First of all I would like to thank you for sharing your experiences and your view on the ongoing development of operations. I think it brings credibility, the feeling of everything being for real and on track out of an operational perspective. The only thing strange is of course that you turn up from out of the blue, one wonders why, as you all of sudden got very active. I think its good with different perspectives though since it usually enhances the debate... So for that I thank you!
You also write about your relation to local managers and Solomon. Therefor I take it you been on the sites for a number of times. From your comments on ECAB, I´ll take it you haven´t met with them since you are quite unclear and general when it comes to your views and somewhat sceptic.
I have also been an owner of this company since before they sold the "milkdivision" and I also therefor have a somewhat long perspective of this company. I have also met with Solomon on a number of occasions. On the board I have mostly talked to Dan and Nisse on a few occasions when SIAF´s been in Sweden. I have also met Nisse in the JF-forum (presentations and pubnights) since I used to be a member of the Jordanfund. I have had meetings with IR- Peter Grossman and since ECAB came in to the company I have also met with Fredrik Danielsson on a number of occasions.
I do agree on your operational perspective, it rather enforces my strong view of the company in that respect but there are a few other areas that you are commenting I would like to complement your perspective. Since you are stating that you have long term financial experience makes me wonder..... it doesn´t add up in my opinion!
First of all, everybody on this board that has been shareholders for a long time, knows that Solomon, however great he is in running operations, has almost diluted us to death. From the first big presentation in 2010 when he made prognosis and came up with precise guidance in all areas, that was based on an demand of the shares widely excessing his dilution plan....
Because that was his plan for financing the company. He only made that very wrong assumption that there would be a lot higher demand for the shares then it was..... Ultimately leading to an extreme dilution....
In this respect I have to totally agree with Emptyone - a CEO´s prime responsibility is his shareholders. And in that respect Solomon has not been dealing with the company in a shareholder friendly or should I say optimal way. Its not acceptable to feed the shareholders with a picture that does´nt fly for five yrs, constantly delaying, and constantly failing when it comes to listing and getting "cheap financing".
You placed very high emphasis in management talent and honesty. In this respect I could share your view when it comes to operations. Its apparent from your posts that everybody that you have met and have a relation with, also are people that you have the highest respect for.
For me its different, its all about business and whats best for the shareholders. Even though I been a member of JF I really cant see Nisses role in the company in this phase given his competence profile, that is being said with my view on core competence profiles needed at this point.
Even though I have met with Peter Grossman and think he is both very nice and friendly, I´m not impressed with the IR-funtion of the company. Its not personal I can just conclude that there has been to little focus and effort in this area, if its due to Grossmans ability or lack of direction and resources is not relevant in this post. My point is that you have to be able to criticize a function even if you like the person running it.
I have also met everybody you are talking about except the local managers so it was nice to hear you say they seemed very able and competent. Even though I have always trusted operations.
But when it comes to BOD and key management ability to transform operational success into shareholder value their accomplishments in this area has been pretty much zero. I´m not talking about the fundamental value of the operation. I´m talking about the market value as a measure of the fundamental value.
There should be no contradiction in achieving both... they just require different skill sets to be accomplished!!
From what you write, in your little bit insinuating and cryptical way, I take it that you are somewhat hesitant towards ECAB and their agenda. I also take it you haven´t met them and therefor you dont got a personal experienced based feeling what they are trying to accomplish. In that respect I´m sure my experience is more relevant than your general view on the financing community.
Before FD came into the company with ECAB the stock was trading below P/E 1, now its trading right below P/E 3 if you take into account the whole dilution through the convertible deal.
We also have a much more positive atmosphere covering the company, even at this forum:)
To me that means that credibility has gained 200 percent since they entered the company...
If you remember correctly the convertible deal was struck, right before Solomon had to repay his loans to the government bank. I don´t think this was a coincidence. He needed the money at the time. He also needed money for expansion and continued growth. Without ECAB there is no doubt in my mind that he would of stayed on the same path. The path of dilution.... Yes it was a great deal for ECAB, but it was necessary for us and if there would of been an serious alternative it would of course been on the table.
When ECAB came into the company with the convertible deal, one on the covenants was end of dilution in an uncontrolled way. That was a fundamental and strong message to both shareholders and the market. The signal was that the company now understood, through a message from ECAB, that the path of dilution was destructive for there ability to gain credibility and proper financing. There was a whole list of things that was now brought up on the agenda.... It was time to really show the market how serious and great this company was. And to do that you needed to attend to a long list of things.... Those things are a process that does´nt occur over night as you also wisely pointed out, given the last strategic updates things seem to move forward in a nice way though.
If you don´t realize the importance of addressing the credibility issue, you will have a really hard time attracting investors, financial institutions or institutional owners. That is pretty clear for everybody in the financial industry and should also be clear to you. I presume you agree on this?
Visibility and transparency together with a great IR function among other things builds credibility.
Without credibility there is no way forward that could reflect SIAF´s true value. Maybe you are happy with this talented and honest organization that is building a great company. But lets not forget that this is a public company that has been financing their growth through there shareholders.
ECAB has clearly publicly stated a "check list" that they aim to improve/enhance: BOD, reporting structure, CFO, IR/PR, Institutional coverage, advisors, listings, corporate governance, auditors etc...
To me that is the foundation of credibility - since they came into the company the P/E has increased from less then 1 to about 3 (fully diluted with the convertible deal). I´m happy when its valued in accordance with its growth, on the right listing that should be >25 when perception has changed.... That is a long process though... But that is the only process that should take some yrs.
To get to a peer valuation arround 12-15, that should be within our reach if you just adress your "check list".
ECAB´s aim is to bring us to a premium valuation and be at our best not only in operations but in all areas, its fundamental to obtaining that premium valuation. They dont have any opinions on operations, they think operations are great. I heard FD say that he has the greatest respect for Solomons ability and I believe he meant it.
I have met ECAB, listened to them and talked to them... and my feedback to you is that they seem to be the only stakeholder in the company that have the same vision as me. Being - building a world leading company and at the same time having the right people working as hard, on obtaining a premium valuation. To get there you need the financial markets on your side, you need expertise on M/A, divesting, "geering" of the balance sheet etc... Through their organization we both have their proved and documented skill set and we get there financial contacts.... just look at the Arctic Security deal. Anybody with comprehensive knowledge of the financial sector and the fish industry understands what it means to have an advisor of that caliber covering our company and ultimately being able to reach out through their network in all kinds of ways to optimize shareholder value. Because they will of course have no other agenda - simply because thats how they get payed!!
Finally I want the best of the best, the best advisors to help with listings and financing... the best IR competence to work on our story, our presentations and on our PR´s.... the best CFO and auditor to bring credibility into our finances and the opportunities in that area.. the best management team in our operations.... There is no reason why we should´nt look for excellence in all areas that matters for getting that "shareholder friendly premium valuation"....
I´m an investor and I want maximum return on my investment and therefor I want the company to adress shareholder return in an optimal way. No prestige, no regards to old loyalties and friendships, everybody in management are also shareholders, lets be business oriented about it and everybody will be rewarded.
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