1 divide its investment assets into two distinct portfolios;
2 engage an unspecified "second investment manager" to manage initially approximately $27 million in funds and over time up to 50% of the Company's investment portfolio; and
3 change the well respected Contango name to an unspecified name.
1& 2 are one and the same
3 is utterly irrelevant and laughable that they exposed how shallow their complaints are by noting this? In any case it is redundant, it needs 75% shareholder approval. I have no idea why they wasted ink on that one it undermines 1&2
As for 1&2, well, doth protest too much". It was only as a result of this that I investigated deeper their investment performance. Talk about rebound effect. I'd go to the EGM and ask them on what basis they would keep any money with the investment manager
As for their stated reasons, NO!
1. Shareholders should be given the opportunity to vote on fundamental changes to the investment management arrangements
No they shouldn't. This would be a dysfunctional company. You would have control by fool. What happens is we leave the running of the company to the board, and then, if they get it wrong, we vote them out. I have no problem running these 3 out of town if this was a bad decision, but it isn't. This isn't fundamental. This is a straw man the proposed have created. A few years back they put $30m into MIDCAP stocks and we didn't bat an eyelid. Now we are getting that money and putting it into microcaps. But not with this External manager.
2. The proposed changes are contrary to the previous representations of the Board
Oh. I must have missed the statement where the board announced that they would never do this. For what I can see this was an additional block of $30m. That is LOT of money in an already large microcap fund where the manager said it is trying to grow its size. I think it is prudent to send the fresh, unexpected money to an alternative manager, especially a better performing manager
3. The proposed changes jeopardise the highly successful investment strategy of the existing investment manager
"Highly successful"!!! Did they say this with a straight face? Because the performance tables I've seen show they are a dud manager with a capital D.U.D when compared to other managers. Gee I wish I could see those graphs.
In any case this is nonsense. How? Seriously. they are trying to convince us that CGA's not having this additional $30m to splash into microcaps will "jeopardise the highly successful investment strategy"? Think that through readers, think about what they are saying their investment strategy must therefore be based upon. Uh-huh
Note- they invest in highly volatile and illiquid MICROcap stocks. And not being given more money puts the strategy in "jeapordy". Ummm, now that they have mentioned this, could the existing CTN board investigate CGAs investment strategy because that sentence sounds like less of a grammar thing and more of a description of a pyramid scheme, which I am sure it isn't. Buuuuuuut I'd like to have someone check that.
Incidentally, if these 2 aren't associated with CGA, how do they know so much about their investment strategy and why they believe the changes jeopardise this?
4. Contango's investment rating has already been cut by independent research houses as a result of the Proposals announced by the Board
Yes, that's a potential problem. Not sure how. Perhaps they can explain that. I'd wonder if it gets reinstated will the rater then suspend it again when they observe the financial precarity of CGA? Protest too much?
5. The Contango name is well recognised, well respected and a valuable asset that will be lost if the Company's name is changed
I agree. I think they should keep it and let CGA do all the advertising and freeload off the back of that. But this isn't something you roll the board over. This is petty and undermines their other problems
6. Costs are likely to increase as a result of the Proposals
Here we go. What a paragraph! Popcorn time for sure. Now we find out how far the snouts were in the troughs. In my life having been sued 3 times and seen family court and tv reality shows, I have learnt there are 3 sides to all stories. Ours, theirs, and the true one. I am going to Woolies right now to get the popcorn ready because this will be fun when the gloves come off. I note that they are only seeking to roll 3 of the 4 directors. I have a proxy organised but I am really tempted to come to this meeting
As for the costs increasing, by what...$100k in duplication....$300k? Thats 1% on $30m. Big deal. All they need to do it outperform CGA and it was worth it.
"Likelihood" here- go to the small companys page on 4 or so and compare OC to Contango. noting the > 5 years numbers belong to David Stevens on the table.
7. The Board of Contango should have a majority of independent directors
I agree with that. That's why I would not vote in favour of these 2 joining the board. From where I sit that would make 4 not independent directors. 3 of whom probably could not identify a Listed Investment Company from a police line up of 7 dogs and a man in a suit holding a briefcase wearing a cap with "LIC" written on it.
I'm sorry. I didn't intend to do this but the showers are keeping me indoors and this freezing 22 degree weather is doing my head in.
SUMMARY
Well we come back to the same point. I am not going to vouch for the 3 current because I don't think this company has been that well run. However, these reasons for their sacking are not sufficient and the 2 incoming are poor choices by whom I can only assume are CGA and their backers. The stated reasons here are not good enough. Who are these 2 and why do they care? Do they even have CTN shares?
I would roll the entire board simply for selling the fund manager for $13m, which goes and raises another $4m, and a day after it listing it is valued at $70m. And for awarding them the new contract in the first place. Now that is my beef. That is 40c I see should have been on the CTN share price.
CTN Price at posting:
$1.01 Sentiment: Hold Disclosure: Held
(20min delay)
