Forum Archive Index - December 2000

["G Stolwyk" <stolwyk@wave.co.nz>]

 

 

Please refer to my entry of Dec. 13.

 

"So, you have completed the first assignment: "Start losing some money first"? How did you do it? Did you invest in one of those little IT companies? I heard that plenty of options were allocated to the directors!"

 

"It started with a prospectus with glorious photos; also, plenty of names dropping. The organizing broker told us that shares  were going to be scarce. No, I did'nt look at the management contract in small letters nor did I notice some onerous items, eg. the MD was entitled to 5% of the turnover!

Even if it were say 5% of the net profit, I would not have liked it. Anyway, I trusted the outside directors.

These directors were selected by the founding directors and their fees were somewhat high, I thought". 

"What happened next?" 

"They started well and announced a large contract of $2 mill. There was a big write-up in the paper which said that the company was a leading player! I enjoyed that phrase! The shares shot up!".

 

"And what did their first Annual report say?"

 

"I looked at the share dealings and found that a lot of shares were sold by some directors after that announcement was made. 

I just came back from the Annual meeting; it seems that contract resulted in a marginal profit which did not cover the overheads. They now have to sack staff. However, they did say that they were close to signing another contract".

 

"Hey, the driver of that new Bentley, is he the MD of the company?"

 

"He is! He has done very well but I had to sell my stock and lost half of my original investment. I don't feel too well and want to see my doctor for an ECG".

"The second assignment was: "To lose more money". Congratulations, you have completed both assignments at the same time!  You beat me, it took me two lots of shares to achieve that result!" Go and see the doc!

 

Gerry