AV Jennings, Laurie Cox, WA News and my shares

Monday, September 17, 2007, 11.35am

Dear nine paying Mayne Report subscribers and a handful of family and friends,

WHAT HAPPENED AT AV JENNINGS

As has been widely reported in the press, Sir Ron Brierley's GPG called an extraordinary general meeting of property developer AV Jennings on Friday in an attempt to get two of their representatives on the board.

We're still in the dry run phase for our daily videoblog but go here for our preview of the meeting on Friday and here for today's videoblog which we recorded at the meeting itself, pointing out that GPG's Graeme Cureton did indeed have an untenable conflict of interest. The two videos provide an insight as to what lies ahead as we marry shareholder activism with video and audio delivery.

WHY DID LAURIE COX QUIT TRANSURBAN?

The 2006 AGM of tollroad giant Transurban was a lively affair and long-serving chairman Laurie Cox, a main board director of Macquarie Bank and former chairman of the ASX before it demutualised, handled it with his usual aplomb.

However, it went unremarked in the mainstream press that Cox suffered quite a protest vote against his re-election, as you can see here. Most incumbents get more than 99%, but Laurie was down at around 91% after 30 million shares were voted against his re-election.

Lo and behold, less than four months later he then abruptly resigned as chairman in this brief statement on 14 February. There was no mention of conflicts of interest or protest votes, but I suspect both were factors.

After all, Macquarie Infrastructure Group is the biggest competitor to Transurban and with Macquarie Bank ending its association with Transurban to concentrate its efforts on MIG, it seemed very strange to continue having a Macquarie director in charge at Transurban.

Then again, I recently asked Laurie why he quit and he pointed to 11 years of service and great performance - which is certainly the case.

But in the context of the recent debate about John Howard, why stand for another three year term October and then bail four months later. It would have made far more sense to not stand for re-election and announce the new chairman at the AGM.

It's appropriate that the first edition of our new shareholder activism venture includes an item on Laurie because next Saturday is the 10th anniversary of the 4 Corners program about Jeff Kennett's dodgy share dealings - which was the moment I formally went from mainstream journalist to political whistleblower.

I dobbed poor old Laurie in for looking after Jeff with a 20,000 share allocation to the lucrative 1993 float of garden products company Yates, but he's still very polite whenever we bump into each other.

RUNNING FOR THE BOARD OF WA NEWS

Seven Network chairman Kerry Stokes is always most enthusiastic when I front at his AGM, declaring how he just loves the questions. Given that there hasn't been a more emphatic endorsement from anyone else at an AGM, I've decided to test this Stokes support by nominating for the board of West Australian Newspapers at the forthcoming AGM.

Seven has bought a 17% stake in WAN so Stokes has the potential to be the kingmaker for any outside candidate, especially if he was to vote his stock against one of the incumbents.

The WAN notice of meeting is expected by early October after the annual report was released on 6 September. Most companies normally release the notice and annual report at the same time, so I'm starting to wonder if there is some consternation. After all, Stokes still doesn't have a Seven representative on the board so he might even be putting up his own candidate.

There are only five non-executive directors so it would be bizarre if WAN pulled the same "no vacancy" trick as when I last ran for this board back in 2000 and got a healthy 28.25% of the directed proxies voted in favour, as you can see here.

For some strange reason I haven't heard anything back from the company after lodging the nomination a couple of months ago but am assuming everything is in order.

FROM THE POST OFFICE BOX

When you own shares in 420 companies, it usually takes at least 15 minutes to plough through the mail from the Post Office box each morning.

Today was the unofficial start of the AGM season because the PO Box included five notices of meeting and annual reports - Southern Cross Broadcasting, CSL, Worley Parsons, Primary Healthcare, Telecom New Zealand and Fletcher Building. They've only been dribbling in up until now, but I'm expecting as many as 20 a day for the next month.

The Kiwis are a patriotic bunch - the back cover of the Telecom New Zealand annual report is all black with "Go the All Blacks" in large white type.

CSL chief executive Brian McNamee continues to show his family's tennis history. The brother of former Wimbledon doubles champion and Australian Open director Paul McNamee will once again be only the major Australian company CEO fronting shareholders at Melbourne Park, home of Australia's tennis grand slam, this season.

The PO Box also featured a glossy "new investor newsletter" from Tap Oil. Surprise, surprise, this is the Perth-based oil company currently under attack from former Alinta chairman John Poynton and a few of his mates.

TRACKING THE RICHEST DIRECTORS AND EXECUTIVES

One of the beauties of receiving all these annual reports is that you can keep tabs on who Australia's richest directors are. Over the coming months, we're going to be compiling a list of every Australian public company director and senior executive who we reckon is worth more than $20 million. It will probably come to almost 1000 names and producing the list will assist in our annual meeting activism because rich individuals are often the ones who show the least respect for good corporate governance. Look no further than Rupert Murdoch and former Coles Myer chairman Solomon Lew.

Besides, the most interesting AGM tangles are usually with rich entrepreneurs, rather than the standard professional director types.

From today's annual report haul, here are some of the names that will feature in our $20 million director club list:

John Dahlsen: the Southern Cross Broadcasting founder and chairman owns 882,506 shares which will fetch $15.36 million if the currrent $17.41 cash takeover bid for the company by Macquarie Media and Fairfax is approved by shareholders next month.

Neil Balnaves: the Southern Star founder owners 2.59 million Southern Cross shares so his cheque will be for a tidy $45.1 million.

Brian McNamee: Cervical cancer vaccine Gardasil has been an absolute bonanza for booming pharma company CSL and I managed to sell four of my six shares for exactly $100 a pop last week. CEO Brian McNamee has sold plenty of shares on the ride up from the $2.40 float price, but he still owns 208,511 fully paid shares worth more than $20 million.

John Green: the former Macquarie Bank executive is now a non-executive director of booming infrastructure and engineering company Worley Parsons whose 941,510 shares are worth $36.61 million based on today record price of $38.89.

Andrew Wood: whilst Worley CEO John Grill is one of our newest billionaires, many of his fellow executives are also seriously rich. For instance, has anyone ever heard of Andrew Wood, the executive who runs Worley's mergers and acquisitions division? Wood's 828,238 Worley shares are currently worth a very handy $32.2 million.

If there's someone out there who wouldn't be obvious, drop us a line to stephen@maynereport.com .

REVEALED: THE FULL MAYNE REPORT PORTFOLIO

Here it is folks - the world's biggest small share portfolio. That spreadsheet contains shares in more than 450 different companies and a total portfolio value of less than $170,000.

I've had to hire a PA just to handle the paperwork, but it delivered profits of almost $50,000 in 2006-07, primarily thanks to two plays earlier this year - Platinum Asset Management and Magellan Financial Group.

The strategy at the moment is to further diversify the portfolio when the market weakens and when a $500 investment cracks $600, I try to sell about $450 worth of stock, given that the market is once again looking fully priced.

INTERESTING SHARE TRADES FROM THE PAST WEEK

The Mayne Report will be setting new standards in terms of disclosure. Every equity ownership position will be disclosed in full and here are some examples of recent shares trades.

Bought 91 shares in Sydney Attractions at $6.18 a pop to be part of the action now that Village Roadshow has made a bid for the company which runs the Sydney Aquarium.

Bought 270 shares in the Kerry Stokes-controlled National Hire at $6.18 each as it attempts to team up with private equity to buy Coates Hire in what is an increasingly contentious corporate battle.

Bought 300 Biota shares at $1.70 each to get access to the forthcoming AGM in Melbourne.

Bought 336 shares in Staging Connections for $1.49 each as am amused by the idea of grilling the company which puts on AGMs for everyone else about the way they run their own gathering. Besides, its chaired by former Telstra chairman Bob Mansfield, who deserves plenty of stick.

Sold 122 Oilsearch shares at $4.45 each this morning, locking in a quick $100 profit courtesy of the record oil price.

TIP OF THE DAY - GET ON THE WESTPAC SHARE REGISTER

Westpac are spinning off a minority stake in its funds management arm BT and have indicated that shareholders will be given a priority allocation in the pre-Christmas float. I've naturally got my $500 worth of Westpac shares anyway, but have tipped the better half, Paula, into a $500 stake as well. If the pricing looks good, it makes sense to send off two cheques through separate applications to get double the allocation.

This was the strategy which delivered our family a $25,000 profit in a Magellan Financial Group capital raising earlier this year. The raising was priced at 97.5c, we had three cracks at it and got out for an average of about $2.20. The stock is now back to $1.53.

That's it for now, so just keep doin' ya best.

Stephen Mayne