Spent all day on this and reviewed all material and previous correspondence including a full review of their securities trading policy, (13 pages) and due consideration of what's material information and what isn't.
Spoke with Tony Carter - After the usual pleasantries A fairly robust debate and exchange of views was expressed:-
His View - The information contained in the investor day presentation was broadly neutral in terms of its nature and nothing material in there that wasn't already in the market place.
SP on the day of the presentation went up.
My view - The market takes time to digest the information and several analysts downgraded shortly afterwards and the SP performance over the following few days is more relevant, down 10%
His view - Management and directors are very surprised by the SP decline and its certainly not reflective of the current operating environment and strong cash flow.
He conceded that the optics of this matter weren't the best and he could see my point of view. He went on to say he was just as concerned about the reputation risk as the legal one after I explained that it is easy for investors to perceive that management have taken advantage
He went on to explain that there has been significant black out periods this year that are additional to those normally encountered and specifically they related to the VAH matter and in and around the time of the announcement that their stake was under review. In effect he said for all of January February and March 2016 executives have been restricted from dealing in shares.
After reviewing all management share sales this morning and timing thereof the two executive sales that most concern me are those in a tight timeframe in the five trading days up to the investor day briefing.
Steven Jones Chief Strategy Net work and Alliances officer sales 26,27 & 28 April, in total 314,135 shares and David Morgan, (I think his title is chief pilot something or other) 350,000 shares 2 May 2016 the day before the briefing.
Agreed that Steve Jones was involved with the briefing but David Morgan not. At issue, and in compliance with their security trading policy is that executives can request approval to trade and such approval is then valid for 30 trading days so as to give the executive some freedom on their ability to optimise the timing of their transaction...they are after all their shares.
He suggested the timing of the sales was simply unfortunate. I scanned my desk for a Tui...surely there's one on hand.
Tony explained that it is not them that make the call on whether an information release is price sensitive or not, that's the NZX's call and they simply whack a "P" symbol denoting price sensitive on it as they see fit.
I went on to explain my position on the matter as fully articulated in my original communications which you can see earlier in the thread, namely what's the point of having an investor day presentation if you believe all the information contained therein is already known to the market and if it was all already known to the market why did we see significant analyst downgrades afterwards followed by significant a significant SP decline in the four trading days afterwards ?
He again conceded they had been taken by surprise by the extent of the fall and conceded it the optics weren't all that good.
I outlined what had happened with Mrs Barlow and Summerset and how they had worked with interested parties and amended their securities trading policy to include a black out period of two weeks prior to the quarterly sales metrics and went on to ask if they would consider amending their security trading policy along similar lines prior to any future investor day briefing. He suggested it could be construed that AIR's monthly operating stat's were of a nature to be not materially dissimilar to SUM's quarterly ones and should we have a blackout period prior to release of each month's stat's ? While a good idea in a practical sense because of the regular nature of same I suggested this wasn't practical in that one month's operating stat's were unlikely to contain information that was as substantive as a full quarter's results like Summerset. He quipped that if Steven Jones CEO of QAN had of sold a whole bunch of shares just before their latest monthly operating stat's it wouldn't have been a good look. I took heart form this that he is taking this matter seriously.
He has agreed to review the matter again and take it under advisement in terms of whether they have a formal black out period prior to their next investor day briefing. The last one was two years ago.
I asked were these restricted to analysts and institutions and he said he's get back to me on their policy as he wasn't sure if larger retail holders might be allowed to attend, he noted that FPH had that policy around their briefings.
Summary - I think they are committed to maintaining a high standard of corporate behaviour. I think they have slipped here but I take heart from his undertaking to review this matter in detail with a view to possibly amending their security trading policy in the future.
I will follow him up about progress at the next annual meeting.
We had a brief discussion about the share price and he shared some personal thoughts I will keep to myself (nothing price sensitive and nothing in breech of insider trading policy)...trust me I did ask how the sale process going with VAH...nice try he said
Technically I will concede this still looks truly awful, fundamentally I think the company is in good shape and I get an inkling that they are progressing the sale of VAH with all due haste and diligence, (nothing was specifically said). I think we are close to the bottom so I increased my stake earlier this afternoon. (DYOR and this is not to be considered professional advice or a recommendation)
Sorry he had very limited time and we didn't discuss the freight settlement matter so you'll need to decide for yourself if you think the two executives noted above who sold fairly close to the 9th may stock exchange release about that would have been cognisant of the likely quantum of any possible settlement. Upon reflection this morning, given they weren't involved in the mediation process I didn't see this as a top priority for debate.
As I said earlier I will stay on his case at the annual meeting and follow Tony Carter up regarding updated an improved security trading policy. I note their April 2016 policy that investor relations e.mailed me is version 3 so there's no reason they can't have a version 4 with improvements, a view I believe I expressed in a robust manner.
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Originally Posted by couta1
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