When I wrote "there is no reason why brokers could not send its “electronic customers” an email " - Meant in addition to the mail package, not instead.
I guess that is the reason people did not get a link from their broker to vote through broker’s site.
Yet, there is no reason why brokers could not send its “electronic customers” an email with a control number and instructions how to vote (By internet at proxyvote, or by telephone – an 800 number that is completely useless outside of US and Canada, or by mail.)
The way Taro is managing this proxy-going the snail mail way and giving people such a short time leads me to believe that that they have a good-self serving reason for it.
About the proxy card I received by mail: All the voting items were unreadable – the letters were the smallest I’ve ever seen, and almost white. I wonder whether it is the same with you guys.
And yet Blue Mountain is quiet.
As you may recall, the McKenzie company was the administrator for the for the AGM of Dec. 2013, and after its “great success," it is also the administrator for the upcoming EGM, and they are probing minority again. Some of us received a phone call from McKenzie in the last proxy vote, and just a few minutes ago I received a phone call from McKenzie, regarding the upcoming EGM.
He called and asked for me by name. I asked him to identify himself. He did as SomeName from McKenzie.
“And what is the purpose of your call?” I asked, without identifying myself.
“You should have received a package from, with a proxy card for the EGM”, he said.
“Yes I know, and what is the purpose of your call?” I repeated.
“I would like to go with you through the items”, he said.
“Thank you that will be all”, I said.
“Oh.” He said. I hang up.
I received the package and already voted on March 9th- ( I voted “For” on items 6a and 6b – BM’s candidates, and I voted “AGAINST” on all other items. Exactly per BM’s recommendations.)
I wonder why Blue Mountain is so passive- besides filing with the SEC, they did nothing in the public domain to promote their candidates.
(Continues from previous post)
But wait there is more good news:
Volume in Jan-Feb-May picked up considerably, many of the trades were of K’s shares. Most likely Institutions s are discovering Taro.
In the last election, voters did not have to disclose “personal interest”. So Dilip’s wife, kids, brothers and sisters- If they personally own Taro- in this election they cannot vote for management and still be counted as minority (but his cousins can still do.) So it is really up to you!
Ung, (“Uphill battle”) on the contrary!
I think it is very achievable for the following reasons.
Minority owns 30% of Taro and needs slightly more than 15% of total votes in order to de-certify “results’ of last election.
Now consider the following:
(1) As of Dec 31 2013, 13F institutions own 9.5%.
(2) Let assume other institutions (None 13Fer- like Grand Slam, and institutions in foreign countries) own 1%.
(3) Individual investors who are active on this message board and another platform, and others who became aware of Taro's story due to articles in SA, TMF and BM’s public letters. These could be easily count to own 1%
(4) Former Taro's employees ( and many of them are former Taro's officers) who were let go when Sun took over, or who hated the way Sun managed Taro and left on their own- they hate Sun. Let give them 0.3 %
Sum it up and you’ll get 11.8%, let assume out of 11.8 only %11 will vote against management. If 4% out of 18.2% (that is less than one out of four) will vote against Sun-Taro, we win!
(continued on next post)
The good thing about this proxy: If management’s candidates are ‘re-certified’- there is no change in the status quo, and therefore no reason for Taro’s stock to go down. However, if management’s candidates are rejected, there is a good chance that minority may get at least one external director on the board- I am pretty sure the market will love it, and will reward Taro’s shares.
Better yet, if all management’s items (1-5) will be rejected, and BM’s candidates are elected by the majority of minority - that will be a great message to management-Minority is not going to be abused by management lying down. Hopefully, management will heed the message and things will start changing for minority and Taro’s shares will surge. You can make it happen by voting exactly according to BM’s recommendations (6a, 6b –FOR, all the rest AGAINST). Good luck for all of us!
Would you trust Taro’s board after 2 shameful low ball offers?
Would you trust a board that does almost nothing in developing its business in RoW markets?
Would you trust a board that its volume product sales are stagnating for a few years?
Would you trust a board that hides Taro away from the investment community?
Would you trust a board that ignores its minority, and gives them no opportunity and no platform to voice their grievances with management?
Would you trust a board that intentionally practices so many “irregularities” in its voting mechanism?
Would you trust a board that is made of Sun’s puppets, that does not include even one board member who stands up for minority?
Do you trust Sun pharma, the majority owner, not to abuse its power with the board?
Would you trust Sun-Taro to work for all investors rather than for Sun’s interests?
My theory is that for all of the above rhetorical questions the investment community does not trust Sun-Taro, and therefore it is not willing to give Taro its fair value.
Furthermore, according to my theory, Sin-Taro is aware if this mistrust, and since it plays to its own benefit it will not do anything that will “harm” this mistrust. They would like to keep it as is, and even nurture it further. That’s why they will fight tooth and nail anything that will restore some of the lost trust in its board- like 2 real independent external directors.
(Continued from previous post)
As for those who did not vote- it is obvious that they are not against management (god forbids), otherwise they would have voted AGAINST, right? Therefore they are FOR management. Count these lazy bones in the “FOR “Column.
See, all you need is just two simple rules – There is no need for a convoluted proxy vote, there is no need to hide the election results from the voters for so long, no need for Mckenzie. After all you are the majority; you can do whatever you want.
One a second thought, in light of these two rules, it is obvious that management wins in a landslide. If the results are already known, just cancel the EGM and declare a victory for management.
BTW, Sun-Taro, I noticed that you are already doing the right thing- The elections are three weeks away, and brokers have not yet received the proxy material. Good! Keep confusing the minority, but please remember: in case some of the voters are in Cayman Island, or Mauritius, or they are uncles, aunts, or cousins... shu, shu of you know who-do not confuse them, they are the good guys!
Since you already established the rule “if no directions are indicated the shares represented by the proxy will be voted as recommended by BOD”. Why not adopt the following two very simple rules.
1. All shares voted by proxy and or otherwise will be tallied as recommended by BOD
2. Al shares not voted will be tallied as recommended by BOD.
See, it is very simple! After all you control %70 of Taro, and be sure that the minority is very grateful to you: for the low ball offers, for keeping Taro’s share in check (god forbids it may go up and some minority will not be able to handle it), for stagnating Taro’s business, for disengaging from the investment world and for many other reasons. The voting minority just wants to show its gratitude to Sun-Taro management for all the wonderful things you are doing for them. There is no question whatsoever that all of them are voting for management’s recommendations, and those who voted against management were absent minded and made mistakes (please, forgive them), they also intended vote for management. Please correct this minor problem by adding there shares to the “FOR” column.
(Continues in next post)
To find Taro's filing on the sec site.
paste in Goog search box the following:
SEC Taro Schedules Extraordinary General Meeting for March 27, 2014
-- Continued from previous post
While, sadly, I cannot say the same things about Ms. Ilana Avidov and Mr. Dan Biran. I think that Avidov&Biran, together with Pekelman sold Taro’s minority down the river – by supporting Sun’s low ball buyout offers, by supporting Sun’s tactics of keeping Taro’s valuations low by means of: war of attrition against Taro’s minority, by helping Sun in stagnating Taro’s business (Volume of products sale is stagnating for few years), by not developing new markets for Taro’s products, for hiding Taro away from potential new investors (no Investor relations). And the list is long!
I think that Taro’s minority will be sleeping better at night knowing that there are two trustful directors on Taro’s board- Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky- who are there to serve the interests of all shareholders, not just Sun’s.
Why would any minority investor, in his/her right mind, vote for two miserably failed directors like Ms. Avidov and Mr. Biran?
The cutoff day for voting in the upcoming EGM is today, Feb 24th, so I expect the proxy material to be available at my broker sometime soon.
How I am going to vote in the upcoming EGM? No secrets, no surprises here!
I am going to vote AGAINST all pro-management's (items 1-5 in the filing notice, may be different numbers in the proxy). I am going to vote for Blue Mountain’s candidates, Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky, to the Board of Directors as External Directors (Item 6.)
I am impressed with Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky’s CV and list of achievements. I believe Mr. Ben-Ami Rosenfeld and Ms. Adi Bershadsky will be real independent directors, and they will protect minority interests while serving on Taro’s board, they will help move Taro forward for the benefit of all investors in Taro, and above all they will help restore some of the lost trust in Sun-Taro’s board, which keeps away many potential investors.
--Continued in next post--
I agree with most of your stuff. However, I do not agree with your assertion that minority has no hope in Taro, as implied in “There is no way the majority will allow a vote for a minority shareholder candidate. They will spend to keep him off the board. I am only stating the obvious.”
Well, it is not entirely up to majority for the following reasons:
1. Election of external directors requires the approval of the majority of the minority, without it there can be no board. So if Sun-Taro plays straight and honest in the upcoming re-certification proxy, and majority of minority will vote against it, Sun-Taro will have to either let Blue-Mountain re-introduce its candidates in the following proxy, or to compromise on at least one of BM’s candidate.
2. The lawsuit of BM vs. Taro in Israeli court may go in favor of minority, forcing Sun-Taro to conduct another proxy for electing external directors and other issues, like compensation for directors.
3. Minority needs about %15 out of the %30 in order to block management. Currently institutions hold probably more than %10 of Taro () and growing fast – they are unlikely to vote with management. If only %5 out of the remaining %20 owned by private investors will vote against management, Sun-Taro will be effectively blocked. That’s means Sun can no longer enjoys Taro’s profit while keeping Taro’s share depressed, and no lower ball offers.
Anyone who doesn’t see hope for minority in Taro because of the way Sun treats Taro’s minority should not own Taro.
My observation: As long as Taro is being fully controlled by Sun and as long as Sun is intended on low balling minority once again, it will not let Taro develop its business organically* or inorganically and it will do as much as possible to limit Taro’s growth and therefore Taro will not “have its day”.
However, that can change,
(1) When minority will have two real independent directors- not Sun’s nomination ( May be the Israeli court will be helpful on this matter.) And/or
(2) when Sun will be convinced that it has no chance of low balling minority. Last reporting shows that as of Dec 31st 2013 13F institutions owns %9.5 of taro( and it is probably higher than that by now -Taro’s trading volume has almost doubled in 2014.) So getting another #$%$ from the rest of minority in order to block Sun is definitely in the cards.
I am optimistic that if the minority will do the right things Taro will have more than its day.
HOTCHKIS AND WILEY CAPITAL MANAGEMENT, LLC ( $23.5B under management) initiated a position of 439K shares in the 3rd Q and added another 91K shares in the 4th Q and now owns 530K shares-more then %1 ownership of Taro.
It looks like Raging Capital is on the way out; it has been selling in the last 3 Q’s but still owns a significant amount of Taro’s share.
No major institution bailed out.
In Q3-2013 13F institutions held 2,736,374 Taro’s shares, about %6.44
In Q4-2013 13F institutions held 4,017,338 Taro’s shares, about %9.50.
So for now all is needed to block Management if necessary is another #$%$ out of %20.5 of the rest of minority (which also includes none-13F institutions). However, minority’s life will get better in the nerxt 13F reporting Date.
Initially I was under the impression that volume of trading in 4Q-13 was higher than 3Q-13, but a close scrutiny showed that volume was actually higher in 3Q-13 than in 4Q-13. Avg. daily volume in Q4 was ~24K; while in Q3-13 it was 33.7K. That explains why there was only %.5 growth of 13F ownership in Taro, which is mostly attributable to the reduction in Taro’s outstanding shares (IsZo just shifted a column from None-13F to 13F.) Actually the good fin. results of Q3-13 were known to the public only in mid-November, and only then the anemic trading volume started to pick up.
In Q1-14 avg. daily volume surged to 57K shares- Taro is being discovered, and the increase in # of large blocks means: institutions are buying.
I believe that in the May 13F reporting, 13F will grow to %11-%12 ownership of Taro, therefore in case of a proxy, requiring only about additional %4 from rest of minority in order to block anti-minority moves by management.
As long as Taro is undervalued (increase in earnings with less than a proportional increase in PS,) minority position in Taro will only improve.
I am wishing to none 13F institutions that the growth in their Taro’s holding will carry them to the 13F institutions.
Some other observations:
The number of known institutions which hold more than one percent of Taro grew from 3 to 4 (Assuming Greywolf Capital Management will stay at 473K shares). A %1 ownership gives its holder the right for “activism.”)
HOTCHKIS AND WILEY CAPITAL MANAGEMENT, LLC ( $23.5B under management) initiated a position of 439K shares in the 3rd Q and added another 91K shares in the 4th Q a
an NYT article by by Gardiner Harris Feb. 14, 2014
...acne drug Accutane, the pain drug Neurontin and the antibiotic Cipro — that the F.D.A. determined were adulterated, ...
---The World Health Organization estimated that one in five drugs made in India are fakes. A 2010 survey of New Delhi pharmacies found that 12 percent of sampled drugs were spurious....
(continues of 3. and the rest of post)
..... the investor (by a phone call) and sometimes it doesn’t*. And when the bank officer calls the investor by phone, the investor’s elections are recorded manually – This whole process is miserably error prone. Unfortunately Israeli investors do not call back the bank to verify that their elections were recorded correctly, and even if they were recorded correctly by the bank, they is no guarantee that they were transferred correctly or recorded correctly by the proxy managing company. There is no way to verify the investor’s elections.
I believe that BM/Iszo made a big mistake by not communicating their messages to Taro’s shareholders in Israel. However, the upcoming EGM proxy is an opportunity to correct past mistakes. BM should place its message in Israeli newspapers and in Hebrew- It is well worth it.
* BTW, some of these Israeli investors who had not been notified about their AGM proxy by their bank were approached by the bank and were asked whether they wanted to tender their shares in the recent Dutch auction. An accident? May be.
I send the following email to Mr. Zorub of Blue Mountain, and cc'ed a bunch of institution and individuals.
Dear Mr. Zorub,
I am trying to understand, how come Taro’s candidates for external directors –Avidov and Biran, were not blocked from serving on Taro’s board by the majority of minority, and I think one of the reasons, is your lack of attempt to communicate your message to Taro’s shareholders in Hebrew in Israel!
I believe that the vast majority of Taro’s minority shares are held by shareholders in US, Canada and Israel.
1. While Taro’s investors in US-Canada, (and UK and Ireland) are fluent in English and have an access and could read and understand Blue Mountain’s (BM) public messages in English, most Israel shareholders do not access American financial sites -were BM’s messages are published, and therefore were not educated on the importance of voting for BM’s candidates and against management’s candidates.
2. While most US-Canada shareholders elected to risk their money and invest in Taro because they saw the value of investing in Taro, and most likely educated themselves about the intricacies of “the majority of minority rule”, the proxy process and the provisions in Israel companies law which protect minority- mostly by your public messages.
Many Israeli investors did not invest in Taro through the marketplace. They are Taro’s Employees and Ex-Employees who received their Taro’s shares through Employee Stock Purchase plans, and stock other option plans. BM English messages did not reach them and BM did not place any message in Israeli newspapers in Hebrew. Therefore, being uneducated about the process, their way of thinking is: ‘since Sun owns %66 of Taro, why even bother going through the proxy process.’
3. While most Americans and Canadians hold their account in a brokerage firm and vote their proxy electronically- with a confirmation option. Most Israelis hold their shares in a bank account, sometime the bank notifies