I smell a plan.

Mmm… Why not get rid of those whiners by buying back their shares while they are so cheap Sir, then we can concentrate stock in our hands even more.

We don’t want any more troublemakers like those Intelligent Investor guys now do we.

Excellent plan Smithers! Make it so!

Thanks guys for showing us that we (small retail investors) can still be heard if we band together.

Firstly thank you for all your efforts and expenditure (time and money) on the action it was greatly appreciated and should be applauded. Secondly I think while you failed in making the board, at least we have some information about the company direction enabling investors to make a more informed investment decision which is your credit alone and to be honest if you were elected could you honestly see yourself working well with the current directors? Thirdly I have just read your “Where we stand after standing for the RHG board” and you should be congratulated for taking such a rational approach (and advising shareholders that value still remains within the business, despite some potential concerns) to something that no doubt has become an emotional issue for both Steve and Greg. Best wishes and good luck for the future.

This outcome, alongisde MMC Contrarian, illustrates why it is no simple matter to profit from buying unloved shares selling at a persistent discount to their net tangible assets, even if said assets is virtually all cash. There is always a valid reason for said discount in every business I have investigated and the one that is hardest to resolve is “hostile/arrogant management”. The likes of such masters as Ron Brierley, Warren Buffett and Benjamin Graham had to commit considerable resources and personal influence to release this value.

What Greg & Steven have put in, though highly commendable, barely scratches the surface of what it takes to essentially “break open the piggy bank”.

On the plus side, RHG is pretty much an owner-manager business now so the biggest winners/losers of Kinghorn’s strategy will be Kinghorn’s circle (for now, until they surreptiously sell out).

I imagine that there are two strategies for current and future RHG shareholders:
1) Sell out immediately as the price will probably decline following the optimistic run-up in price pre-AGM
2) Buy back in when the top 20 largest RHG shareholders get complacent and start offloading. Build up a larger stake quietly and prepare for the next opportunity to spill the board.

The reality is that there’s the existing board (25%), us (16-20%), Australian Leaders Fund (7-8%) and Cadence Capital (a bit less than 5%). That’s pretty much the 60% that voted (based on the difference between the proxies and the poll, it seemed 5% were left at the chairman’s discretion). Our point about the 50/50 is that Kinghorn’s comment that ‘90% of the non-board shareholders are happy with the strategy’ is an out and out lie. Yesterday’s vote showed that, combined, we’re pretty close to half the non-board shares. Surely that is a block worth having a conversation with?
As I said to Greg after the meeting, the reality is that we’re not a majority and we have to live with whatever the majority wants. But we’re a lot larger minority than Kinghorn was giving us credit for.