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Who bought into the float? I'm guessing institutional investors, like pension fund managers, bought many of the shares at $2.20. Serious questions should be ask

Who bought into the float? I'm guessing institutional investors, like pension fund managers, bought many of the shares at $2.20. Serious questions should be asked of those guys too. They have a duty of care over people's pension funds, they're investment professionals, and they should be able to read the balance sheets and not get outsmarted by this Phil Cage fellow.

cube00 11y ago
Anyone and everyone, it was floated as an IPO to the ASX. http://www.theage.com.au/business/dick-smith-flat-after-underwhelming-debut-20131204-2yr2y.html http://www.theage.com.au/business/dick-smith-flat-after-unde...
caf 11y ago
One of the comments to the article: Who were the fund manager bunnies that fell for all this? Perpetual, AXA, Commonwealth Bank and AMP. Well done guys! Now who can name the investment managers responsible so as we can all give them a wide berth?
- adaml_623 11y ago
  And the reply to that comment: > You ask who “fell” for it? I’d be more inclined to ask who was “In On It”
  - osullivj 11y ago
    Good point. Which AU Investment Bank underwrote the float? IBs always let their friends in at a lower price so they can flip when trading starts. In this case it was float at 2.20, so they would have mates in at say 1.50. IB spreads the risk a little, and IB mates make a quick little earner...
  - osullivj 11y ago
    "Goldman Sachs and Macquarie Capital were joint lead managers, joint bookrunners and underwriters to the Offer. Aquasia advised the Board in relation to the Offer and Minter Ellison was Dick Smith’s legal adviser." [1] So, the usual suspects... [1] http://dicksmithholdings.com.au/events/dick-smith-lists-on-asx/ http://dicksmithholdings.com.au/events/dick-smith-lists-on-a...
    - paganel 11y ago
      > So, the usual suspects... I'm reading an economic history of the pre-industrial age, and when talking about the "la commenda" system (https://en.wikipedia.org/wiki/Limited_partnership#Concept.27s_roots https://en.wikipedia.org/wiki/Limited_partnership#Concept.27...) from Medieval Italy, a concept which is one of the earliest forms of capitalism, the author mentions that this system wouldn't have taken roots if the parts involved hadn't had "a diffuse sense of honesty". Also, if one of the parts involved in the commenda contract were to show dishonesty, "after some time nobody would have given him their own savings to use as investments anymore". 800 years since those times entities like GS are as dishonest as a private entity can be, and still people and other companies choose to involve them in their financial dealings. It's, to say the least, most curious.
      - dantillberg 11y ago
        While I'm not an expert on the subject, I imagine that one could counter that today we have analysis tools and financial reporting that give potential investors much more informational leverage than a purchaser might have had in Italy in 1200, and that this information battle is the natural balance for equity exchanges. But regardless, the observation that parties involved must have a "diffuse sense of honesty" in order for a system to function is definitely at play on, for example, ebay, craigslist, private auto sales, yard sales, and the like -- systems where buyers have very little information about the product or reputation of the seller, other than what the seller provides them, to decide whether or not to enter into a transaction. There is a social expectation that people should be honest, I think, and while we would not be surprised to hear of people getting ripped off on craigslist or ebay, and while we encourage others to take the possibility into consideration when making purchases, we (or at least I) nonetheless place the bulk of the blame for fraud on the malicious seller, not the hapless buyer.
        josho 11y ago
        > we (or at least I) nonetheless place the bulk of the blame for fraud on the malicious seller, not the hapless buyer. I agree, and find the tone of this thread interesting because it is very much reversed. In that blame seems to be falling on the buyer for not knowing better. Yet, it was the seller that seemed to manipulate the business to inflate standard business metrics at the expense of sustainability. Further, the investment banks then turned a blind eye to the state of the business and facilitated the sale. This reminds me of the sub-prime fiasco. Ie. we had a a system where everyone optimized their own position, but overall those optimizations led to net losses. Same seems to apply here--Private equity optimized their own position, Fund managers likewise, yet the company itself is no longer viable. The long term outcome of this is a failed economy unless systemic corrections are made before that happens.
- wahsd 11y ago
  I really wish there were some kind of reputation tracker for not only these kinds of investment managers and banks, but also just corporations and even politicians.
  - threeseed 11y ago
    Problem is it it would depend on which side you're on. If you invested in Anchorage Capital you might be thrilled at what they managed to pull off.
eru 11y ago
Shouldn't shareholders also sue Woolworth's management, if Woolworth sold Dick Smith way too cheaply?
- meric 11y ago
  Now Woolworth's isn't responsible for the PR nightmare of ripping people off.
  - eru 11y ago
    That's the charitable interpretation. A good lawyer might convince a judge otherwise.
- threeseed 11y ago
  It's been widely acknowledged that Woolworth's was very smart to sell this at the time and price they did. Their shareholders would be thrilled to have the company back focusing on their core business again. If you don't know Woolworths is under immense pressure from their competitors Coles and Aldi and with their other side project aka distraction Masters also struggling they really need to focus and execute.
  - chris_wot 11y ago
    Masters is a complete and utter fuck-up.
    - lukeholder 11y ago
      Masters is a premium products, high margin business competing against Bunnings which is the opposite - a totally different beast to their lower margin, high volume supermarkets. One could see Masters was doomed from the beginning.
      - chris_wot 11y ago
        The other day I had to buy some locknuts. I was in a hurry so I went to Masters. Ain't nothing premium about locknuts.

cube00 11y ago

Anyone and everyone, it was floated as an IPO to the ASX. http://www.theage.com.au/business/dick-smith-flat-after-underwhelming-debut-20131204-2yr2y.html http://www.theage.com.au/business/dick-smith-flat-after-unde...

caf 11y ago

One of the comments to the article: Who were the fund manager bunnies that fell for all this? Perpetual, AXA, Commonwealth Bank and AMP. Well done guys! Now who can name the investment managers responsible so as we can all give them a wide berth?

adaml_623 11y ago
And the reply to that comment: > You ask who “fell” for it? I’d be more inclined to ask who was “In On It”
- osullivj 11y ago
  Good point. Which AU Investment Bank underwrote the float? IBs always let their friends in at a lower price so they can flip when trading starts. In this case it was float at 2.20, so they would have mates in at say 1.50. IB spreads the risk a little, and IB mates make a quick little earner...
- osullivj 11y ago
  "Goldman Sachs and Macquarie Capital were joint lead managers, joint bookrunners and underwriters to the Offer. Aquasia advised the Board in relation to the Offer and Minter Ellison was Dick Smith’s legal adviser." [1] So, the usual suspects... [1] http://dicksmithholdings.com.au/events/dick-smith-lists-on-asx/ http://dicksmithholdings.com.au/events/dick-smith-lists-on-a...
  - paganel 11y ago
    > So, the usual suspects... I'm reading an economic history of the pre-industrial age, and when talking about the "la commenda" system (https://en.wikipedia.org/wiki/Limited_partnership#Concept.27s_roots https://en.wikipedia.org/wiki/Limited_partnership#Concept.27...) from Medieval Italy, a concept which is one of the earliest forms of capitalism, the author mentions that this system wouldn't have taken roots if the parts involved hadn't had "a diffuse sense of honesty". Also, if one of the parts involved in the commenda contract were to show dishonesty, "after some time nobody would have given him their own savings to use as investments anymore". 800 years since those times entities like GS are as dishonest as a private entity can be, and still people and other companies choose to involve them in their financial dealings. It's, to say the least, most curious.
    - dantillberg 11y ago
      While I'm not an expert on the subject, I imagine that one could counter that today we have analysis tools and financial reporting that give potential investors much more informational leverage than a purchaser might have had in Italy in 1200, and that this information battle is the natural balance for equity exchanges. But regardless, the observation that parties involved must have a "diffuse sense of honesty" in order for a system to function is definitely at play on, for example, ebay, craigslist, private auto sales, yard sales, and the like -- systems where buyers have very little information about the product or reputation of the seller, other than what the seller provides them, to decide whether or not to enter into a transaction. There is a social expectation that people should be honest, I think, and while we would not be surprised to hear of people getting ripped off on craigslist or ebay, and while we encourage others to take the possibility into consideration when making purchases, we (or at least I) nonetheless place the bulk of the blame for fraud on the malicious seller, not the hapless buyer.
      - josho 11y ago
        > we (or at least I) nonetheless place the bulk of the blame for fraud on the malicious seller, not the hapless buyer. I agree, and find the tone of this thread interesting because it is very much reversed. In that blame seems to be falling on the buyer for not knowing better. Yet, it was the seller that seemed to manipulate the business to inflate standard business metrics at the expense of sustainability. Further, the investment banks then turned a blind eye to the state of the business and facilitated the sale. This reminds me of the sub-prime fiasco. Ie. we had a a system where everyone optimized their own position, but overall those optimizations led to net losses. Same seems to apply here--Private equity optimized their own position, Fund managers likewise, yet the company itself is no longer viable. The long term outcome of this is a failed economy unless systemic corrections are made before that happens.
wahsd 11y ago
I really wish there were some kind of reputation tracker for not only these kinds of investment managers and banks, but also just corporations and even politicians.
- threeseed 11y ago
  Problem is it it would depend on which side you're on. If you invested in Anchorage Capital you might be thrilled at what they managed to pull off.

eru 11y ago

Shouldn't shareholders also sue Woolworth's management, if Woolworth sold Dick Smith way too cheaply?

meric 11y ago
Now Woolworth's isn't responsible for the PR nightmare of ripping people off.
- eru 11y ago
  That's the charitable interpretation. A good lawyer might convince a judge otherwise.
threeseed 11y ago
It's been widely acknowledged that Woolworth's was very smart to sell this at the time and price they did. Their shareholders would be thrilled to have the company back focusing on their core business again. If you don't know Woolworths is under immense pressure from their competitors Coles and Aldi and with their other side project aka distraction Masters also struggling they really need to focus and execute.
- chris_wot 11y ago
  Masters is a complete and utter fuck-up.
  - lukeholder 11y ago
    Masters is a premium products, high margin business competing against Bunnings which is the opposite - a totally different beast to their lower margin, high volume supermarkets. One could see Masters was doomed from the beginning.
    - chris_wot 11y ago
      The other day I had to buy some locknuts. I was in a hurry so I went to Masters. Ain't nothing premium about locknuts.