Further proof the shorts are full of baloney part 2
From Westlake Securities this am: Continued from part 1
• The budgetary issues at Calvin College are similar to issues at many other college endowments: (NY Times, Moody’s).
• Mr. Samuel Delcamp is a recent addition to the InterOil Board and was previously the Executive Director of the Fuller Foundation. His average total compensation for 2001-2011 of ~$536,000/yr is inline with our expectations for somebody heading a foundation managing ~$450MM and living in a high cost area such as southern California. For reference, media reports put the compensation of the ~$2 billion University of North Carolina endowment CEO at ~$665,000 in 2006 (link).
• The recently published summary report from Calvin College indicates that the primary issues related to building new infrastructure in anticipation of additional gifts and investment returns (link). Both gifts and investment returns underperformed expectations during the recent recession. Given Calvin College’s location in Michigan, we suspect industries supporting its alumni were particularly hard hit.
• We believe this story has been an overhang on the stock for some time. We originally saw a similar story on March 22. We began reviewing the public filings and were able to engage with management on March 25 about the potential issues. Management has been diligent in responding to our questions with written correspondence that clarifies many of the issues.
• We are working to communicate directly with Calvin College, but they seem overwhelmed by the recent influx of calls.