Brisconnections, David Murray, Rio Tinto, Gwalia payout, Oz Minerals tilt, AGM webcasts, Rich List and 40k trading windfall
February 2, 2010
Dear Mayne Reporters,
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It's been another big week in corporate governance but for sheer audacity it is hard to go past Nicholas Bolton's extraordinary BrisConnections coup.
The media certainly lapped it up. I did no less than six radio interviews after news of the extraordinary $4.5 million deal broke on Tuesday afternoon as follows:
Tuesday, 5.10pm: 4BC Brisbane with Mike Smith when assumed Leighton had actually bought the shares and the associated $154 million liability rather than paying $4.5 million just for the voting rights.
Wednesday, 6.50am: ABC Radio National Breakfast with Fran Kelly.
Wednesday, 7.10am: 774 ABC Melbourne with Tracey Bartram on Breakfast.
Wednesday, 7.20am: 702 ABC 702 Sydney with Adam Spencer on Breakfast.
Wednesday, 9.25am: 666 ABC Canberra with Alex Sloan on Mornings.
Wednesday, 5.40pm: ABC 774 Melbourne regular spot on Drive with Lindy Burns.
I also wrote this detailed piece defending Bolton for the Fairfax websites that went live shortly before noon on Wednesday and it clocked up a staggering 75,000 page views by the end of the day. That says a lot about the interest in Bolton and the power of The Age and The SMH websites to deliver more web traffic for business news than anyone else in Australia.
The BrisConnections fiasco reflects awfully on corporate governance in Australia and it is quite fitting that a young upstart has shown up the big boys. God knows what BrisConnections chairman Trevor Rowe will tell Alan Kohler when interviewed on Inside Business on Sunday.
All this talk about ASIC scrutinising Bolton's $4.5 million payment from Leighton seems ill-founded. Bolton has done nothing wrong and never claimed to be representing the small shareholders. Greenmailers are normally minority shareholders trying to extract a disproportionate benefit from a larger shareholder in a takeover. Bolton's skill was in becoming the largest shareholder and leveraging his position. This sort of thing is done by largest shareholders in business all the time. For instance, the Murdoch and Lowy families both use their positions as the largest respective shareholders in News Corp and Westfield to pay themselves more than $30 million a year in salaries.
It is interesting that Bolton and the discredited Trevor Rowe are now essentially publically calling each other liars over who rang who and whether the company itself also made a settlment offer or received payment requests from Bolton.
There is also a lot of talk from standover man Jim Byrnes and others that Bolton risks having his $4.5 million payment unwound.
News Ltd's Terry McCrann best summed up the way Bolton structured the ownership and payment in two different companies, although BrisConnections could certainly appoint liquidators to try and reverse it. I suspect Leighton, which owns half the BrisConnections management company, has committed not to do this as part of the deal.
Meanwhile, Queensland Treasurer Andrew Fraser had an interesting exchange with Business Spectator's KGB crew this morning in which he took quite a hard line suggesting underwriters Macquarie and Deutsche will risk their reputations if they don't deliver on their obligations.
The Macquarie crew have been attempting to renegotiate the terms to improve traffic funnelling but Fraser has so far resisted, to his credit. The outrageous traffic funnelling that Macquarie negotiated with Melbourne's Transurban deal in 1996 has contributed to equity investors enjoying returns of about 1000% from that company over the past 13 years.
As Fraser points out, these investment bankers never come back and offer to return value to taxpayers when they get a favourable deal away so it is up to them to cop the losses when it all goes bad.
The main banking syndicate stumping up $3 billion to fund the leveraged vehicle are also reportedly keen to walk away. This isn't a surprise given that Macquarie negotiated its BrisConnections banking syndicate back before the global financial crisis really hit and before the equity value started fast disappearing.
Whilst the initial media coverage around the BrisConnections float was very positive, as time goes on we're increasingly proud of being the first to blow the whistle on it last year as this package demonstrates.
David Murray's Future Fund leak
The AFR's Pamela Williams is clearly getting on very well with Future Fund chairman David Murray based on the extraordinary detail he's been leaking her about the pressure being placed on Telstra chairman Donald McGauchie by his largest shareholder.
Murray fired a comprehensive shot at McGauchie through the front page of The AFR on Wednesday in what was a really good exclusive for our national financial daily.
The Australian's John Durie wrote an insightful column on the whole issue today and it certainly does look like Murray is doing the Federal Government's bidding in monstering McGauchie.
Then again, McGauchie deserves it and should be removed after botching Telstra's regulatory management. He's the sort of bloke who would never go quietly and with Telstra shares in the cellar, maybe Murray is getting ready to force the issue if the Telstra board won't fix the problems themselves.
Murray himself observed at the Risk Metrics conference earlier this month that boards tend to be naturally collegiate, so it would only be expected that McGauchie's colleagues would rally around him.
Therefore, it would appear that Murray has given up on the subtle backroom approach and is prepared to publically blast McGauchie out if necessary.
Meanwhile, Murray's successor at the Commonwealth Bank, Ralph Norris, is getting stacks of publicity with all this talk about his 10% pay cut.
The board has done likewise which is good PR. The real game here is fending off a regulatory assault from Canberra after observing what the Feds were prepared to do to Telstra and what they've done on executive pay.
Shares in the Big Four have rocketed over the past six weeks and today their collective market capitalisation almost got back to $200 billion. That is far more important for banker wealth in Australia than any 10% salary cut.
Stand by for another Suncorp bailout from Labor
Southern Cross Equities institutional chief Charlie Aitken was as fascinating as ever in tonight's lively edition of The Eureka Report. Of particular interest was his prediction that Federal Treasurer Wayne Swan will move to level the playing field on the fees the government charges banks for their deposit guarantee. Here's the relevent extract:
The Big Four are charged 70 basis points by the government, Suncorp 100 basis points and the regionals (Bendigo & Adelaide and Bank of Queensland) 150 basis points. This obviously translates to a margin advantage for the major banks, with the majors now averaging net interest margins of 2.05%, Suncorp 1.8% and the regionals 1.5%.
It can be argued that the regionals are put at a competitive disadvantage by the staggered nature of the government guarantee fee structure. They simply can't issue new mortgages at the same rates as the majors unless they sacrifice margin. I believe the regional banks have put this theory to the Treasurer and it's believed he is sympathetic to any ideas that might increase domestic banking competition.
While the wholesale funding guarantee has been a success in terms of attracting funding for Australian banks, the perhaps unintended ramification is that it has further enhanced the oligopoly of the Big Four. I would not be surprised to see Swan “level the playing field” in terms of the fee charged for the government guarantee. On that basis, the upside to that announcement lies in the regionals and Suncorp. Remember: just about every negative piece of research written on Suncorp and the regionals is about their funding cost disadvantage compared with the majors. Any change in the government guarantee fee structure would narrow that funding cost disadvantage.
Given that the Queensland division of the ALP owned 1.18 million Suncorp shares before the recent capital raising, there is an obvious conflict of interest here.
If the Labor Holdings investment vehicle took up their entitlement to Suncorp's one-for-five entitlement offer at the knockdown price of just $4.50 in February, then it is looking at a very tidy profit with the stock closing at $6.50 tonight.
The history of Labor Holdings and its huge bank investments was explained in this front page Sunday Age story in February last year. It's worth another read in the context of Charlie Aitken's predictions that the two Queenslanders at the top of the Federal government are planning to change the rules in a way that will boost the value of Labor's Suncorp investment.
That said, the current policy is outrageously beneficial to the Big Four. The simplest solution would be for Labor Holdings to sell all its bank shares to remove the obvious conflict of the party potentially profiting from its own banking policies.
Chinalco will need better terms to land Rio Tinto
There has been a sudden burst of commentary about the Chinese strategy to sell US dollars and buy commodities such as copper which was kicked off in Australia by Alan Kohler with this insightful Business Spectator piece yesterday and then followed up by Michael Pascoe on Fairfax's websites today and Robert Gottliebsen in the lead story of tonight's edition of The Eureka Report.
This Chinese switching strategy was first circuitously explored in the February 16 edition of The Mayne Report when we wrote:
And whilst China last week publically committed to retain their $US682 billion investment in US bonds, which delivered an excellent 15% return over 2008, this $US19.5 billion Rio Tinto play is a very strategic and important allocation of surplus Chinese capital. Did you notice the $12 billion in convertible bonds were priced at $US45 and $US60 a Rio share respectively? The Australian dollar and British pound are both trading well below their long term average against the US dollar. If the US dollar was to suddenly tank due to lack of Chinese support for their bonds, then hey presto, Chinalco's investment in either the Australian or UK version of Rio suddenly gets a whole lot cheaper.
And that is sort of what has happened. All this talk that China will stop supporting US bonds has sent the greenback tumbling. The Australian dollar is back up to US72c which makes this comment by Rio Tinto CEO Tom Albanese at the London AGM on Wednesday night inaccurate: "The bonds we are proposing have a conversion price at a premium well above the current share prices."
Rio shares jumped another $1.25 to $59.30 on the Australian market today, which equates to $US42.70 at the current exchange rate. The first tranche of $US3.1 billion in convertible bonds proposed for Chinalco convert at $US45 a share which is definitely not "a premium well above the current share prices".
It will be interesting to see if the language changes at Rio Tinto's Australian AGM in Sydney on Monday, which we previewed in a Crikey scene setter earlier today.
With Rio shares rebounding, there is no way the Chinalco deal will be accepted by shareholders without some changes to the terms. The most obvious would be to cut the interest rates on the bonds from more than 9% to around 7%.
That would help negate the argument that this week's $US3.5 billion Rio Tinto bond issue at 9% shows that debt markets are recovering and the mining giant doesn't need the Chinese bailout, let alone one which is not attractively priced.
Uncle Sam shells out for Sons of Gwalia directors
QBE Insurance chairman John Cloney claimed at last week's AGM that AIG had started acting quite uncommercially ever since Uncle Sam took control of the company courtesy of that staggering $US182 billion bailout.
That's certainly one conclusion you could make from the landmark $53 million insurance settlement which the Sons of Gwalia administrator has pocketed by suing the directors for $200 million.
The directors' insurance policy was only for $50 million in total and while the case was arguably very strong, it is most unusual for an insurer to settle for the full amount. But that's what AIG has done with its contribution of $30 million courtesy of American taxpayers. Two Lloyds syndicates coughed up the other $20 million and given that QBE is one of the biggest Lloyds players, this might be why Cloney bagged AIG last week.
The Sons of Gwalia directors personally contributed $3 million to the settlement in a move that will have various Allco, Babcock, Centro, MFS, ABC Learning and Opes Prime directors shuddering in their boots. No wonder The AFR had a front page story today warning that premiums for directors and officers insurance are on the rise.
Vanguard founder blasts the fund managers as OECD critiques crisis
Vanguard founder John Bogle is one of the true global legends of the funds management industry and he has let fly at his fellow fund managers for owning shares in all the dodgy investment banks without once pulling them up for the outrageous risks being run. You must read this fabulous article about his views in The New York Times.
Meanwhile, Vanguard has been petitioned by groups campaigning against investments in companies which support genocide, such as PetroChina's efforts in Darfur. This web package shows that Vanguard is claiming it is already substantially in line with the proposal.
And whilst on global governance issues, check out this very detailed report from the OECD examining the lessons from the global financial crisis. It's an interesting read.
Labor remains streets ahead in latest Morgan poll
Gary Morgan's Roy Morgan Research has released its latest Federal opinion poll this afternoon which shows Kevin Rudd remains incredibly popular with 61% of the two party preferred vote. The double dissolution option must look very tempting given all that Senate obstructionism but deep down Labor knows that would probably deliver a dozen Greens into the Senate. I'd even be tempted to have a serious crack in a double dissolution given the Senate quota would be only 7.69% rather than the usual 14.28%.
Whilst these latest poll results were before the Coalition's outrageous reaction to the tragic boat explosion, it just goes to show how popular you can be dishing out cash to all and sundry. That said, Labor governments which lose control of the budget or trash the economy are traditionally swept from office and there's a chance the electorate will perceive that to be the case in a year from now.
Will Australia joins the IMF loan club?
The biggest risk for Australia is that we'll eventually need to be bailed out by the IMF, just like South Korea, Thailand and Indonesia were in the 1997 Asian crisis. The past six months since the Lehman Brothers collapse in September has seen unprecedented bailouts. Here is a list tracking the current state of play with large IMF sponsored loans and loan requests from sovereign states:
Mexico: seeking $US47 billion
Romania: $US27bn
Hungary: $US25bn
Poland: $US20.5 billion
Ukraine: $US16.4bn
Latvia: $US9.5 bn
Pakistan: $US7.6bn
Serbia: $US4bn
Sri Lanka: $US2bn
The reckless disregard for responsible fiscal management being shown by Kevin Rudd and the Labor Premiers is potentially putting Australia on a path to the IMF's door.
How on earth can a predicted $22 billion surplus one year turn into a $50 billion deficit the next? Federal finance minister Lindsay Tanner produced this very thoughtful essay for the Fairfax websites during the week and one of the comments in response from "Lachlan" sums up how many people feel:
As a Liberal voter it hurts me to say that this is actually quite a thoughtful piece. With genuine respect to you, your colleagues don't seem to get it. There is no fiscal discipline in your cabinet, and it is placing our future at great risk. The stimulus packages are the fiscal equivalent of a sugar hit and offer no structural benefits. Nor do they encourage employers to hire in any meaningful way. They are however short term political gold for your mob... Please do what you can to replace Mr Swan as Treasurer - he is just not up to it.
Feds borrow a record $2.3 billion in three days
The Federal Government has just set a record for debt raisings this week with the following three new entries on our list tracking all federal bond and treasury note issues since Kevin Rudd came to power:
April 17, 2009: $700m tender of 2 year bonds expiring in June 2011 were sold for an average yield of 3.32% and was a 4.9 times over-subscribed.
April 16, 2008: $900m of Treasury Note tenders across 3 tranches of $300 million. 90 day paper went for 2.74%, 180 day paper was 2.64% and 9 month money cost 2.84%.
April 15, 2009: $700m tender for 10 years bonds expiring in March 2018 were sold for an average yield of 4.63% and was 3.2 times over-subscribed.
That's $2.3 billion over the past three days which is unprecedented. So is the $14.4 billion that has been raised since the second stimulus package was announced on February 3, although thankfully the average issue remains at about 3.5% for four year money which shows continuing confidence in Australia as a reliable credit. For now!
These sorts of bond issues should become routine for the mainstream media to cover, but sadly they attract little attention. It's even worse with state government borrowing programs, which are also running at about $40 billion a year.
Victorian borrowing blows out
Victorian Premier John Brumby this week warned that tax cuts were out in the May 5 state budget because revenue has collapsed by $2 billion courtesy of the global financial crisis.
A quick look at the Treasury Corporation of Victoria website reveals how quickly the situation has deteriorated. This page shows how short term borrowings blew out from about $700 million in June last year to more than $4 billion at the end of March.
No wonder the Rudd Government had to step in to guarantee state debt. That particular move has only marginally reduced the risk premium that Victoria pays on its 10 years bonds which hit 120 basis points at the end of February but contracted to 93 basis points by the end of March as TCV reveals on this page.
This is the scariest table on the TCV website as it shows gross borrowings were pretty much steady at around $13 billion over the past decade before blowing out to $19 billion this year. Unless some major tax and spending changes are announced, Victoria is careering down the debt path at the rate of $5 billion a year so by the time of the next state election in November 2010, total Victorian debt will be approaching the $32 billion which Joan Kirner bequeathed to Jeff Kennett in 1992.
A $35 billion privatisation program and huge budget surpluses turned all that around, but it seems Victoria is headed back to where it all began without having a pile of assets left that could be privatised to pay back the debt. Oh dear.
Share trades and capital raising profits
As an advocate of maximum disclosure, we've decided to improve the information available on our share portfolio. Rather than just publishing the latest spreadsheet of the world's biggest small share portfolio, we've dragged them all up so you track the changes:
April 16, 2009: portfolio of 655 stocks worth $79,516 with paper loss of $100,822. Average holding worth $121.
March 15, 2009: portfolio of 674 stocks worth $71,294 with paper loss of $127,457. Average holding worth $106.
January 23, 2009: portfolio of 674 stocks worth $87,801 with paper loss of $127,973. Average holding worth $130
December 5, 2008: portfolio of 700 stocks worth $140,907 with paper loss of $105,062. Average holding worth $201.
October 9, 2008: portfolio of 708 stocks worth $143,772 with paper loss of $105,618. Average holding worth $203.
September 17, 2008: portfolio of 718 stocks worth $162,790 with paper loss of $88,132. Average holding worth $226.
July 21, 2008: portfolio of 711 stocks worth $173,953 with paper loss of $78,343. Average holding worth $244.
June 8, 2008: portfolio of 705 stocks worth $169,797 with paper loss of $60,087. Average holding worth $240.
May 16, 2008: portfolio of 693 stocks worth $179,680 with paper loss of $44,153. Average holding worth $259.
April 18, 2008: portfolio of 673 stocks worth $186,279 with paper loss of $55,242. Average holding worth $276.
There's a graphical version of all this data available here.
Meanwhile, check out all the trades so far this year.
An avalanche of tax-loss selling after $40,000 windfall profit
The past four days has seen our most rapid selling spree in terms of transaction numbers, although the collective dollars involved are small. Here's the full detail:
April 17
WA News: sold 29 at $5.01
Trust Company: sold 38 at $4.55
Bradken: sold 50 at $3.45
Emeco: sold 300 at 47.5c
Envestra: sold 635 at 42c
Amalgamated Holdings: sold 71 at $4.15
Ariadne: sold 1,127 at 22c
Commonwealth Property: sold 590 at 90.4c
Beaconsfield Gold: sold 1,855 at 17.5c
Broadcast Services Australia: sold 955 at 18c
Macquarie Office: sold 3,622 at 19.5c
April 16
Mirvac Industrial: sold 610 at 7.8c
Murchison Metals: sold 80 at 90.5c
Pacifica: sold 225 at 13.5c
Prime Financial: sold 509 at 13c
Poseidon Nickel: sold 320 at 29.5c
Prime Retirement and Aged Care: sold 588 at 12c
Rams: sold 200 at 25c
Reckson New York: sold 810 at 6.7c
April 15
CBD Energy: sold 1,450 at 3.3c
Capral Aluminium: sold 530 at 7.6c
Breakaway Resources: sold 853 at 6.2c
Babcock &Brown Residential: sold 686 at 5.3c
Anvil Mining: sold 27 at $1.41
APN Property Group: sold 165 at 17c
Allomak Ltd: sold 1,600 at 1.8c
Austock Group: sold 229 at 3c
April 14
Oilex: sold 324 at 22c
Moly Mines: sold 105 at 27c
Lend Lease Primelife Group: sold 378 at 11.5c
ING Office Fund: sold 309 at 43.5c
Clarius Group: sold 319 at 38.5
Boulder Steel: sold 2,300 at 1.9c
Alesco Corp: sold 33 at $2.66
Abacus Property Group: sold 333 at 32.5c
It should be noted that we've retained 10 shares in most of these companies to ensure AGM and capital raising access. There were two main reasons for this aggressive sell-down. The first is the continuing share market recovery which I reckon is completely overdone.
The second is a much nicer problem: almost $40,000 in crystallised capital gains from playing the angles on capital raisings and share purchase plans since the market bottomed on March 9.
All of a sudden we were sitting on $18,000 of realised capital gains for the 2008-09 financial year, so it was time to start the tax-loss selling of various dogs in the portfolio. And there are hundreds.
The biggest contributor to this nice problem was the Fairfax Media capital raising in which we secured 83,333 shares at 75c and then sold them for an average $1.09 over the past nine days.
IBA Health also delivered a $3000 gain yesterday, which put it in the same league as the recent Suncorp and Wesfarmers.
The Newcrest, Sonic Health and Crown share purchase plans also delivered gains of more than $1000 in profits over the past six weeks, so it has been a nice run which has offset about one-third of our investment losses from the global financial crisis and has meant we've been able to book a few more flights to Sydney for upcoming AGMs.
The pipeline for future offers is also looking very promising and we'll keep you posted on how it all unfolds.
Upcoming shareholder meetings
The mini AGM season really cranks up next week, starting with Rio Tinto in Sydney on Monday. The flights are booked and it should be a fascinating encounter, although we won't be given any information on the proxies until well after the meeting has finished.
We've put together this comprehensive diary of all the upcoming AGMs and are particularly looking forward to attending AMP, GPT and Coca Cola Amatil in Sydney, plus Axa, Alumina and Oz Minerals in Melbourne.
A meeting with Oz Minerals chairman Barry Cusack
The only board tilt this season is Oz Minerals and chairman Barry Cusack has been in touch so we're getting together next Wednesday morning.
As an old Rio Tinto executive, I'll be able to tell Barry all about the Rio Tinto AGM action on Monday, whilst also shooting the breeze on board composition at Oz Minerals after the Chinese Government buys the majority of its assets.
The meeting will presumably be off the record but we'll report back on whatever we can next week.
Rio Tinto cancels AGM webcast as we rank the top 20
Last year's Rio Tinto AGM in Brisbane was a very strange affair when the security goon confiscated my audio recorder even though the AGM was being webcast. We gave all concerned a suitable spray in this special edition at the time.
Given our run in with QBE Insurance last week after they censored the debate from their webcast and Rio Tinto's decision to offer no webcasting at all this year, I asked our multi media editor Shane Marden to critique the AGM web archives of our 20 biggest companies
Here's how they rate:
Westpac: a comprehensive offering to shareholders. The archive goes all the way back to 2000. Questions are included in the webcasts, and they offer video, sound and slides, PDF files or word files to download. This shows a strong consideration of their shareholders and web users.
Macquarie Group: a comprehensive archive for shareholders. They offer pdfs and webcasts that are archived back to 2001. The archive extends to 1999 but only PDFs are on offer between 1999 and 2001.
Commonwealth Bank: broadcast their AGMs live and have 3 years of archived webcasts including questions from the floor. The webcasts are supported by results facts and figures which are also downloadable.
Telstra: have archived webcasts of AGMs back to 2004 including formal business, but after multiple checking, there is no sound supporting the videos for 2004 and 2005. From 2006 onwards everything is archived properly and working.
Newcrest: an extensive archive that goes back to 2003 with the webcast archive kicking in from 2006. The webcasts are comprehensive and cover all questions and formal business.
BHP Billiton: another company that webcasts their AGMs live. The 2008 and 2007 webcast is archived including all questions, and the 2006 and 2005 webcasts are archived as slides and audio only.
Computershare: the archive goes back until 2002 but it is from 2006 onwards where they offer webcasts. The webcasts on offer are only sound files but they do include questions and formal business.
Woodside Petroleum: they webcast and the archive goes back until 2006, but that particular webcast link is broken.
Suncorp: they offer webcasts including questions from the 2007 and 2008 AGMs only. The archive goes back to 2004 but the information is presented as PDF files only.
NAB: The 2008 AGM is on offer as a video webcast and covers formal business, but they have no deeper archive of webcasts or past AGMs.
QBE: the archive goes back to 2004 and offers webcasts as audio and slides for the years up to 2007. Video webcasts are on offer from 2007 but they have been edited down to exclude all debate.
CSL: an archive that goes back to 2000 and webcasts that begin in 2002. This may seem a comprehensive archive, but the webcasts do not include any formal business or questions from the floor, which is self-defeating. Why go to the trouble of hosting and storing webcasts when the information is censored?
Foster's: has an archive that goes back until 2003, but is only from 2006 onwards there are webcasts on offer. Each webcast since 2006 does not include and questions or formal business.
News Corp: they have webcast their AGMs live in the past, but archiving these webcasts is a foreign concept. Could not find an archive of any information for any past AGMs.
AMP: apart from the fact that information for shareholders is very difficult to find, they offer only the 2008 AGM as a webcast which includes questions. They have links to other years going back to 2004, but every one of those links simply says that no information is available. What's the point?
Axa Australasia: the archive for AGMs goes back to 2000, but not a single webcast is on offer. All material is presented as PDF files.
ANZ: They have PDFs and an audio webcast with slides of of the previous AGM only.
Wesfarmers: they only archive PDF documents, but at least it goes back to 2003. They prompt users to download software to listen to webcasts, but after much checking, the links to webcasts are non-existent.
Fortescue Metals: an informative website but no offerings of any past AGMs, in the printed form or as webcasts. A poor effort considering everything else is covered in detail.
Rio Tinto: To access some of their media releases and webcasts, it requires the viewer to register. There are no AGM webcasts available on the website, but the two webcasts they do offer are annual results and for an investor seminar.
Cornwall cartoons for The Mayne Report
We're delighted to welcome seasoned cartoonist Mark Cornwall to The Mayne Report. Mark drew many hundreds of excellent toons for Crikey over the years before returning to teaching, but he's keen to get back into the game and we're delighted to have him.
Mayne Report video blog, podcasts and press room
The best way to listen to our regular radio interviews is to sign up for video and audio podcasts so you can see and hear our electronic media engagements conveniently on your ipod or iphone.
This week we have also packaged up past appearances on the ABC's Lateline and Lateline Business programs.
The Mayne Report Rich List
Since we began compiling the Mayne Report Rich List documenting Australians currently or previously worth more then $10 million, it has grown in numbers and popularity such that no other feature on the website can match it for traffic. We're now up to 1332 entries.
This week we have put together a list of rich Aussies in sport, TV, music and movies:
Sport
Andrew Bogut: professional basketballer in the NBA playing with the Milwaukee Bucks. Originally from Melbourne, he moved to the US to play for the University of Utah as a teenager.
Lleyton Hewitt: tennis player who owns property in Australia worth over $30 million, and has a lucrative contract with Yonex.
Harry Kewell: arguably Australia's best-known soccer player of his generation who has made tens of millions playing in the English Premier League for the likes of Leeds and Liverpool. The BRW claims $54 million.
Mat Mladin: six-time winner of the AMA Superbike Championship, he runs a motorcycle import business and has a large contract with Suzuki.
Greg Norman: former world number one golf professional, Greg Norman continues to build his wealth through golf course design, property, clothing, wine and export beef. Despite a nasty and costly divorce, his wealth is still north of $200 million. The BRW claims $254 million.
Geoff Ogilvy: a past winner of a prestigious major golf tournament, the US Open, he continues his success rising up the world rankings and expanding his wealth.
Chad Reed: unheralded, he is an Australian Supercross champion with huge success in the US worth around $25 million.
Adam Scott: Australia's best young golfer with annual earnings around $8 million and a personal wealth of more than $25 million.
Karrie Webb: the best female golfer Australia has ever produced who has cashed in big time on the professional tour.
Mark Webber: part of the Red Bull F1 racing team, and since his debut has annual earnings upwards of $8 million.
TV
Reg Grundy: an Australian icon and successful television entrepreneur, who brought to our screens TV shows such as Neighbours, Prisoner and a large variety of game shows. Privately, he is an accomplished and passionate wildlife photographer. The BRW claims $850 million.
Rove McManus: has become one of Australia's premier light entertainment personalities. Starting as a comedian, he owns his own production company that produces Rove Live.
Eddie McGuire: collected $4.7 million from PBL in 2005-06 and $4.2 million in 2006-07 despite getting flicked as CEO and signing a new lucrative 4-year contract on the same rate to do not very much.
Steve Vizard: a canny wheeler dealer who made his first fortune selling Artist Services to Granada but has now enjoyed another windfall through the sale of his Toorak mansion for a record $17 million.
MUSIC
Murray Cook: founding member of the world famous The Wiggles, most of the wealth is generated from touring and dancing with children globally, regularly earning $45 million annually for the past few years.
Michael Coppel: a music promoter for the past 20 years, his company was ranked the fourth biggest concert promoters by Billboard magazine and continues to grow.
Jeff Fatt: the oldest member of The Wiggles, he was once member of 1980s rock band The Cockroaches and has regular earnings of $45 million, mainly from touring.
Anthony Field: founding member of The Wiggles, most of the wealth from touring has delivered regular earnings of $45 million.
Michael Gudinski: founder of Mushroom records and the Frontier Touring Company which was ranked fifth largest concert promoter by Billboard magazine, the Mushroom juggernaut continues to grow including the film production division which was responsible for hits such as Wolf Creek and Chopper.
Darren Hayes: found fame with band Savage Garden and is now a solo artist with his own label, Powdered Sugar. Made BRW Young Rich List.
Rod Leissle and John Tyrrell: behind the phenomenal ABBA tribute band Bjorn Again which now has 5 franchises playing at any one time around the globe.
Kylie Minogue: is most famous from her singing career, has also worked as an actress, owns a lingerie and fragrance line, and is rumoured to be starting her own home furnishing brand. She also owns property in Melbourne, Paris and London. Made BRW Young Rich List.
Gregory Page: founding member of The Wiggles, most of the wealth is generated from touring and dancing with children globally.
Keith Urban: singer and songwriter who was born in New Zealand and now lives in Australia with his wife, Nicole Kidman, has a string of recording successes earning him north of $30 million.
Angus and Malcolm Young: guitarists, songwriters, and co-founders of the Australian hard rock band AC/DC. Check out this excellent explanation of their business savvy by James Thomson on Business Spectator.
MOVIES
Cate Blanchett: actress and co-artistic director of the Sydney Theatre Company who owns property in Australia and the UK. The BRW claims $48 million.
Stuart Beattie: arguably Australia's most successful screenwriter in Hollywood who managed to produce the blockbuster GI Joe in only seven weeks during the big writers strike a couple of years back.
Russell Crowe: when you're getting $20-$30 million per movie, it doesn't take long to be worth plenty, although he's not enjoying the losses on South Sydney.
Hugh Jackman: tripled his yearly salary in 2007 as a film and musical actor, and co-runs Seed, a production company. Jackman owns property in New York, Melbourne and London. Made BRW Young Rich List.
Nicole Kidman: a well-known Hollywood actress who also heads production company Blossom Films, and earns close to $20 million a film. The BRW claims $289 million.
Baz Luhrmann: has become one of Australia's leading film directors responsible for Strickly Ballroom, Romeo and Juliet, Moulin Rouge!, and the recent epic Australia.
Geoffrey Rush: the first Australian-born person to win an Academy Award for acting, he continues to shine on top of his profession.
James Wan: creator and director of the Saw series of films which has taken over $400 million at the box office.
Naomi Watts: an actress who now earns more than $2 million a year and is worth upward of $20 million.
Rich property families snap up bargains
The highly conflicted and overpaid property fund managers in Australia have largely stuffed it courtesy of the temptations presented by the credit and property bubbles over the past five years.
The smart private players like the Besens, Roberts and Walkers took the institutional cash at the peak of the boom but are now getting back into the game. There was an interesting story in The AFR yesterday exploring this theme so we've grabbed their table and weaved it into our Rich List to produce the following updated entries:
Laidlaw family: Australia's oldest manufacturer of work wear, Yakka was owned by this Melbourne family until it was sold to Pacific Brands for $280 million in 2007. Would be worth half that today. A recent purchase for the family was the TAC buliding in Geelong for a reported $75 million.The BRW claims $280 million.
Pollack family: Henry was the co-founder of Mirvac in 1973 with Bob Hamilton and still has an estimated $100 million-plus investment portfolio, although he left Mirvac in 1996, aged 73. A recent addition to the family's portfolio was 66 Clarence Street in Sydney for a reported $60 million.
Roberts family: owned the construction giant Multiplex since it all began from humble beginnings with John Roberts in Perth in 1962, until the children pocketed $1 billion selling out to Canadian firm Brookfield Asset Management in 2007. With an already expansive commercial property portfolio, another recent addition to the stable was the Australian Red Cross building in Sydney for around $70 million. The BRW claims $1.16 billion.
Roth family: tenacious property developers, brothers John and Stanley Roth have added to their large Sydney property portfolio which was created by their father Henry Roth. Owning buildings in Sydney's CBD and surrounds, they have expanded into creating Italian gelato chain, Gelatissimo. They are currently in the process of finalising a half interest in 1 Spring St Melbourne worth $65 million.The BRW claims $243 million.
Tieck family: largely involved in Sydney commercial property and other investments, their wealth was built by their father Norman Tieck who was a partner of the Franklins supermarket chain. A recent addition to their expansive property portfolio was 44 Martin Place, Sydney for $83 million. The BRW claims $989 million.
Three new Rich Listers
Tony Gilby: former board member of coal-seam gas sensation, Sunshine Gas, which was taken over by Queensalnd Gas last year for a reported $812 million. Mr Gilby was a big winner from the sale which delivered him a $43 million windfall.
Fraser Hopkins: co-founder of the Latina pata brand, he recently sold the Russell Drysdale painting Rocky McCormack for a reported $1.89 million. An astute art collector whose wealth continues to grow.
Ric Richardson: Sydney-born founder of IT company, Uniloc, was the winner in a battle with Microsoft over an unauthorised use a software patent registered to his company. Now living in California, a US jury ordered Microsoft to pay $532 million for the unauthorised use. This decision will make Mr Richardson almost $100 million wealthier, provided Microsoft loses its promised appeal.
Tales from the speakers circuit
It was another interesting week on the talk circuit after a breakfast presentation this morning to 100 small business types organised by Brimbank City Council in Melbourne's western suburbs.
There was about 10 ALP councillors and state MPs present and not a Liberal to be seen. Melbourne's western suburbs are a disgrace as far as the Liberal Party are concerned and even the Labor types were this morning complaining about the lack of competiton.
The feedback was pretty good this morning in spite of giving the Labor state and federal governments both barrels for their reckless borrowings.
Notorious hitman Andrew "Benji" Veinaman is buried in the Keilor cemetery at the back of the wedding reception centre used for this morning's function. Ironically my council Manningham across town started the gangland war when Alphonse Gangitano was taken out in January 1998 at his Templestowe home.
Underworld survivor Mick Gatto moved out of Manningham into a Lower Plenty mansion within our neighbouring Banyule City Council a couple of years back, but his Elite Cranes business is based in Brimbank. That's enough useless trivia for a while.
Meanwhile, if you've ever considered having us along to your function, check out this feedback section from some of the 200-plus speeches we've given over the years.
That's all for this week.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
First up this week, we've decided to offer an extended free trial until June so if you enjoy these weekly corporate governance newsletters, tell your friends and colleagues to sign up here.
It's been another big week in corporate governance but for sheer audacity it is hard to go past Nicholas Bolton's extraordinary BrisConnections coup.
The media certainly lapped it up. I did no less than six radio interviews after news of the extraordinary $4.5 million deal broke on Tuesday afternoon as follows:
Tuesday, 5.10pm: 4BC Brisbane with Mike Smith when assumed Leighton had actually bought the shares and the associated $154 million liability rather than paying $4.5 million just for the voting rights.
Wednesday, 6.50am: ABC Radio National Breakfast with Fran Kelly.
Wednesday, 7.10am: 774 ABC Melbourne with Tracey Bartram on Breakfast.
Wednesday, 7.20am: 702 ABC 702 Sydney with Adam Spencer on Breakfast.
Wednesday, 9.25am: 666 ABC Canberra with Alex Sloan on Mornings.
Wednesday, 5.40pm: ABC 774 Melbourne regular spot on Drive with Lindy Burns.
I also wrote this detailed piece defending Bolton for the Fairfax websites that went live shortly before noon on Wednesday and it clocked up a staggering 75,000 page views by the end of the day. That says a lot about the interest in Bolton and the power of The Age and The SMH websites to deliver more web traffic for business news than anyone else in Australia.
The BrisConnections fiasco reflects awfully on corporate governance in Australia and it is quite fitting that a young upstart has shown up the big boys. God knows what BrisConnections chairman Trevor Rowe will tell Alan Kohler when interviewed on Inside Business on Sunday.
All this talk about ASIC scrutinising Bolton's $4.5 million payment from Leighton seems ill-founded. Bolton has done nothing wrong and never claimed to be representing the small shareholders. Greenmailers are normally minority shareholders trying to extract a disproportionate benefit from a larger shareholder in a takeover. Bolton's skill was in becoming the largest shareholder and leveraging his position. This sort of thing is done by largest shareholders in business all the time. For instance, the Murdoch and Lowy families both use their positions as the largest respective shareholders in News Corp and Westfield to pay themselves more than $30 million a year in salaries.
It is interesting that Bolton and the discredited Trevor Rowe are now essentially publically calling each other liars over who rang who and whether the company itself also made a settlment offer or received payment requests from Bolton.
There is also a lot of talk from standover man Jim Byrnes and others that Bolton risks having his $4.5 million payment unwound.
News Ltd's Terry McCrann best summed up the way Bolton structured the ownership and payment in two different companies, although BrisConnections could certainly appoint liquidators to try and reverse it. I suspect Leighton, which owns half the BrisConnections management company, has committed not to do this as part of the deal.
Meanwhile, Queensland Treasurer Andrew Fraser had an interesting exchange with Business Spectator's KGB crew this morning in which he took quite a hard line suggesting underwriters Macquarie and Deutsche will risk their reputations if they don't deliver on their obligations.
The Macquarie crew have been attempting to renegotiate the terms to improve traffic funnelling but Fraser has so far resisted, to his credit. The outrageous traffic funnelling that Macquarie negotiated with Melbourne's Transurban deal in 1996 has contributed to equity investors enjoying returns of about 1000% from that company over the past 13 years.
As Fraser points out, these investment bankers never come back and offer to return value to taxpayers when they get a favourable deal away so it is up to them to cop the losses when it all goes bad.
The main banking syndicate stumping up $3 billion to fund the leveraged vehicle are also reportedly keen to walk away. This isn't a surprise given that Macquarie negotiated its BrisConnections banking syndicate back before the global financial crisis really hit and before the equity value started fast disappearing.
Whilst the initial media coverage around the BrisConnections float was very positive, as time goes on we're increasingly proud of being the first to blow the whistle on it last year as this package demonstrates.
David Murray's Future Fund leak
The AFR's Pamela Williams is clearly getting on very well with Future Fund chairman David Murray based on the extraordinary detail he's been leaking her about the pressure being placed on Telstra chairman Donald McGauchie by his largest shareholder.
Murray fired a comprehensive shot at McGauchie through the front page of The AFR on Wednesday in what was a really good exclusive for our national financial daily.
The Australian's John Durie wrote an insightful column on the whole issue today and it certainly does look like Murray is doing the Federal Government's bidding in monstering McGauchie.
Then again, McGauchie deserves it and should be removed after botching Telstra's regulatory management. He's the sort of bloke who would never go quietly and with Telstra shares in the cellar, maybe Murray is getting ready to force the issue if the Telstra board won't fix the problems themselves.
Murray himself observed at the Risk Metrics conference earlier this month that boards tend to be naturally collegiate, so it would only be expected that McGauchie's colleagues would rally around him.
Therefore, it would appear that Murray has given up on the subtle backroom approach and is prepared to publically blast McGauchie out if necessary.
Meanwhile, Murray's successor at the Commonwealth Bank, Ralph Norris, is getting stacks of publicity with all this talk about his 10% pay cut.
The board has done likewise which is good PR. The real game here is fending off a regulatory assault from Canberra after observing what the Feds were prepared to do to Telstra and what they've done on executive pay.
Shares in the Big Four have rocketed over the past six weeks and today their collective market capitalisation almost got back to $200 billion. That is far more important for banker wealth in Australia than any 10% salary cut.
Stand by for another Suncorp bailout from Labor
Southern Cross Equities institutional chief Charlie Aitken was as fascinating as ever in tonight's lively edition of The Eureka Report. Of particular interest was his prediction that Federal Treasurer Wayne Swan will move to level the playing field on the fees the government charges banks for their deposit guarantee. Here's the relevent extract:
The Big Four are charged 70 basis points by the government, Suncorp 100 basis points and the regionals (Bendigo & Adelaide and Bank of Queensland) 150 basis points. This obviously translates to a margin advantage for the major banks, with the majors now averaging net interest margins of 2.05%, Suncorp 1.8% and the regionals 1.5%.
It can be argued that the regionals are put at a competitive disadvantage by the staggered nature of the government guarantee fee structure. They simply can't issue new mortgages at the same rates as the majors unless they sacrifice margin. I believe the regional banks have put this theory to the Treasurer and it's believed he is sympathetic to any ideas that might increase domestic banking competition.
While the wholesale funding guarantee has been a success in terms of attracting funding for Australian banks, the perhaps unintended ramification is that it has further enhanced the oligopoly of the Big Four. I would not be surprised to see Swan “level the playing field” in terms of the fee charged for the government guarantee. On that basis, the upside to that announcement lies in the regionals and Suncorp. Remember: just about every negative piece of research written on Suncorp and the regionals is about their funding cost disadvantage compared with the majors. Any change in the government guarantee fee structure would narrow that funding cost disadvantage.
Given that the Queensland division of the ALP owned 1.18 million Suncorp shares before the recent capital raising, there is an obvious conflict of interest here.
If the Labor Holdings investment vehicle took up their entitlement to Suncorp's one-for-five entitlement offer at the knockdown price of just $4.50 in February, then it is looking at a very tidy profit with the stock closing at $6.50 tonight.
The history of Labor Holdings and its huge bank investments was explained in this front page Sunday Age story in February last year. It's worth another read in the context of Charlie Aitken's predictions that the two Queenslanders at the top of the Federal government are planning to change the rules in a way that will boost the value of Labor's Suncorp investment.
That said, the current policy is outrageously beneficial to the Big Four. The simplest solution would be for Labor Holdings to sell all its bank shares to remove the obvious conflict of the party potentially profiting from its own banking policies.
Chinalco will need better terms to land Rio Tinto
There has been a sudden burst of commentary about the Chinese strategy to sell US dollars and buy commodities such as copper which was kicked off in Australia by Alan Kohler with this insightful Business Spectator piece yesterday and then followed up by Michael Pascoe on Fairfax's websites today and Robert Gottliebsen in the lead story of tonight's edition of The Eureka Report.
This Chinese switching strategy was first circuitously explored in the February 16 edition of The Mayne Report when we wrote:
And whilst China last week publically committed to retain their $US682 billion investment in US bonds, which delivered an excellent 15% return over 2008, this $US19.5 billion Rio Tinto play is a very strategic and important allocation of surplus Chinese capital. Did you notice the $12 billion in convertible bonds were priced at $US45 and $US60 a Rio share respectively? The Australian dollar and British pound are both trading well below their long term average against the US dollar. If the US dollar was to suddenly tank due to lack of Chinese support for their bonds, then hey presto, Chinalco's investment in either the Australian or UK version of Rio suddenly gets a whole lot cheaper.
And that is sort of what has happened. All this talk that China will stop supporting US bonds has sent the greenback tumbling. The Australian dollar is back up to US72c which makes this comment by Rio Tinto CEO Tom Albanese at the London AGM on Wednesday night inaccurate: "The bonds we are proposing have a conversion price at a premium well above the current share prices."
Rio shares jumped another $1.25 to $59.30 on the Australian market today, which equates to $US42.70 at the current exchange rate. The first tranche of $US3.1 billion in convertible bonds proposed for Chinalco convert at $US45 a share which is definitely not "a premium well above the current share prices".
It will be interesting to see if the language changes at Rio Tinto's Australian AGM in Sydney on Monday, which we previewed in a Crikey scene setter earlier today.
With Rio shares rebounding, there is no way the Chinalco deal will be accepted by shareholders without some changes to the terms. The most obvious would be to cut the interest rates on the bonds from more than 9% to around 7%.
That would help negate the argument that this week's $US3.5 billion Rio Tinto bond issue at 9% shows that debt markets are recovering and the mining giant doesn't need the Chinese bailout, let alone one which is not attractively priced.
Uncle Sam shells out for Sons of Gwalia directors
QBE Insurance chairman John Cloney claimed at last week's AGM that AIG had started acting quite uncommercially ever since Uncle Sam took control of the company courtesy of that staggering $US182 billion bailout.
That's certainly one conclusion you could make from the landmark $53 million insurance settlement which the Sons of Gwalia administrator has pocketed by suing the directors for $200 million.
The directors' insurance policy was only for $50 million in total and while the case was arguably very strong, it is most unusual for an insurer to settle for the full amount. But that's what AIG has done with its contribution of $30 million courtesy of American taxpayers. Two Lloyds syndicates coughed up the other $20 million and given that QBE is one of the biggest Lloyds players, this might be why Cloney bagged AIG last week.
The Sons of Gwalia directors personally contributed $3 million to the settlement in a move that will have various Allco, Babcock, Centro, MFS, ABC Learning and Opes Prime directors shuddering in their boots. No wonder The AFR had a front page story today warning that premiums for directors and officers insurance are on the rise.
Vanguard founder blasts the fund managers as OECD critiques crisis
Vanguard founder John Bogle is one of the true global legends of the funds management industry and he has let fly at his fellow fund managers for owning shares in all the dodgy investment banks without once pulling them up for the outrageous risks being run. You must read this fabulous article about his views in The New York Times.
Meanwhile, Vanguard has been petitioned by groups campaigning against investments in companies which support genocide, such as PetroChina's efforts in Darfur. This web package shows that Vanguard is claiming it is already substantially in line with the proposal.
And whilst on global governance issues, check out this very detailed report from the OECD examining the lessons from the global financial crisis. It's an interesting read.
Labor remains streets ahead in latest Morgan poll
Gary Morgan's Roy Morgan Research has released its latest Federal opinion poll this afternoon which shows Kevin Rudd remains incredibly popular with 61% of the two party preferred vote. The double dissolution option must look very tempting given all that Senate obstructionism but deep down Labor knows that would probably deliver a dozen Greens into the Senate. I'd even be tempted to have a serious crack in a double dissolution given the Senate quota would be only 7.69% rather than the usual 14.28%.
Whilst these latest poll results were before the Coalition's outrageous reaction to the tragic boat explosion, it just goes to show how popular you can be dishing out cash to all and sundry. That said, Labor governments which lose control of the budget or trash the economy are traditionally swept from office and there's a chance the electorate will perceive that to be the case in a year from now.
Will Australia joins the IMF loan club?
The biggest risk for Australia is that we'll eventually need to be bailed out by the IMF, just like South Korea, Thailand and Indonesia were in the 1997 Asian crisis. The past six months since the Lehman Brothers collapse in September has seen unprecedented bailouts. Here is a list tracking the current state of play with large IMF sponsored loans and loan requests from sovereign states:
Mexico: seeking $US47 billion
Romania: $US27bn
Hungary: $US25bn
Poland: $US20.5 billion
Ukraine: $US16.4bn
Latvia: $US9.5 bn
Pakistan: $US7.6bn
Serbia: $US4bn
Sri Lanka: $US2bn
The reckless disregard for responsible fiscal management being shown by Kevin Rudd and the Labor Premiers is potentially putting Australia on a path to the IMF's door.
How on earth can a predicted $22 billion surplus one year turn into a $50 billion deficit the next? Federal finance minister Lindsay Tanner produced this very thoughtful essay for the Fairfax websites during the week and one of the comments in response from "Lachlan" sums up how many people feel:
As a Liberal voter it hurts me to say that this is actually quite a thoughtful piece. With genuine respect to you, your colleagues don't seem to get it. There is no fiscal discipline in your cabinet, and it is placing our future at great risk. The stimulus packages are the fiscal equivalent of a sugar hit and offer no structural benefits. Nor do they encourage employers to hire in any meaningful way. They are however short term political gold for your mob... Please do what you can to replace Mr Swan as Treasurer - he is just not up to it.
Feds borrow a record $2.3 billion in three days
The Federal Government has just set a record for debt raisings this week with the following three new entries on our list tracking all federal bond and treasury note issues since Kevin Rudd came to power:
April 17, 2009: $700m tender of 2 year bonds expiring in June 2011 were sold for an average yield of 3.32% and was a 4.9 times over-subscribed.
April 16, 2008: $900m of Treasury Note tenders across 3 tranches of $300 million. 90 day paper went for 2.74%, 180 day paper was 2.64% and 9 month money cost 2.84%.
April 15, 2009: $700m tender for 10 years bonds expiring in March 2018 were sold for an average yield of 4.63% and was 3.2 times over-subscribed.
That's $2.3 billion over the past three days which is unprecedented. So is the $14.4 billion that has been raised since the second stimulus package was announced on February 3, although thankfully the average issue remains at about 3.5% for four year money which shows continuing confidence in Australia as a reliable credit. For now!
These sorts of bond issues should become routine for the mainstream media to cover, but sadly they attract little attention. It's even worse with state government borrowing programs, which are also running at about $40 billion a year.
Victorian borrowing blows out
Victorian Premier John Brumby this week warned that tax cuts were out in the May 5 state budget because revenue has collapsed by $2 billion courtesy of the global financial crisis.
A quick look at the Treasury Corporation of Victoria website reveals how quickly the situation has deteriorated. This page shows how short term borrowings blew out from about $700 million in June last year to more than $4 billion at the end of March.
No wonder the Rudd Government had to step in to guarantee state debt. That particular move has only marginally reduced the risk premium that Victoria pays on its 10 years bonds which hit 120 basis points at the end of February but contracted to 93 basis points by the end of March as TCV reveals on this page.
This is the scariest table on the TCV website as it shows gross borrowings were pretty much steady at around $13 billion over the past decade before blowing out to $19 billion this year. Unless some major tax and spending changes are announced, Victoria is careering down the debt path at the rate of $5 billion a year so by the time of the next state election in November 2010, total Victorian debt will be approaching the $32 billion which Joan Kirner bequeathed to Jeff Kennett in 1992.
A $35 billion privatisation program and huge budget surpluses turned all that around, but it seems Victoria is headed back to where it all began without having a pile of assets left that could be privatised to pay back the debt. Oh dear.
Share trades and capital raising profits
As an advocate of maximum disclosure, we've decided to improve the information available on our share portfolio. Rather than just publishing the latest spreadsheet of the world's biggest small share portfolio, we've dragged them all up so you track the changes:
April 16, 2009: portfolio of 655 stocks worth $79,516 with paper loss of $100,822. Average holding worth $121.
March 15, 2009: portfolio of 674 stocks worth $71,294 with paper loss of $127,457. Average holding worth $106.
January 23, 2009: portfolio of 674 stocks worth $87,801 with paper loss of $127,973. Average holding worth $130
December 5, 2008: portfolio of 700 stocks worth $140,907 with paper loss of $105,062. Average holding worth $201.
October 9, 2008: portfolio of 708 stocks worth $143,772 with paper loss of $105,618. Average holding worth $203.
September 17, 2008: portfolio of 718 stocks worth $162,790 with paper loss of $88,132. Average holding worth $226.
July 21, 2008: portfolio of 711 stocks worth $173,953 with paper loss of $78,343. Average holding worth $244.
June 8, 2008: portfolio of 705 stocks worth $169,797 with paper loss of $60,087. Average holding worth $240.
May 16, 2008: portfolio of 693 stocks worth $179,680 with paper loss of $44,153. Average holding worth $259.
April 18, 2008: portfolio of 673 stocks worth $186,279 with paper loss of $55,242. Average holding worth $276.
There's a graphical version of all this data available here.
Meanwhile, check out all the trades so far this year.
An avalanche of tax-loss selling after $40,000 windfall profit
The past four days has seen our most rapid selling spree in terms of transaction numbers, although the collective dollars involved are small. Here's the full detail:
April 17
WA News: sold 29 at $5.01
Trust Company: sold 38 at $4.55
Bradken: sold 50 at $3.45
Emeco: sold 300 at 47.5c
Envestra: sold 635 at 42c
Amalgamated Holdings: sold 71 at $4.15
Ariadne: sold 1,127 at 22c
Commonwealth Property: sold 590 at 90.4c
Beaconsfield Gold: sold 1,855 at 17.5c
Broadcast Services Australia: sold 955 at 18c
Macquarie Office: sold 3,622 at 19.5c
April 16
Mirvac Industrial: sold 610 at 7.8c
Murchison Metals: sold 80 at 90.5c
Pacifica: sold 225 at 13.5c
Prime Financial: sold 509 at 13c
Poseidon Nickel: sold 320 at 29.5c
Prime Retirement and Aged Care: sold 588 at 12c
Rams: sold 200 at 25c
Reckson New York: sold 810 at 6.7c
April 15
CBD Energy: sold 1,450 at 3.3c
Capral Aluminium: sold 530 at 7.6c
Breakaway Resources: sold 853 at 6.2c
Babcock &Brown Residential: sold 686 at 5.3c
Anvil Mining: sold 27 at $1.41
APN Property Group: sold 165 at 17c
Allomak Ltd: sold 1,600 at 1.8c
Austock Group: sold 229 at 3c
April 14
Oilex: sold 324 at 22c
Moly Mines: sold 105 at 27c
Lend Lease Primelife Group: sold 378 at 11.5c
ING Office Fund: sold 309 at 43.5c
Clarius Group: sold 319 at 38.5
Boulder Steel: sold 2,300 at 1.9c
Alesco Corp: sold 33 at $2.66
Abacus Property Group: sold 333 at 32.5c
It should be noted that we've retained 10 shares in most of these companies to ensure AGM and capital raising access. There were two main reasons for this aggressive sell-down. The first is the continuing share market recovery which I reckon is completely overdone.
The second is a much nicer problem: almost $40,000 in crystallised capital gains from playing the angles on capital raisings and share purchase plans since the market bottomed on March 9.
All of a sudden we were sitting on $18,000 of realised capital gains for the 2008-09 financial year, so it was time to start the tax-loss selling of various dogs in the portfolio. And there are hundreds.
The biggest contributor to this nice problem was the Fairfax Media capital raising in which we secured 83,333 shares at 75c and then sold them for an average $1.09 over the past nine days.
IBA Health also delivered a $3000 gain yesterday, which put it in the same league as the recent Suncorp and Wesfarmers.
The Newcrest, Sonic Health and Crown share purchase plans also delivered gains of more than $1000 in profits over the past six weeks, so it has been a nice run which has offset about one-third of our investment losses from the global financial crisis and has meant we've been able to book a few more flights to Sydney for upcoming AGMs.
The pipeline for future offers is also looking very promising and we'll keep you posted on how it all unfolds.
Upcoming shareholder meetings
The mini AGM season really cranks up next week, starting with Rio Tinto in Sydney on Monday. The flights are booked and it should be a fascinating encounter, although we won't be given any information on the proxies until well after the meeting has finished.
We've put together this comprehensive diary of all the upcoming AGMs and are particularly looking forward to attending AMP, GPT and Coca Cola Amatil in Sydney, plus Axa, Alumina and Oz Minerals in Melbourne.
A meeting with Oz Minerals chairman Barry Cusack
The only board tilt this season is Oz Minerals and chairman Barry Cusack has been in touch so we're getting together next Wednesday morning.
As an old Rio Tinto executive, I'll be able to tell Barry all about the Rio Tinto AGM action on Monday, whilst also shooting the breeze on board composition at Oz Minerals after the Chinese Government buys the majority of its assets.
The meeting will presumably be off the record but we'll report back on whatever we can next week.
Rio Tinto cancels AGM webcast as we rank the top 20
Last year's Rio Tinto AGM in Brisbane was a very strange affair when the security goon confiscated my audio recorder even though the AGM was being webcast. We gave all concerned a suitable spray in this special edition at the time.
Given our run in with QBE Insurance last week after they censored the debate from their webcast and Rio Tinto's decision to offer no webcasting at all this year, I asked our multi media editor Shane Marden to critique the AGM web archives of our 20 biggest companies
Here's how they rate:
Westpac: a comprehensive offering to shareholders. The archive goes all the way back to 2000. Questions are included in the webcasts, and they offer video, sound and slides, PDF files or word files to download. This shows a strong consideration of their shareholders and web users.
Macquarie Group: a comprehensive archive for shareholders. They offer pdfs and webcasts that are archived back to 2001. The archive extends to 1999 but only PDFs are on offer between 1999 and 2001.
Commonwealth Bank: broadcast their AGMs live and have 3 years of archived webcasts including questions from the floor. The webcasts are supported by results facts and figures which are also downloadable.
Telstra: have archived webcasts of AGMs back to 2004 including formal business, but after multiple checking, there is no sound supporting the videos for 2004 and 2005. From 2006 onwards everything is archived properly and working.
Newcrest: an extensive archive that goes back to 2003 with the webcast archive kicking in from 2006. The webcasts are comprehensive and cover all questions and formal business.
BHP Billiton: another company that webcasts their AGMs live. The 2008 and 2007 webcast is archived including all questions, and the 2006 and 2005 webcasts are archived as slides and audio only.
Computershare: the archive goes back until 2002 but it is from 2006 onwards where they offer webcasts. The webcasts on offer are only sound files but they do include questions and formal business.
Woodside Petroleum: they webcast and the archive goes back until 2006, but that particular webcast link is broken.
Suncorp: they offer webcasts including questions from the 2007 and 2008 AGMs only. The archive goes back to 2004 but the information is presented as PDF files only.
NAB: The 2008 AGM is on offer as a video webcast and covers formal business, but they have no deeper archive of webcasts or past AGMs.
QBE: the archive goes back to 2004 and offers webcasts as audio and slides for the years up to 2007. Video webcasts are on offer from 2007 but they have been edited down to exclude all debate.
CSL: an archive that goes back to 2000 and webcasts that begin in 2002. This may seem a comprehensive archive, but the webcasts do not include any formal business or questions from the floor, which is self-defeating. Why go to the trouble of hosting and storing webcasts when the information is censored?
Foster's: has an archive that goes back until 2003, but is only from 2006 onwards there are webcasts on offer. Each webcast since 2006 does not include and questions or formal business.
News Corp: they have webcast their AGMs live in the past, but archiving these webcasts is a foreign concept. Could not find an archive of any information for any past AGMs.
AMP: apart from the fact that information for shareholders is very difficult to find, they offer only the 2008 AGM as a webcast which includes questions. They have links to other years going back to 2004, but every one of those links simply says that no information is available. What's the point?
Axa Australasia: the archive for AGMs goes back to 2000, but not a single webcast is on offer. All material is presented as PDF files.
ANZ: They have PDFs and an audio webcast with slides of of the previous AGM only.
Wesfarmers: they only archive PDF documents, but at least it goes back to 2003. They prompt users to download software to listen to webcasts, but after much checking, the links to webcasts are non-existent.
Fortescue Metals: an informative website but no offerings of any past AGMs, in the printed form or as webcasts. A poor effort considering everything else is covered in detail.
Rio Tinto: To access some of their media releases and webcasts, it requires the viewer to register. There are no AGM webcasts available on the website, but the two webcasts they do offer are annual results and for an investor seminar.
Cornwall cartoons for The Mayne Report
We're delighted to welcome seasoned cartoonist Mark Cornwall to The Mayne Report. Mark drew many hundreds of excellent toons for Crikey over the years before returning to teaching, but he's keen to get back into the game and we're delighted to have him.
Mayne Report video blog, podcasts and press room
The best way to listen to our regular radio interviews is to sign up for video and audio podcasts so you can see and hear our electronic media engagements conveniently on your ipod or iphone.
This week we have also packaged up past appearances on the ABC's Lateline and Lateline Business programs.
The Mayne Report Rich List
Since we began compiling the Mayne Report Rich List documenting Australians currently or previously worth more then $10 million, it has grown in numbers and popularity such that no other feature on the website can match it for traffic. We're now up to 1332 entries.
This week we have put together a list of rich Aussies in sport, TV, music and movies:
Sport
Andrew Bogut: professional basketballer in the NBA playing with the Milwaukee Bucks. Originally from Melbourne, he moved to the US to play for the University of Utah as a teenager.
Lleyton Hewitt: tennis player who owns property in Australia worth over $30 million, and has a lucrative contract with Yonex.
Harry Kewell: arguably Australia's best-known soccer player of his generation who has made tens of millions playing in the English Premier League for the likes of Leeds and Liverpool. The BRW claims $54 million.
Mat Mladin: six-time winner of the AMA Superbike Championship, he runs a motorcycle import business and has a large contract with Suzuki.
Greg Norman: former world number one golf professional, Greg Norman continues to build his wealth through golf course design, property, clothing, wine and export beef. Despite a nasty and costly divorce, his wealth is still north of $200 million. The BRW claims $254 million.
Geoff Ogilvy: a past winner of a prestigious major golf tournament, the US Open, he continues his success rising up the world rankings and expanding his wealth.
Chad Reed: unheralded, he is an Australian Supercross champion with huge success in the US worth around $25 million.
Adam Scott: Australia's best young golfer with annual earnings around $8 million and a personal wealth of more than $25 million.
Karrie Webb: the best female golfer Australia has ever produced who has cashed in big time on the professional tour.
Mark Webber: part of the Red Bull F1 racing team, and since his debut has annual earnings upwards of $8 million.
TV
Reg Grundy: an Australian icon and successful television entrepreneur, who brought to our screens TV shows such as Neighbours, Prisoner and a large variety of game shows. Privately, he is an accomplished and passionate wildlife photographer. The BRW claims $850 million.
Rove McManus: has become one of Australia's premier light entertainment personalities. Starting as a comedian, he owns his own production company that produces Rove Live.
Eddie McGuire: collected $4.7 million from PBL in 2005-06 and $4.2 million in 2006-07 despite getting flicked as CEO and signing a new lucrative 4-year contract on the same rate to do not very much.
Steve Vizard: a canny wheeler dealer who made his first fortune selling Artist Services to Granada but has now enjoyed another windfall through the sale of his Toorak mansion for a record $17 million.
MUSIC
Murray Cook: founding member of the world famous The Wiggles, most of the wealth is generated from touring and dancing with children globally, regularly earning $45 million annually for the past few years.
Michael Coppel: a music promoter for the past 20 years, his company was ranked the fourth biggest concert promoters by Billboard magazine and continues to grow.
Jeff Fatt: the oldest member of The Wiggles, he was once member of 1980s rock band The Cockroaches and has regular earnings of $45 million, mainly from touring.
Anthony Field: founding member of The Wiggles, most of the wealth from touring has delivered regular earnings of $45 million.
Michael Gudinski: founder of Mushroom records and the Frontier Touring Company which was ranked fifth largest concert promoter by Billboard magazine, the Mushroom juggernaut continues to grow including the film production division which was responsible for hits such as Wolf Creek and Chopper.
Darren Hayes: found fame with band Savage Garden and is now a solo artist with his own label, Powdered Sugar. Made BRW Young Rich List.
Rod Leissle and John Tyrrell: behind the phenomenal ABBA tribute band Bjorn Again which now has 5 franchises playing at any one time around the globe.
Kylie Minogue: is most famous from her singing career, has also worked as an actress, owns a lingerie and fragrance line, and is rumoured to be starting her own home furnishing brand. She also owns property in Melbourne, Paris and London. Made BRW Young Rich List.
Gregory Page: founding member of The Wiggles, most of the wealth is generated from touring and dancing with children globally.
Keith Urban: singer and songwriter who was born in New Zealand and now lives in Australia with his wife, Nicole Kidman, has a string of recording successes earning him north of $30 million.
Angus and Malcolm Young: guitarists, songwriters, and co-founders of the Australian hard rock band AC/DC. Check out this excellent explanation of their business savvy by James Thomson on Business Spectator.
MOVIES
Cate Blanchett: actress and co-artistic director of the Sydney Theatre Company who owns property in Australia and the UK. The BRW claims $48 million.
Stuart Beattie: arguably Australia's most successful screenwriter in Hollywood who managed to produce the blockbuster GI Joe in only seven weeks during the big writers strike a couple of years back.
Russell Crowe: when you're getting $20-$30 million per movie, it doesn't take long to be worth plenty, although he's not enjoying the losses on South Sydney.
Hugh Jackman: tripled his yearly salary in 2007 as a film and musical actor, and co-runs Seed, a production company. Jackman owns property in New York, Melbourne and London. Made BRW Young Rich List.
Nicole Kidman: a well-known Hollywood actress who also heads production company Blossom Films, and earns close to $20 million a film. The BRW claims $289 million.
Baz Luhrmann: has become one of Australia's leading film directors responsible for Strickly Ballroom, Romeo and Juliet, Moulin Rouge!, and the recent epic Australia.
Geoffrey Rush: the first Australian-born person to win an Academy Award for acting, he continues to shine on top of his profession.
James Wan: creator and director of the Saw series of films which has taken over $400 million at the box office.
Naomi Watts: an actress who now earns more than $2 million a year and is worth upward of $20 million.
Rich property families snap up bargains
The highly conflicted and overpaid property fund managers in Australia have largely stuffed it courtesy of the temptations presented by the credit and property bubbles over the past five years.
The smart private players like the Besens, Roberts and Walkers took the institutional cash at the peak of the boom but are now getting back into the game. There was an interesting story in The AFR yesterday exploring this theme so we've grabbed their table and weaved it into our Rich List to produce the following updated entries:
Laidlaw family: Australia's oldest manufacturer of work wear, Yakka was owned by this Melbourne family until it was sold to Pacific Brands for $280 million in 2007. Would be worth half that today. A recent purchase for the family was the TAC buliding in Geelong for a reported $75 million.The BRW claims $280 million.
Pollack family: Henry was the co-founder of Mirvac in 1973 with Bob Hamilton and still has an estimated $100 million-plus investment portfolio, although he left Mirvac in 1996, aged 73. A recent addition to the family's portfolio was 66 Clarence Street in Sydney for a reported $60 million.
Roberts family: owned the construction giant Multiplex since it all began from humble beginnings with John Roberts in Perth in 1962, until the children pocketed $1 billion selling out to Canadian firm Brookfield Asset Management in 2007. With an already expansive commercial property portfolio, another recent addition to the stable was the Australian Red Cross building in Sydney for around $70 million. The BRW claims $1.16 billion.
Roth family: tenacious property developers, brothers John and Stanley Roth have added to their large Sydney property portfolio which was created by their father Henry Roth. Owning buildings in Sydney's CBD and surrounds, they have expanded into creating Italian gelato chain, Gelatissimo. They are currently in the process of finalising a half interest in 1 Spring St Melbourne worth $65 million.The BRW claims $243 million.
Tieck family: largely involved in Sydney commercial property and other investments, their wealth was built by their father Norman Tieck who was a partner of the Franklins supermarket chain. A recent addition to their expansive property portfolio was 44 Martin Place, Sydney for $83 million. The BRW claims $989 million.
Three new Rich Listers
Tony Gilby: former board member of coal-seam gas sensation, Sunshine Gas, which was taken over by Queensalnd Gas last year for a reported $812 million. Mr Gilby was a big winner from the sale which delivered him a $43 million windfall.
Fraser Hopkins: co-founder of the Latina pata brand, he recently sold the Russell Drysdale painting Rocky McCormack for a reported $1.89 million. An astute art collector whose wealth continues to grow.
Ric Richardson: Sydney-born founder of IT company, Uniloc, was the winner in a battle with Microsoft over an unauthorised use a software patent registered to his company. Now living in California, a US jury ordered Microsoft to pay $532 million for the unauthorised use. This decision will make Mr Richardson almost $100 million wealthier, provided Microsoft loses its promised appeal.
Tales from the speakers circuit
It was another interesting week on the talk circuit after a breakfast presentation this morning to 100 small business types organised by Brimbank City Council in Melbourne's western suburbs.
There was about 10 ALP councillors and state MPs present and not a Liberal to be seen. Melbourne's western suburbs are a disgrace as far as the Liberal Party are concerned and even the Labor types were this morning complaining about the lack of competiton.
The feedback was pretty good this morning in spite of giving the Labor state and federal governments both barrels for their reckless borrowings.
Notorious hitman Andrew "Benji" Veinaman is buried in the Keilor cemetery at the back of the wedding reception centre used for this morning's function. Ironically my council Manningham across town started the gangland war when Alphonse Gangitano was taken out in January 1998 at his Templestowe home.
Underworld survivor Mick Gatto moved out of Manningham into a Lower Plenty mansion within our neighbouring Banyule City Council a couple of years back, but his Elite Cranes business is based in Brimbank. That's enough useless trivia for a while.
Meanwhile, if you've ever considered having us along to your function, check out this feedback section from some of the 200-plus speeches we've given over the years.
That's all for this week.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.