Forum Archive Index - February 2000

[frank <frank.fernandez@xtra.co.nz>]

Amy,
You asked yesterday about the lessons to be learnt from Strathmore in
assessing the AQL stock. Seeing most of the subscribers to Sharechat
would know all of this, I'll try to be as brief as possible.
Previously a mediocre company, Strathmore announced early last year that
it was selling off all of its assets. Chairman Ray Thomson said the
company would be left a "cash shell" but no plans had been made
regarding its future.
On 9 June, the Thomson family announced it was selling its 70.5%
shareholding in Strathmore to a John Sorenson. Before the sale
announcement, Strathmore shares were trading at 26c on extremely low
volumes. After the announcement, the price picked up and traded in the
40c to 50c range during most of July but fell back to 30c to 40c in
early August.
There was much speculation about the future direction of Strathmore but
again, no official announcement. From 17 August to 3 September,
Strathmore's share price rose from 32c to 99c on exceptionally high
volumes. After the final trade on 3 September, these announcements were
made to the NZ Stock Exchange:
· John Sorenson had settled his purchase of 70.5% of Strathmore at 18c a
share.
· Mr Sorenson had immediately sold 19.9% to Advantage Corporation, 10.6%
to Eric Watson, and 10.3% to Ken Wikeley.
· Strathmore would have a 10 for one cash issue at 5c a share
· The company was going to concentrate on the IT sector.

[The Stock Exchange was asked to investigate the sharp rise in
Strathmore's share price before the September 3 announcement. It passed
the issue on to the Securities Commission who found no evidence of
malpractice.]

Since the 3 September announcement, the "Watson factor" came into play
and the Strathmore stock found increasing favour amongst investors. By
way of example, Eric Watson attended the AGM of Strathmore last
December, asked a few 'leading' questions which was widely covered by
the news media. Immediately following the meeting, Strathmore's price
leapt from 37c to 51 c.

The similarities between Strathmore and AQL are pretty obvious:
· The same principals are involved, Eric Watson (with a 9% stake and
understood to have a further 17% option), John Sorenson and Ken Wikeley
(who between them own 25% of the company)
· AQL's assets are to be sold and the company will be left as a "cash
shell"
· No announcement has been made regarding the company's future
· There has been heavy trading of AQL shares in the previous two weeks.

AQL finished up at 0.182 today and will open up at 0.189 tomorrow. Like
with most stocks today, trading was extremely light with only 695,732
shares changing hands for $127,193. There were about 10 transactions of
50k shares while the rest were all under the 30k mark. 

As Les has indicated on Sharechat tonight, AQL today announced the issue
of 10 million ordinary shares at 18cps on a private placement (4.38% of
total shares) making a total of 21 million new shares issud as private
placements in the last three weeks. I guess we don't need to be brain
scientists to figure out that a major acquisition is in the wings
(considering that AQL will also be inheriting a lot of funds through the
disposal of its aquarium assets).

You may also be interested in DFMainland's comment today (on its
website: dfmtrade.co.nz) that "The Aquaria investment seems to be
tracking well in a difficult market." Incidentally, AQL figures
prominently in the Blue Horseshoe's stock portfolio (also on the DFM web
page).

Hope the above info will provide some useful background information for
you. 

Frank Fernandez

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