


Michael Hill International @ Share Investor

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


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