capitalise the gain, socialise the losses

As a non-holder I have tried stayed away out of respect for those who have lost and those trying to salvage something from the mess. Cuso has shown great leadership and application which surprises me, although his litigious streak following early legal threats towards me is not surprising. There is a certain irony at Cuso looking to sue CMR because of assertions that he threatened to sue me over came to pass.

I’m not sure that hypocrite was another Greek Olympian but hypocrisy certainly fits well with the ancient Greek theme running through this thread. What a turn around we have from Oly, the cult leader espousing rampant capitalism on the way up stock mountain (driven by HNC 50% Buy-out!) and now socialism back down the bottom. Having bragged about the good money he made on HNC takeover of AII, everyone was waiting with bated breath for the HNC takeover of CMR. The US$10M con-note was further proof of their interest and the only questions were when and at what price? Any attempt to talk up the risk profile was met with the usual derisory comments like “surely you did not think HNC will let this go under”!

Anyway, this post isn’t about how badly some misread the situation but about capitalising the gains and socialising the losses. Everyone here was happy to sell off the farm to the chinese on the way up for profit. For HNC to be the white knight on the way down with a takeover offer that saw new comers make a profit and old timers get their money back after averaging down. The 50% HNC JV, the con-note and a would-be takeover was all good. In fact, near the end a prospect of HNC takeover was the only reason for holding. Now that shareholders are rightly standing at the back of an ugly receivership que cries of nationalism go out to save your risk money.

Paalllease! Enough with the whining and gnashing of teeth over protecting Ossie assets and the national interest. The government still gets royalties and the workers will still have jobs IF it gets up and running again. Maybe foreign money will pay the start-up capex or maybe it will be re-floated to another generation of Aussie punters but save me the national interest excuses. All here punted CMR on self interest, looking for a bargain and easy money, and it is now self interest driving the push to have government bail you out. Resource ownership has been steadily sold into foreign hands for centuries and will no doubt quicken with a credit crunch, it’s happening every day. Why is CMR so special? White elephants are at the bottom of any government bailout list for good reason and CMR aint no Woodside!

A beef with management is understandable. They have misled since GT started selling down and the insiders made a mottsa shorting before every delay and BS excuse that dribbled out. However, they were at least honest about the high cost nature of the plant (after the famous “back to the drawing board” email that is) that meant it was doomed in this recession even if the Ni-Co circuit got up and running. On balance no-one should be shocked by this outcome and no-one on HC could say they weren’t well warned. The TA, the FA and management’s history screamed STAY AWAY but some could not take a loss or punted on a takeover anyway. I respectfully suggest that all punters suck it up, learn a lesson about risk-capital and the speculative end of the share market. It hurts like hell but you aren’t the first and won’t be the last.

That said I would still like to see shareholders rank equal with subordinated con-note creditors who were always better informed and re-float the whole boat with a debt-to-equity conversion and rights issue. As unlikely as that may be I wish you well in the fight.

goodluck