Those of you who read the Financial Review may remember PIERPONT [Trevor Sykes] and his recent book "Six Months of Panic" which tracks the Global Financial Crisis and its impact on Australia [released by Allen & Unwin in 2010].
Anyway, way back in 2003, Pierpont published an article in the Financial Review called "INVESTMENT IN SUPERMAN". I wish I had read that article at the time as I would not have been blinded by the promise of a 5 cent per share dividend that was NEVER a possibility and been spared a lot of financial pain.
Pierpont's 2003 article enlightens us on the DPL Prospectus as follows:
"..... Any serious investor would, of course, expect extensive detail on exactly how the tenant performs, but at this point the ladies suddenly become coy. Pierpont would have been highly interested in the vital statistics of the business. We should know the turnover, for instance, and the depreciation rate of the assets. Itemisation of stock, group structures and sensitivity analysis would also be required. And, above all, the range of products and services.
But the ladies who so frankly reveal their personal figures are exceedingly modest about their corporate performance. There is not one number in the prospectus to show whether the business is profitable or even solvent.
All investors get is an assurance from the chartered accountants Alexander & Spencer who give an opinion, based on information from the directors, that nothing has come to their attention to cause them to believe that Daily Planet Australia Pty Ltd (the tenant) will not have the ability to pay the forecast amount of rent.
That's it. No valuation of the assets, no stock-turn ratio, no balance sheets and not a whisper about embedded value or long-tail insurance (sorry, Pierpont started thinking about HIH for a moment there)....."
Thank you Pierpont. We eagerly await your 2012 follow up analysis of DPL/PPN over the past 9 years which you might title "Screwed by Superman".
You can read Pierpont's full "INVESTMENT IN SUPERMAN" article on the following link: http://www.pierpont.com.au/article.php?An-investment-for-Superman-35
PPN Price at posting:
25.0¢ Sentiment: Hold Disclosure: Held
