Allied Minds Share Discussion Threads

[flyfisher] 21/11/2019 09:35

I doubt it will get to an EGM, now that woodford has gone who can the board rely upon for support.

[spectoacc] 21/11/2019 08:53

"3rd ever EGM" - 2nd was only recently - CRS not very activist for an activist.

@kooba - see post above. Woody was largely out on 5th Nov (via Link rather than BlackRock). CRS got their further c.9% from somewhere later on.

Be interesting to see what - if anything - ALM say about the EGM. Presumably they'll be attempting to defend themselves.

Edit - still a seller around too. Really need to hear when we might see the payout. Would have liked a lot more about that in CRS's statement.

[kooba] 21/11/2019 08:29

Woodford stock went to Blackrock ,Blackrock placed Bulk out in the Placing. Believe Invesco still in.

[spectoacc] 21/11/2019 08:03

Woody was gone already, but lack of Holdings RNS's are odd.

Edit - I get confused following so many Woody holdings (as was), but a quick check on ALM shows Link down to c.2% on 5th Nov. CRS subsequently bought another c.9% on later dates. Isn't impossible they've been buying from those who took the Link/Woody holding at 47p, rather than a new seller such as Invesco, & I don't doubt the final few % have been sold by Link too.

[kooba] 21/11/2019 08:01

Think the placing was Woodfords stake , believe a Invesco still there.The numbers on that placing not adding up though, think there must be other new large investors in the wings? No disclosure though..as yet.

[kooba] 21/11/2019 07:57

I was invested in LEAF it has taken a while ( due to lengthy but very successful legal action in US) highly effective wind up of the company extracting great value for shareholders.Not sure if there is legal case here but with so many investments going wrong and hundreds of millions of shareholders money down the drain there may be an angle.I don't remember the board mentioning the $4.9m bonus payout on selling Hawkeye stake...but when you get 1 out of 40 right and you are net down hundreds of Ms on your business does this really seem justifiable???

[spectoacc] 21/11/2019 07:56

@flyfisher - waiting on the RNS, but pretty sure Invesco were the recent seller.

[flyfisher] 21/11/2019 07:52

Specto, I would guess they are doing it that way to avoid any severance, they want them to walk voluntarily.

Invesco was a 40% holder at LEAF and supported bernsteins actions. They are highly likely to support him here, between them they have 40% of the company.

The existing board are done for.

[buffettjnr] 21/11/2019 07:51

It’s a good first step. This won’t be around in 2020

[kooba] 21/11/2019 07:50

21 November 2019CRYSTAL AMBER FUND LIMITED("Crystal Amber Fund" or the "Fund")Crystal Amber Fund requisitions General Meeting of Allied Minds plc:Proposes to remove four directors and appoint two new directorsCrystal Amber Fund, the activist investment fund, announces that it has sent to the board of Allied Minds plc ("Allied Minds") a requisition notice requiring Allied Minds to convene a general meeting at which resolutions will be proposed to remove Jeffrey Rohr, Fritz Foley, Joseph Pignato and Michael Turner from the board, and to appoint Mark Lerdal and Stephen Coe to the board as non-executive directors. The Fund expects that the proposed board will be more effective at minimising ongoing costs and maximising distributions to shareholders from the orderly realisation of Allied Minds' remaining investments. The proposed removal of Allied Minds' executive directors from the board does not preclude their continued employment as executives.Since becoming a shareholder in Allied Minds in November 2018, the Fund has engaged extensively with its management. Despite some necessary and long overdue changes, the Fund has concluded that the board of Allied Minds is still not acting in the best interests of its shareholders. This is evidenced by the annual ongoing headquarter ("HQ") cash cost guidance from Allied Minds, which has recently been increased to US$7.5 million. The Fund estimates that US$67 million of Allied Minds' current market capitalisation is attributable to its non-cash net assets (i.e. after deducting parent-level cash, which the Fund estimates to be approximately US$88 million). The annual ongoing HQ cash costs represent more than 11% of this value. In addition to this, Allied Minds this month awarded a US$4.9 million cash pay-out to current and ex-employees, despite cumulative operating losses since its 2014 IPO now exceeding $460 million.The Fund believes that it now has no alternative but to requisition a general meeting of Allied Minds in order to address the issues identified:Excessive ongoing HQ costs and misaligned incentive arrangementsInsufficient prioritisation of excess cash redistribution to shareholdersInability to redress the longstanding significant discount of the share price compared to the Net Asset Value ("NAV") per share, which now stands at over 40% despite the carrying value of the portfolio having been verified by substantial third-party fundingRichard Bernstein, investment adviser to Crystal Amber Fund, said: "In the 11 years since the Fund was established, this is only the third time that we have felt compelled to requisition a general meeting of an investee company to change its board composition. The Fund hopes that, as has occurred on the previous two occasions when the Fund felt forced to requisition a general meeting of a company, the current board of Allied Minds will accept the Fund's proposals without delay and without having to call a general meeting. Mark Lerdal has an excellent track record of delivering for shareholders in a not dissimilar situation at Leaf Clean Energy. We are confident that he can do the same for the shareholders of Allied Minds."Allied Minds' track record:Listed on the London Stock Exchange in 2014 at a valuation of £405m and raised a further £64m via a placing in 2016. To date Allied Minds has paid zero cash to shareholders and its market capitalisation is now around £120mReported total consolidated operating losses of around US$590m from 2011 to mid-2019, of which approximately US$465m since it listed in 2014Invested in over 40 companies but has achieved only a single successful exit. Following many write-offs and closures, only six holdings are now deemed to have any value, of which three plus cash at the holding company now account for around 95% of the total NAVDespite having committed not to make further investments in new businesses, Allied Minds operates with ongoing HQ cash costs of US$7.5m per annum, an increase from its guidance of US$5-6m announced in April 2019Maintains misaligned management incentive schemes, including:The "Phantom Plan" that pays out 10% of any gains on individual holdings, irrespective of losses incurred across the investment portfolio as a wholeAnnual bonuses (worth up to 225% of salary) that are determined independent of shareholder returns and the performance of the portfolio, e.g. US$576,000 CEO bonus paid in respect of 2018 despite a share price fall of 57.5% that yearA golden parachute scheme that would pay out upon a takeover of Allied MindsRedistributing to shareholders only half of the proceeds from the disposal of Allied Minds' stake in HawkEye 360, despite the sale triggering a Phantom Plan pay-out of up to $4.9m to current and former management. This will leave Allied Minds with a parent-level cash balance of around US$55mCrystal Amber Fund's engagement with Allied Minds:Commenced investment in Allied Minds in November 2018, having analysed the company over the preceding year, and now owns 16.8% of Allied Minds' total issued share capitalExpressed concerns regarding the urgent need to realign the excessive HQ cost base, the unprecedented and wholly unacceptable Phantom Plan, and the granting of long-term incentive shares that had cost around US$3.9m during the first half of 2018Met with then-CEO, Jill Smith, along with the CEO of portfolio company Federated Wireless, in February 2019The Fund subsequently conveyed its views that, despite a guided reduction of over 40% in ongoing HQ cash costs, these would still be hugely excessive at around US$13m per annum, and also that the portfolio companies SciFluor and Precision Biopsy were likely to be significantly overvalued. Since then, both of these portfolio companies have been written to zero, taking around US$115m off Allied Minds' NAVMet with co-CEOs, Joe Pignato and Mike Turner, in August 2019 and reiterated our views that the Phantom Plan represents a major misalignment between management and shareholdersThe Fund was disappointed that, despite being one of Allied Minds' largest shareholders, it was excluded from Allied Minds' consultation with shareholders regarding preferred quantum of immediate cash distribution following the HawkEye 360 disposalTrack record of Mark Lerdal and Stephen Coe:Mr Lerdal and Mr Coe have both been directors of UK-listed company Leaf Clean Energy Co ("Leaf") since 1 April 2014: Mr Lerdal as executive Chairman and Mr Coe as a non-executive directorLeaf was a failed investment company that had focused primarily on US-based private-market opportunities, similar to Allied MindsIn the financial year that ended shortly after the appointment of Mr Lerdal and Mr Coe, Leaf's administrative expenses were US$5.4m. These costs were halved in the following year and have been reduced in each subsequent year, down to a level of US$1.4m in FY2018After formally adopting an orderly realisation and redistribution strategy, Leaf's investments were then monetised over the subsequent five and a half years – a process that was prolonged by a very protracted legal dispute relating to its largest investment, which was finally resolved in Leaf's favour in mid-2019Prior to the appointment of Mr Lerdal and Mr Coe in 2014, Leaf's shares traded at a substantial discount to its NAV. Since then, Leaf has to date returned a total of US$128m cash to its shareholders, an impressive cash realisation of over 100% of the rebased $116m NAV as of 30 June 2014, after all holding company costsMr Lerdal is currently executive Chairman of Leaf Clean Energy Co and a non-executive director of three private companies.Mr Coe is currently a non-executive director of Leaf Clean Energy Co, Weiss Korea Opportunity Fund Ltd and various private companies.For further enquiries please contact:Crystal Amber Fund Limited Christopher Waldron (Chairman) Tel: [phone]

[alasdair100new] 21/11/2019 07:40

Where's the rns of it? Do you have a link?

[spectoacc] 21/11/2019 07:30

Good, but - sounds like a decent falling-out and EGM doesn't go nearly far enough IMO. Removing 4 directors but continuing to emply them as executives! And the two additions non-exec.

[dodger777] 21/11/2019 07:28

Will the board step aside though ..they won’t let go of their cash cow (for them) easily I don’t think

[flyfisher] 21/11/2019 07:25

Mark Lerdal and Stephen Coe did well at LEAF.

Stephen Coe was also a non exec at ERET, which was a successful wind down.

I view them both as very good news.

[kooba] 21/11/2019 07:06

Crystal Amber Fund requisitions General Meeting of Allied Minds plc: Proposes to remove four directors and appoint two new directors

[spectoacc] 20/11/2019 13:33

Strange, CRS buying all these shares, yet doing absolutely nothing about it. If they were, there surely wouldn't have been the director buy.

No reply from CRS or ALM IR's.

Edit - and not sure what happens to ALM share price when CRS run out of money. Their recent record doesn't inspire (to say the least), but selling bits of other holdings to buy more ALM seems a good sign, and I've added again.

[ragnarr] 20/11/2019 13:11

Bernstein now clearly has a plan - things should start moving - current nav around 120

[buffettjnr] 19/11/2019 16:27

With my 100 shares

[spectoacc] 19/11/2019 16:23

Buyback might have worked if it was Woodford or Invesco's overhang being bought back. Otherwise, bring me my divi.

Switched tack and written to CRS instead.

[buffettjnr] 19/11/2019 16:21

I will block a div

[alasdair100new] 19/11/2019 15:47

So the shareholders can get a return for their investment. To prove to other potentials that this share can make you money through dividends and share price returns. A share buy back? I couldn't think of anything worse for the private investor in this share. Has to be a cash pay out. The more the better!

[buffettjnr] 19/11/2019 13:46

Absolutely. We need to get in there and change management

[buffettjnr] 19/11/2019 12:47

Why on earth do you want a payout? They should take 20p per share and buy back as many shares as they can at 50p. That’s what I’m pushing for.