SPX Discussion for the Grown-Ups, page-37

There are some members of the forum who seem able to follow along and hopefully we can engage in productive debate. For others the gap looks to be too large and we wish you well.

Here are some points to build on what we have said already:

1. Our approach is to treat investing like a business and go about it in a business-like way. Personal attacks on the CEO, personal attacks on other members and one-line quips that you hope make you look smart are childish, will achieve nothing and won't move the company forwards. If you want to influence the outcomes or create change, do it professionally. Be a grown-up and hang out and engage with other grown-ups.

2. If you want change, our strong recommendation is to start with the board. This may come as a surprise to many of you, but in Australia (and most other sophisticated markets) by law the board is appointed by the shareholders and has a duty to act in good faith for the best interests of the company and for a proper purpose. By law they must also act with reasonable care and diligence. Your ASIC website has great resources for SH who want to find out more.

SPX has four NEDs and if you believe they are being derelict in their duties, find a way to point it out to them. Remind them that the best interests of the company are served when information is reported accurately and truthfully and the delivery of initiatives are on time, on budget with a tangible ROI. If they aren't doing this, it brings into question whether they are fulfilling their obligations to act with reasonable care and diligence. "Spenda shareholders accuse directors of dereliction of duty". Simple.

Don't rule out that board, exec and staff in the company read this forum. They absolutely do. However, doing so they must think most of their shareholders are children incapable of rational debate about the company, its products, customers and outlook. What could happen if they read well-though out, insightful comments that all of a sudden held them to account? Amazing things have been achieved in other companies in the past by a structured groundswell of shareholders that make the board and exec feel a little bit uncomfortable that they aren't delivering.

3. If you have lost money in SPX, our thoughts are with you, but it's important to move from stage 3 to stage 7 in the Seven Stages of Grief quickly. You haven't managed your risk properly and you only have yourself to blame. In our experience good investors internalise and learn from losses ("we got it wrong, how do we learn from this?") and bad investors externalise them ("someone else got it wrong, it's their fault not ours").

4. Our central thesis is that so long as the issues aren't terminal, SPX will mean revert at some point and both our experience and the literature support this. We have built a position in the company (with an average cost a few ticks higher than the current SP for those who are interested) and if this thesis holds, it's going to pay off. This is often accompanied by a catalyst (although as we said these are hard to identify) and we believe the LP acquisition (with former LP SH alignment through tranching) and pipeline of sales COULD be it. Look out for announcements of new LP pipeline deals in coming quarters as evidence. If they aren't there, it's a red flag. Even if we are wrong, making several SPX-style investments works at a portfolio level as the winners far, far outweigh the losers.

Finally, our sources tell us it's Australia Day down under, but this seems to be a controversial subject for some. So not wanting to upset anyone.... if you are a believer, have a great day. If not, why not do some reading?