Dear Secret Broker, my portfolio’s been violated
The Secret Broker
Link copied to
After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.
This week the Secret Broker has been rummaging through his fan mail to bring us three of the less saucy communiques.
Dear Secret Broker,
I am a stressed, overworked and underpaid CEO of a listed ASX company and after my last shareholder presentation, my company’s shares fell by 20 per cent over the next two days. Now irate shareholders won’t stop ringing my mobile and my millions of options are worthless leaving my island retirement plans in ruins. Can you please review the attached presentation and explain where it all went wrong?
Mr X – Bruised Ego – Malvern, Adelaide
The Secret Broker says:
I can see why your company’s shares fell after your presentation. There are far too many waffly slides and complex diagrams accompanied by meaningless business speak regarding the potential size of your market and not enough information that explains how you are going to take advantage of your market segment.
All it does is underline what holders already knew, and not one hint on the potential profits they were holding out for.
As Warren Buffet says — if you can’t explain to him what your company does with a piece of paper and a crayon, he’s out. (I don’t think he does PowerPoints).
Also, who put your contact details at the end of the presentation so those pesky shareholders could contact you? Tut tut old boy. A rookie mistake.
As for me, I have a broking mate who has asked me if you could let me know a couple of days ahead of your next presentation, so he can set up a short on your stock. He said that would be most kind.
Dear Mr Broker Man,
I woke up this morning to find out that one of my portfolio holdings has been violated by one of those rather unsavoury short sellers. The company is called Wisetech and the short seller is called JCap and I would like to know what I should do as I may have to downgrade to an inner cabin for my next European Cruise, if they don’t go back up. Surely what they have done is illegal?
Mrs C – Very Upset – Woollahra NSW
The Secret Broker says:
Dear Mrs C,
It is a shock when this type of stock market behaviour occurs in a company one holds.
However, I have always felt that shareholders of a company with such a high valuation have had their eyes shut and their hands over their ears singing ‘Lalalala’ to blank out the obvious, for far too long.
In a situation akin to mentioning to a stranger that ‘your fly’s undone’ or ‘you have spinach in your teeth’, no local broker has ever dared tell Wisetech that ‘your valuation is too high’ to their face, until now.
It took JCap to tell them that parading around the market on 150 times earnings with a wardrobe to match its A$9bn valuation, had allowed them to create a jugular trading position and here is a report on why.
I have been sitting back watching this catfight with great enjoyment and just as JCap stated in their second report ‘to be blunt, that is bollocks’, I feel your complaining kindles the same response.
It’s not illegal to short a stock and no one should complain if a stock falls in price as it becomes cheaper to buy.
If you only feel compelled to complain when a situation becomes a NIMBY or in your case NIMPIO (Not in my Portfolio) then my advice to you is to stop complaining. If you can’t stand the heat, I suggest that you get out of the kitchen.
I noticed you mentioned a P76 in one of your articles and wondered if you have ever owned one?
Derek- P76 owners club NSW member.
The Secret Broker says:
No, I have never owned one but I have read a lot about them. I know that they were designed especially for the Australian market and in that respect, they advertised that you could fit a bale of hay in the boot or if you were into oil speculation, a whole 44 gallon oil drum with room remaining for your supermarket shopping bags.
In typical British Leyland style, it became known as a lemon and built up a cult following. I noticed that the ABC show, Julia Zemiro’s Home Delivery, featured one in the intro to her latest show.
I have parked enough lemons into the Mother in Law’s portfolio so I don’t need to worry about driving one.
Although if you have one for sale, I could buy it for the Mother in Law as her latest handbag could just about be squeezed into a P76 boot — though probably not with her still attached, which is a shame.
Feel free to contact him with your best stock tips and ideas.