Which is what I couldn't find either. Says it all really. But anyway, lets have a looksie
From the 2014 Annual Report: “During the year, CTN gained full ownership of the investment manager Contango Asset Management Limited (CAML). The key reasons for this were to lock in a market leading investment team, and to more closely align them to CTN's growth aspirations. The internalisation of the manager is generally considered good practice by the market and has had beneficial impacts on the valuation of the Company.”
The 4 main claims in the sale statement are these, with comment underneath
1.“CTN acquired 100% of CAML in November 2013 to reduce fees and improve corporate governance”.
I would like to understand how selling CAML will benefit me as a shareholder?
2.“The key management team should have direct equity participation in the business.” I'll just leave this here: "The key reasons for this were to lock in a market leading investment team, and to more closely align them to CTN's growth aspirations. The internalisation of the manager is generally considered good practice by the market and has had beneficial impacts on the valuation of the Company”
3.“CTN believes that CAM is now well-positioned to grow both its product offerings and the highly customised services.”
This makes no sense- that is a benefit to TDX not CTN. How is this beneficial to CTN shareholders? Remember they said about buying the fund manager "The key reasons for this were to lock in a market leading investment team, and to more closely align them to CTN's growth aspirations”
CTN then bought into 2 other fund managers in the last few years in order to grow its funds other management. One called Bellwether and then Switzer funds management a few months ago. I assume they bought them under the aggregator Treasury Group model, but now are selling the prime bull CAML for a bag of peanuts ($2m more than its holding value) while retaining the other 2 fund managers. I am also curious about there being a Switzer on the board of this new fund manager set up. That doesn't sound right to me.
Why am I struggling to see the benefit to shareholders?
A CTN shareholder person might feel quite upset if they picked up some big clients in the immediate future.
Where I am confused is that they seem to be telling me why this is such a good acquisition....for TDX. And I agree, it is! That’s why I don’t want to see the fund manager arm carved back out only a couple of years after they bought it in. Remember they said
“The internalisation of the manager is generally considered good practice by the market and has had beneficial impacts on the valuation of the Company”but now they are selling it. Were they wrong then or right now?
4. "To deliver on this growth opportunity requires strategic management and focussed growth capital beyond the resources that CTN as a successful specialist LIC can provide
Okay. I am completely and utterly confused. Am I reading a statement telling me that the Board admits they have failed to internalise and grow the managers business, and that all the reasons they internalised the manager haven’t worked, that they will be better off without the management team, better off going back to an externalised model and that they believe an insignificant ultra-nanocap company will be able to achieve what they couldn’t, AFTER having just told us how the CAM is poised for growth? My head is spinning out of control here. These are reasons you would NOT sell CAM aren't they? This is a takeover statement not a selling statement isn't it?
Re-appointment of manager
Do we shareholders have a say in who is the best manager for the portfolio going forward? I expect Geoff Wilson and one or two other managers would suggest they are better managers
Sentiment: I don't know. I really can't figure this out
Disclaimer: DYOR and I stand to be corrected on all, opinion only
CTN Price at posting:
95.5¢ Sentiment: None Disclosure: Held
(20min delay)
