Commercegroup - Talk about a ghost from the past! I sold my Mymetics after it spun off from MFC - when? 1999? but long ago (for around $2, I think). I didn't realize it still had some viability. Do you still have the stock or just follow it? I wonder if MIL has any retained interest. It's an interesting situation, but anticipate years more of research and trials. Ah, who knows?
We’ve seen this sort of analysis before. (http://seekingalpha.com/article/1936811-mfc-industrial-a-sum-of-the-parts-story-with-significant-upside-potential?source=email_rt_article_readmore) It’s basically the same story: Lots of real and potential value, stock well below NAV, etc. The article repeats several times the need to trust Michael Smith’s management in spite of the lack of transparency. I bank on three aspects: Smith’s track record, the quality of assets and Peter Kellogg.
You can complain about possible self enrichment, “what are the auditors finding that they get changed out every year?”, bad decisions (Goa) and “If we have such value, why is the stock at 65%?”. You can complain, but the long term record and stock price appreciation are outstanding. End of story. Smith is a financial genius and anyone who wants to get rid of him hasn’t really thought it through.
The assets appear to be high quality and the upstream and downstream linkages such as commodity trading and merchant banking appear highly synergistic. The above analysis gives Pea Ridge and Kasese ZERO value. The former is long term gold. Compton is the same.
Finally, the whole Kellogg story. Why would an astute billionaire investor with his analysts and lawyers continue to add to his holdings if he didn’t think it was a good deal? Why wouldn’t you want to follow his lead? Also, what’s the implication of the recent board fight? I don’t think it’s that complicated. Kellogg is tired of a depressed stock price. Maybe he doesn’t like the revolving auditors and the milquetoast directors. I don’t know, but I don’t believe he wants to oust Smith (he says so and I can’t imagine he would do so). I do expect, or hope, we’ll see some positive price action. If it doesn’t come immediately, it’s not that big a deal. Does anyone think the stock has much downside? I can wait for the upside, just like I have for the past almost 20 years.
Trepanne – good story re Kellogg and Smith. I didn’t realize, until the recent brou-haha, that Kellogg was not represented on the board at all and was so passive. I always thought there was some interaction.
Given my admiration for Smith’s accomplishments through the years, I was taken aback by his reaction to Kellogg’s reasonable position. I don’t want to throw the baby out with the bath water, and we have some great assets that will bear fruit, someday, but I worry about a few things:
1. Why is Smith living in Hong Kong? Is it just to be next to the Chinese commodity appetite or is there a darker reason? Any insights?
2. Smith isn’t getting any younger. Is he getting reactionary? Protecting his reputation? There is no succession plan that I can see and anyway, it’s a one-man band at MFC. When Smith goes, MFC won’t be the same.
3. Worst, is he hiding something and if so, what is it? Could it blow up the company?
So, good luck at the AGM. Give us a report if you have the time and can tear yourself away from the food.
Whenever friends ask me about what this company does, that I’ve held so long (17 yrs), I tell them about the Bre-X deal. Salted gold mines, geologists pushed out of helicopters, CEO absconding to Panama, hundreds of billions in lawsuits, etc. Smith waded into this untouchable horror for about $1.5 million and wound up clearing like $27 million,+\-, which he parlayed into the purchase of KHD. It was brilliant.
The judge needs more time. I don't know if he will decide purely on the basis of law or sentiment. The law says Kellogg got his notices out a little late. Sentiment says: so what? MIL knew his holdings all along and who was harmed?
The law says Kellogg can vote his shares, The sentiment says the judge smells a rat regarding MIL's attempt to freeze the board and toss out Kellogg's shares.
Finally, the votes are a major sentiment indicator. 58%!!! The judge has to have that in the back of his brain. It's difficult to ignore such overwhelming support from shareholders.
Even though there is delay, the wind may be blowing in Kellogg's direction. Even if he loses, Smith has got a slap in the face and knows Kellogg won't quit just because of this. Things are gonna change.