Forum Archive Index - May 2000

[Phil Eriksen <phil@acepay.co.nz>]

nick wrote:

> 3)  Is chairman happy?  This is the tricky part, the problems with the
>      hamilton licence have thrown a spanner in the works, investors
>     would have to consider carefully the implications of this before
>      investing in the company. What impact will it have on future earnings?

Good to see the analysis you are doing - very interesting stuff.  I have
to question the relevance of point (3) - a positive chairman.  To me,
the best chairmen/directors/managers are not consistently bullish, if
ever.  They are guarded about future prospects, and usually conservative
in their estimates.  In fact, the very best sort of Chairman would be
one talking down the prospects for the company, yet quietly buying more
shares!.

Looking for an ultra positive shiny happy Chairman who may well have no
holding, a small holding, or be selling shares is asking for trouble. 
If it was me, i'd replace point (3) with "Have the
managers/directors/major shareholders been net buyers or sellers of
shares during the last 5 years?".  Over time these people are sellers as
they acquired their shares pre-float.  So if in a particular company,
these people are buying yet more shares over a 5 year period, it usually
bodes well.  It is also interesting to see the price these "insiders"
pay.  Sure, its one thing to have 100,000,000 shares - but another thing
if they were issued at 3 cents pre-float.  If the insiders are happy to
stump up the $6 a share (or whatever) that you have to pay, well, that
says more to me that positive words from the Chairman.

Cheers,
Phil

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