general sentiment, page-29

i bought a huge chunk today at 21.5-22
the way i see it, the only (big) problem is management. but it is known and factored into shareprice. with ICAC and shareholders tuned in, we will be putting all transaction under a microscope. still very hard to pinpoint dodgy practices like flying first class for personal holiday etc. bad management is the worst fundamental factor.

BUT

having 40m cash above current share price is that buffer. if it as a smaller nominal amount (but discounted by same percentage), then that safety factor will not be that comforting. but 40m is probably sufficient to take us forward a few years (even with first class holidays for mr duncan etc). I dont know where the floor is, but the lower the better for us. just buy more. the trick i think is to always keep some powder to average down.

White energy does not seem to have done anything wrong (ie bribed for licenses etc). Our other low grade coal asset (cant remember the name) was also purchased through duncans other private company for about $30m i think (read another article today on it). it was excluded from felix-china sale, so that he could milk WEC for more cash.

i am not sure how we are going to clear the deck with management owning so much of the company. I used to take comfort with that, but now i am paranoid and i wonder how many other ceos/chairman in my portfolio who does these sort of things and get away with it. maybe a major shareholder could request for an EGM . im not sure how much the directors own of WEC collectively.

there is alot of negative press now, interest in WEC is zilch, look at the number of reads on hotcopper posts. all day only 20 or so reads. thats always a good sign for a bottom.

i think short/medium term, wait for a bounce. once all this is resolved - if duncan gets charged, he may not be able to serve as chairman. that would be read as good news. my interpretation of this is -this (ICAC investigation and its findings) is GOOD news, not bad. now we know the enemy within. share price should go up, not down!

latest news:

A query from a single private investor with a small shareholding in White Energy may have brought down the proposed $500 million takeover of Cascade Coal.

The investor, a professional engineer who does not wish to be named, told the Weekend Financial Review he emailed the ASX to question various disclosures in independent expert reports for the transaction in early March 2011.

Perhaps his biggest concern at the time was that White Energy was overpaying for Cascade, but one query was about a mysterious item on the Cascade balance sheet.

Cascade had paid only $1 million for the Mt Penny project and spent a few million more on exploration, yet there were capitalised mining costs of $41.7 million listed in its accounts.

Ten days later, the ASX sent a letter to White Energy reflecting the investor’s concerns, including the mysterious balance sheet item.

White Energy responded on March 21, saying: “The capitalised mining costs relate to the carrying value of the acquisition, rights and other mining costs related to the mining sites.”

By April 11, there may have been more queries. On a taped phone conversation with fellow White Energy director and Cascade investor John Kinghorn, Travers Duncan said the corporate regulator was also making inquiries.

Duncan says White Energy couldn’t answer the questions without disclosing that $30 million was paid to Cascade director Richard Poole and his family. In turn, the inquiry has heard those funds were funnelled to former NSW minister Eddie Obeid and his associates.