uncle tobias on investing and green thumbs

This is Uncle Tobias, and I have got my nephew Lincoln to erase all his recent posts as they were confusing some people. I will try and explain to you what he was trying so hard to say.

1. CVI and ESG. Do you remember CVI? These two stocks had much in common in that everyone had very high valuations for the both of them, and the family realised slowly that there was much being said that did not make sense in the cold light of day, and we finally thought that it was time to go. Both these stocks had some very vocal supporters and a lot of followers, who were so busy shooting down contrary opinions that they failed to see the emerging signs. No doubt this message will also be shot down in flames, but we note that there are at least a few who are beginning to see the light of the burning plane.

2. It is so easy to fall in love with a stock and it is so easy to give lots of green thumbs ups to anyone who writes, in bold letters, a lot of rubbishy hype about a share. Then the rubbish gets to the top of the posting list and attracts more thumbs and so the rubbish is perpetuated. We have seldom regarded a postings worth by the number of green thumbs it got, for a feral goat could come on the scene and say that a five cent share is worth twenty dollars and get 100 thumbs up in a matter of minutes. Lemmings are known to have green thumbs aplenty before they drown in a sea of red.

3. We find that anyone with contrary views does not get any thumbs up and his/her message is not given any credence. The messengers gets a truckload of spite and vitriol heaped upon themselves. Hopefully that mentality will change. Perhaps someday, a poster who posts a negative view in some Hotcopper thread in a sensible manner will be given 20 or more green thumbs up. We are not holding our breath on this one.

4. We do not think that any poster who posts an educated and thought provoking but contrary views is necessarily a down ramper, nor do we think that he could be a company stooge. We regard him as being someone who realises that he cannot make a silk purse from a sow?s ear. We have never regarded Buddy or db as down rampers, and have turned their thoughts over in our minds. Sometimes we agreed with them, sometimes we disagreed with them. We have however always regarded certain other posters as having been always lost in a bit of irrationality and hype and being of dubious value.

5. AGMs are the place where you get the Board in a room and ask them the questions ON THE FLOOR, where everything is on record. We note that some posters have made comments at what was said to them by jolly board members during the tea AFTER the AGM. What is said during the tea on a wink-wink nudge-nudge session is often as hard to swallow as the cold tea that is often served at these AGMs..

6. So if you have anything to ask, ask it, and stick to your guns till you get an answer. Ask the Fat Controller the answer before the little blue train chootles out of the station. The AGM is the only time in the whole year that the Board has to stand there and answer your questions. Make them stand there, make them answer you on record, on the floor. And if the meeting goes on for four hours, don?t desist. If they tell you that the tea is ready and that they will answer questions over some hot buttered scones, don?t desist. If the meeting has gone on for eight hours, don?t desist. Nail them like a bull mastiff with a bone, and keep asking till you get the answers to your questions. And if they say they will get back to you on something, tell them that it is not good enough and tell them that they are paid to have the answers to any reasonable query a share holder may make, and that you want the answer on the floor. And if they start treating you as a nuisance and look at you with annoyance when you ask your questions, then you know that you are on the right track in your questioning. The board is not your friend.

7. And keep reminding them that this is the only one chance that you have to question them, so you would like to know the answers. You do not have to be polite or refrained if they are evasive, because they are paid enough as it is....by you, the shareholders. Tell them you want TRANSPARENCY. That is a good word to throw around for ut has many connotations.

8. We have often referred to that OIP question that was asked in the 2009 AGM, and we started to draw our own conclusions after reading how that question was answered. Go back to the 2009 and 2010 post-AGM comments and make up your minds now on what thoughts you should have started thinking from then..

9. When we heard how the Board handled questions about water issues and how they addressed farmers concerns in the 2010 AGM, we felt that perhaps the time to go had come.

10. So we sold our 52 shares in ESG and bought a few more in Metgasco.

11. The members of the family are investors, not traders or messiahs ramping up a share. We are usually in for the long haul in a company. We were long term in ESG, but went when we felt we had to go. We did tell everyone when we went why we had gone, and maybe we were right and maybe we were wrong, but we went and it is over.

12. We are invested in Metgasco for the long term, like hopefully for 2 to 5 years or even more, as long as they keep going the way they are going, and we hope that we will be happy with the outcome. Metgasco promised upgrade of reserves and the promises have been kept, their fields are low water in nature, they have a very good PR team and good dialogue with the farmers and they own everything 100 percent. And they are welcomed in casino. They are a rather unique coal bed methane company.
So it is interesting to compare MEL with ESG

13. So if MEL got 50 cents/gig, using the same maths as has been used for ESG, each MEL share should be worth more than $3.50 now, just based on coal seam reserves and giving nil value to the conventional fields.

14, There are many similarities between MEL and Queensland gas in its early days.

15. So we are not at all perturbed by juvenile barbs about the fact that we did reinvest some of our ESG money in MEL. We are happy and not concerned, and we feel that ESG has been very very lucky to have got Santos to enter into a Scheme of Arrangement.

14. The big boys lost money in One-Tel...big boys whom one would never have expected to make such mistakes. So big boys can also blow their money sometimes...it has happened before and it will happen again. Hubris. Sometimes fishermen have caught turkeys.

15. If we had doubts about MEL in the future then we would reassess our views, and change our minds if necessary. It is no fun being the last in the down lift as you have to turn the lights off.

16. Investing is not riding a one-way green thumbed lemming over a cliff. If there is any reason to jump off, if one discovers that the boomer is a duster, if one feels that the management just does not give good vibes, then one jumps, because there are a lot of companies with a lot of management, and the trick is to try and stay away from those that you have some doubts about.

17. And so we say that if there is a contrary view on Hotcopper, sit back and ask yourself in a logical voice if there is merit in that view or not. Perhaps one should not bag everyone who dares to suggest to one that one's investment is a lemon. Maybe it is a lemon. If it looks like a lemon, smells like a lemon and tastes like a lemon, then it is a lemon. Stop thinking it is an orange.

18. We feel that many Hotcopper posters buy a share then sit back and want to read all sorts of good things about that share to justify their purchase. We see, in the midst of all these vocal voices, that there are a few rational ones who may or may not be sharing our views on a particular stock, and we appreciate their views.

19. We read what these people have to say and turn their thoughts over in our minds. If they agree with us, we try to figure out why, and try to figure out if we are both right, or whether we are both wrong.

20. If they disagree with us, we try to figure out why, and importantly, if we are the ones who are wrong. And the posters who write long incoherent posts and their slavish followers...we read what they post now and then just for a laugh, for laughter is good for the soul.

19. We say again that it is such a shame that we have never seen a contrary view posted on any share in Hotcopper get anywhere near 20 green thumbs up yet. Perhaps that green thumb never had any value.

20. We look forward to getting an educated and unemotional response to this posting.

Uncle Tobias