Allan Hubbard Saga: Hubbard Defiant in 2011

Many hours of time have been whiled away by mainstream journalists, bloggers and supporters of disgraced businessman Allan Hubbard during 2010 over his dodgy business practices and collapsed empire. As 2010 drew to a close few final conclusions could be drawn from investigations made into South Canterbury Finance, Aorangi Securities and a whole raft of businesses owned by Hubbard and now in receivership, gone bust or in Statutory Management.

What we do know is that Hubbard has been, for the last few years anyway, bending the rules big time when it came to the day to day running of his business interests. Fraud, forgery, endemic related party lending to make the books look good, omissions and padding of paperwork, fake investments and highly risky lending were par for the course.

Interested parties to the Allan Hubbard Saga currently await the outcomes of several investigations into the stubbornly defiant octogenarian. The Serious Fraud Office is waiting for a response from Hubbard's Lawyer Mike Heron on his behalf to a range of possible charges which were outlined prior to Christmas and a 6th Grant Thorton Report on Aorangi Securities Limited, Hubbard Management Funds, Hubbard Churcher Trust Management Limited, Forresters Nominee Company Limited, Mr AJ and Mrs MJ Hubbard and Associated Charitable Trusts is due at the end of February 2011.

The long wait on final decisions on what to charge Hubbard for are primarily due to the complicated nature of Mr Hubbards business empire and the lack of precise, or any, paperwork.

Obfuscation on the part of Hubbard and his lawyer during the investigation has also led to a delay in charging.

As published in the New Zealand Herald today and written by Fran O Sullivan, Hubbard has sent a 2 page memo to Simon Power pleading his case:

The Business Herald understands the SFO has indicated that it had narrowed its investigation to four particular issues - one relates to the failure to issue a prospectus for Aorangi Securities, and, another focuses on statements Hubbard Funds Management made which are alleged to have misled investors.

"I think the charges they are proposing are ridiculous and I cannot see any court of law upholding them," said Hubbard. "I've stolen no money - they're dreaming up charges."

Hubbard maintains Aorangi had never traded recklessly, had always paid its interest seven days before due, was not insolvent and had always paid obligations with default during its 36-year history.

"The action taken signalled the death knell for South Canterbury Finance with incoming deposits immediately falling from $2 million weekly to $200,000 per week..."

I agree with Hubbard that the courts may have trouble upholding any possible charges, you just need to recall the history thus far of failed finance company directors who have never been charged or skipped serious charges in the courts over the last year to concur.

Having said that, we know that Mr Hubbard has been less than truthful in his public statements in his own defence. It is crystal clear that there was a rotten core at the middle of his empire and that he was at least partially responsible for the rot. It is quite likely there are others involved but Mr Hubbard was the head banana and he needs to take responsibility for his actions in the coming year.

Allan Hubbard Saga

Full SFO Statement on SCF Fraud Investigation

Hubbard Letter to Simon Power

Download Grant Thornton Report 1
Download Grant Thornton Report 2
Download Grant Thornton Report 3
Download Grant Thornton Report 4
Download Grant Thornton Report 5

Join the Put Allan Hubbard Away Facebook Group

Book Review: Allan Hubbard: Man Out of Time, by Virginia Green
Allan Hubbard Saga: VIDEO - Hubbard Biographer Virginia Green on TVNZ's Breakfast
Book Extract - Allan Hubbard: Man Out of Time
Allan Hubbard Saga: Going Feral - Part 3, The Final Cut
Allan Hubbard Saga: Going Feral - Part 2
Allan Hubbard Saga: Paul Carruthers Goes Feral... Again
Allan Hubbard: The Biography
Allan Hubbard Saga: On Forged Signatures and Uncharitable Trusts
Allan Hubbard Saga: Evidence of Fraud now Clear
Allan Hubbard Saga: NBR VS the SFO
Allan Hubbard Saga: South Canterbury Finance to be investigated by the SFO
Allan Hubbard Saga: Third Grant Thornton Report
Allan Hubbard Saga: Will He Walk?
Allan Hubbard Saga: No Longer Bothered by Botherway
Allan Hubbard Saga: 60 Minutes Interview, Sept 23 2010
Allan Hubbard Saga: Supporters head to the exit door
Allan Hubbard Saga: Threats & the Mysterious PWC Report
Allan Hubbard Supporters: Conflict of Interest
VW Veneer reveals BMW heart
VIDEO: Jenni McManus Explains Allan Hubbard Collapse
Allan Hubbard Statement on SCF Receivership
VIDEO: Sandy Maier - full news conference on SCF Receivership
Market Alert: South Canterbury Finance to be placed in Receivership
Allan Hubbard: Ignorant Supporters Blissfully Unaware
Thornton Report 2: Allan Hubbard Guilty as Charged
Allan Hubbard: Full TV3 Interview - July 16 2010
Thornton Report 1: Allan Hubbard's Aorangi Securities
Bothered by Simon Botherway

NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill

Join the Share Investor Facebook Group

c Share Investor 2011

Fletcher Building: Crane Takeover Offer Well Timed

The takeover offer by Fletcher Building Ltd [FBU.NZX] for Crane Group Ltd [CRG.ASX] comes at an opportune time for Fletcher. Crane Group is at or near the bottom of a business cycle over the last 6 years (see 6 year summary from the CRG 2010 Annual Report below) and the share price has been trading at a multi year low so Fletcher has made a bid that would have otherwise been higher near the top of the business cycle.


Click on picture to enlarge view

Crane has had a patchy last 10 years with profit ranging from a AU$15 million loss in 2004 at its lowest and a $AU60 million profit in 2008 at the high end. Revenue has ranged from $1.4 billion in 2000 to $2.3 billion in 2008.

2010 half year profit of $21 million was up 16.8% on 2009 and a research report from Aspect Huntly indicates positive earnings with "upside to come" from the commercial building sector - the major floods in Australia over the last month will be a big benefit to Crane and to Fletcher Building so this upside is likely to be significant.

This is where FBU have a problem because CRG management have indicated that the offer for Crane is far too low and significantly undervalues the company and its long term prospects.

Fletcher do not have a good history with acquisitions providing good value for shareholders, with the purchase of Formica Corp a few years ago, for almost a billion dollars, destroying shareholder value and adding less than nothing to the balance sheet. If the offer for Crane is successful it could provide some benefit to FBU shareholders if they can take over the company at its current price.

The AU$ 740 million bid for 90% of the company is detailed as follows and can be found in more detail here.

• Australasian building materials manufacturing and distribution company Fletcher Building (FB) has bid for CRG offering $3.43 cash and 1 FB share implying a value of $9.35, a 28% premium to CRG’s one month volume weighted average price equating to an FY11 PE multiple of 19 based on consensus forecasts and an EV/EBIT multiple of 11.8.


• FB already owns 14.9% of CRG, 13.1% of which it bought from institutional shareholders for $9.35 cash immediately prior to announcement of the bid.


• The bid includes a 90% minimum acceptance condition.

For FBU shareholders like myself this is a nervous time. If the proposed acquisition doesn't come off there will be millions of dollars of cost associated with the takeover activity.

Analysts have indicated that as Crane has over 80% of institutional investors on its shareholder registry so a takeover is likely to be an easier case to make than with a company with more mum and dad investors as shareholders.

We can only cross our fingers that FBU are able to grab Crane at their current bid price and add value to both companies if successful.


Fletcher Building @ Share Investor

Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free
Download FBU Company Reports

NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill

Join the Share Investor Facebook Group

c Share Investor 2011

Share Price Alert: New Zealand Refining Ltd

When we last looked at New Zealand Refining Ltd [NZR.NZX] back in October 2010 its shares were trading at $3.66 and its prospects at that time were starting to look promising as the oil price was rising and the company had largely put the expense of its plant shut downs and low refining margins behind it.

In June 2010 I picked the stock at $3.10 for the same reasons as stated above.

Yesterday the shares finished trading at $4.66 for the day (see 3 month chart above), up over 27% over 3 months or 50% from June share price levels.

The shares have traded upwards in the preceding months because of increased refining margins and an increased capacity to refine raw product after the plant upgrade in 2009 - 2010.

Profit has also been tipped to rise because of the favorable trading conditions.

It is likely that NZR will reinstate a larger dividend for the coming profit result and one would expect the share price to head north as global oil prices continue to rise.

This stock was in the 2011 Share Investor Stock Picks at $3.95.

Long term you will do well.


Share Price Alert
Freightways Ltd
Xero Ltd


NZR @ Share Investor

Share Investor's 2011 Stock Picks
Stock of the Week - Reprise: NZ Refining Ltd
Chart of the Week: New Zealand Refining Ltd
Stock of the Week: NZ Refining Ltd

Discuss NZR @ Share Investor Forum
Download NZR Company Reports


Related Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $9.73
Usually ships in 24 hours


Security Analysis: The Classic 1934 Edition by GRAHAM
Buy new: $37.80 / Used from: $29.48
Usually ships in 24 hours




c Share Investor 2010 & 2011

Kathmandu Holdings: Profit Upgrade lacks accurate comparison

The Kathmandu Holdings Ltd [KMD.NZX] trading update out today is positive for investors but it really didn't warrant a rise in share price today of nearly 14%.

I say this because the figures disclosed today are compared to last years figures which are based on Pro forma accounting methods.

I have discussed pro forma accounting before in relation to Kathmandu and it is important to note that the main feature of pro forma figures is to disguise the true nature of how a business is run.

This is part of what I wrote about KMD and the figures they used in their IPO Prospectus towards the end of 2009:

Pro Forma figures - figures based on an "as if" scenario rather than reality - are used throughout the document.

Pro-forma figures do not show investors the true state of a companies books and this alone should have prospective investors running for the hills (without a Kathmandu backpack).

I will go on however.

For example pro forma sales figures from 2007 and 2009 indicate that in 2007 Kathmandu sales were $A151.4 million and in 2009 A$215 million and respective store numbers were 58 and 82. That works out roughly the same level of sales per store for each of these years. Very hard to get this sort of consistency in any sector of the economy, least the retail industry. These particular figures have clearly been manipulated or "smoothed" to make things look good and we can safely assume this for other comparisons made. This makes the figures misleading to say the very least.

Kathmandu Holdings: Market Update Misleads Share Investor Blog, August 5 2010

So when looking at the release today we need to take into account that even though same store sales have increased by around 9% , to make a fully accurate and meaningful comparison we need to use actual raw figures from 2010 to make our comparison not the pro forma ones KMD are using in today's release.

I am of the view that we need to look at the 2011 second half year for the company when we can use raw figures from mid 2010 to make an accurate reading of how the company is going.

It will be March 2012 though before we can see a full year of results and compare them to raw accurate data from the year before.

Until then investors need to be cautious at these share price levels.


Kathmandu @ Share Investor

Kathmandu Holdings Ltd: The First Year
Kathmandu Holdings Ltd: 2010 full year profit analysis
Chart of the Day: Kathmandu Holdings Ltd
Kathmandu Holdings: Market Update Misleads
Kathmandu's 2011 Results Under Pressure from Jan Cameron
Kathmandu IPO: Prospectus Analysis
Kathmandu IPO: Jan Cameron lands a blow to IPO
Kathmandu IPO: What is it worth?
Kathmandu IPO: Retail Interest High
Kathmandu IPO: A tough mountain to climb
Kathmandu No.1 but IPO should get the Bullet
Download the detailed Kathmandu Value Cruncher Report - Requires free registration at Share Investor Forum to download
Download Kathmandu IPO Prospectus
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum
Download KMD Company Reports

NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill

Join the Share Investor Facebook Group

c Share Investor 2011