what i think of ccc, page-2

Avacrack, its just not true that you have no one to blame but yourself. And if you don't listen to anyone, why would you invest in any stock? You always have to rely to some extend on the story being told to you by management. Here the the story was made up! The guidance on margins given when export coal was only about $85 was just lies. Coal went to $125 and they still generated no cash. They gave presentations with flawed resource numbers and wrong ownership percentages. Both of which they later, under pressure changed. Brewer meanwhile was claiming 100% "economic" ownership. That was straight lies. They kept announcing that they were funded. $180m of debt funding announced since I've been following. Still only $26m drawn. Even the last $30m of ABSA is still not available until the end of Aug. Not sure they will ever get it. I could go on and on with these things.

It is true that some people like myself identified problems with CCC early on. But I have 20 years experience analysing accounts and when I was working I specialised in avoiding problem names. I also have more time than most since I don't work. You shouldn't need to have that background to invest in the share market. Perhaps more importantly, I'm hyper cynical. I can tell you it wouldn't be a very efficient share market if everyone thought like me. Capital markets require more optimistic people. Those people need to able to trust what management tell them. With such a large number of people involved and such obvious misrepresentations, I think the regulators need to act in this case. We'll see.

That's not to say you shouldn't do as much research as possible obviously. You should look at management backgrounds. Check out KAB where Brewer is making big promises and some people at least are lapping it up. You should also try and verify management's story. For instance, here their ultimate goal was to be like Coal Of Africa and yet CZA has never made money on their thermal coal. The share value has always been about the coking coal projects. Ultimately though you rely on managements telling you the truth.

I guess it is true you shouldn't be too swayed by Hotcopper comments. Particularly where all they are doing is re-telling the company story over and over uncritically which is what we saw with CCC. I do find hotcopper valuable myself though. I look for posts with facts and don't dismiss those posts I don't agree with as biased as some people seem to.

The most important thing about research in my view is to always go back to the source document. Listen to other people views but don't rely on their interpretations. For recent example, check the post from James about the meeting. While I appreciate him going to the trouble. I have a fairly different interpretation of the meeting now I listen to the tape. Most importantly he said they can draw on Penn loan now. Whereas they actually said at the end of the month. That is fairly vital for me. There is still a decent chance I'd say that they never get to draw it. Also James said he wasn't sure what they needed the $10m for. I thought that was clear also. They have no cash at holdco but need to pay $8m to Mashalla, $2m to RR I think and have $6m of expenses there. So they need to upstream cash but the BEE2 agreement restricts upstreaming and even if it didn't, the bank deal restricts cash out of Penn for 18mths. They did say they can draw interest on loans to CCL but are choosing not too as CCL is tight for cash itself as it focuses on finishing Penn. That of course doesn't make sense. Penn is supposed to be covered by the bank deal and the contingency cash now.

Of course that is only my interpretation and I hope everyone listens to the tape. (Thanks to whoever recorded it and generously made it available online). It is long but pretty absorbing. I've never been to any company meeting like that before. The questioning, and particularly the persistent follow ups, where brilliant. That was heroic work I thought from whoever was doing the asking.