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Could have made 500k but lost Paula 18k instead

My gross capital gain of $34,000 submitted to the tax department for 1999-2000 was the crystalisation of many longer term investments in the likes of the Commonwealth Bank and Telstra.

We’ve been looking back at 10 years worth of tax returns and estimate that I could be almost $500,000 richer today if I’d never sold a share. Some of the biggest blunders are as follows:

ANZ: Have bought these on three separate occasions and if held the lot today would be about $20,000 in front.

Aristocrat: Did make $7000 from a $3000 investment but it would have been $10,000 more if I’d never sold.

BRL Hardy: Bought 5000 shares at $1 in the 1992 float and sold them for $1.96. Would be about $35,000 better off if still held them today.

Commonwealth Bank: bought 3000 shares at an average price of about $7 and sold for profits of about $8000 when would be $75,000 in front if still held them today.

Fairfax: Bought 20,000 at $1.20 in the 1992 float and sold for an average of $1.40 so would be about $60,000 better off if still held them today.

GIO: Bought $30,000 worth in the 1992 float at $2.40 and could have sold to AMP for $5.35 making a profit of about $40,000.

News Corp: Have bought various parcels at prices as low as $5.23 and would be about $20,000 better of if had never sold.

Seven Network: Bought 7000 shares at $2 in the 1993 float and sold them for $3 a share. Would be $22,000 better off if still held them today.

Westfield Holdings: Bought a couple of parcels at $7 and would be about $10,000 in front if had not sold out at around $8.

Woolworths: Bought 2000 in the float at $2.40 and would be $15,000 in front today if never sold.

Over the years I’ve made about $100,000 in capital gains but sadly this year’s figures are awful and the worst part about it is that I’ve managed to blow up about $18,000 of my wife’s hard-earned after-tax savings.

Anyway, as we prepare this year’s tax returns, this is a blow by blow summary of where I lost all this money for Mrs Crikey, who has been incredibly tolerant and understanding. It is good for Crikey to be in the thick of some of these disasters but no-one wants to drop $30,000 in a year (Paula plus my losses added together). Can I stress that most of these shares were bought to get access to the AGMs, rather than because I thought they were good value and were going to go up. Strange but true.

Bad investments Stephen Mayne did for wife Paula

Ashton Mining

Paula bought 4000 of these at 73c a share on April 10 last year so I could go to the AGM. Given that we were in the market for diamond rings we thought it a nice irony to buy into the world’s biggest diamond mine. As the travel bills mounted up in the US with the dollar at US53c, we sold them at 84c a piece on May 25 crystalising a negligible profit of $260.40 after brokerage. So how stupid did I feel when North and De Beers got into a bidding war a couple of weeks later and the stock was eventually taken over for about $2.20 a share. This missed $6000 profit would have paid for the ring so how do you reckon I felt shelling out thousands a few weeks later for diamonds in Amsterdam.

Austar

Paula bought 450 shares in this regional pay-TV company at $6.99 a pop on April 4 last year for a total of $3235.30. The stock peaked shortly before this at almost $9 and some dopey institutions took a placement at more than $8 around this time. Thankfully we got out $5.62 a share on June 1 and therefore crystallised a quick $795.20 loss. However, if we still held them today they’d be worth about $360 because at 80c they’ve fallen right out of bed. Sorry for losing you $795 darling but it could have been $2900 at today’s price.

BMC Media

Nick Greiner likes to make a quick buck and chaired this internet advertising agency when they went public at 50c a share in 1998. They soared all the way to a peak of $8 and then I bought Paula 800 of them at $3.65 a pop on April 11 on the way down. The lesson here is to cut your losses because we’ve still got these dogs and they closed at 16c last week meaning Paula has lost $2900. They were bought to give Greiner grief at AGMs but I’ve missed the last two so there are absolutely no redeeming features in this effort. Then again, it’s good to see Greiner come a cropper occasionally.

CPH Investments

When Packer announced he was turning the old FXF Trust into a general investment vehicle they surged from 80c to $2.40 on nothing but hot air. I bought 2500 for Paula on the way down at $1.29 for $3329.95 on April 11. They are now at 40c so we’ve lost about $2300 but at least I got to ask both Packers a swag of questions at the last AGM. James Packer even tapped me on the leg on the way out and said: “That’s unlike you Stephen not to buy at the bottom and sell at the top.” Trying to claw some of the losses back, Paula and I each invested $5000 in the CPH capital raising at 50c a share and we together made about $1000 after brokerage by selling out at 57c so the total loss from this stock was about $1200 and we had some fun with the Packers at the AGM so there are bigger disasters in the portfolio.

Emitch

Michael Kroger and Harold Mitchell floated this online advertising buying business at 50c a share in 1998 and they went to $3.75 on the first day after all the major media players were corralled into it. They’d fallen back to $1 by the time Paula bought 3000 of them on April 13 and then they dived to a low of 42c in June. Thankfully, the dead cat bounce got them back to 91c when we sold on July 7 so the loss was confined to $456.60 in 3 months. If we’d stuck with them the loss today would be $2800 given they closed at 9.5c last week. Lucky we got out of these shockers darling.

Eisa

After Eisa announced the $300 million purchase of Ozemail’s ISP business to become a serious threat to Telstra Bigpond, I read the glowing profiles about CEO Damian Bradley written by Ivor Ries and Alan Kohler in the Fin Review. And with ANZ, John Fairfax and Mike Fitzpatrick’s Hastings Funds Management all announcing funding contributions, I ploughed in and bought Paula 1300 of them at $1.30 to get access to the upcoming EGM to approve the deal. Sadly, all the big players pulled out, Damian Bradley turned out to be bullshit-artist about his MBA, the largest shareholder Johnson Wang went broke and Ozemail kept Eisa’s $20 million deposit and the business. Before I knew it the broker had sold these dogs at 19.5c so I’d lost Paula $2737.80 in 3 months. Ben Hills tried to suggest in the SMH that I’d been talking up the stock as a shareholder. Not so Benny, the investment came after the Ozemail deal was announced. Can only say I’m profoundly sorry about this one darling.

Hutchison Telecommunications Australia

These guys own the Orange mobile brand and floated the business at $5 a share in 1998. They peaked at $6 in March 1999 and I bought Paula 600 of these at $4.98 a pop on April 12 last year to get access to their AGM which ended up clashing with something else so I missed it. Just like One.Tel, these boys went berserk bidding for Next Generation mobile spectrum which only served to transfer $700 million from HTA to the government. Silly me held onto these dogs and they closed at 29c last week, meaning we have an unrealised loss of $2900. At least I got to contribute to the savaging the board got at the recent AGM in May this year and also gave HIH director Justin Gardiner lots of curry. This softened the pain a little but the loss is still the equivalent of a round the world air ticket and they’re yet to offer Paula and other long-suffering shareholder a cheap mobile deal.

Keycorp

I bought Paula 325 of these at $8.95 for $2998.25 on April 27 last year and then got out a month later at $8.20 a share crystallising a loss of $422.30 including brokerage. Silly me sold these shares just a few weeks before Telstra launched its first over-priced takeover bid and the stock went to $15 in July. At the peak Paula could have made a profit of almost $2000 but if she still held these dogs today she’d be sitting on a loss of $2400 because the One.Tel crash has sent them tumbling to $1.98. Still, happy to get out at $8.20 in the circumstances and Telstra is looking real silly now. Also got a few questions in at an EGM last year so all is not lost.

Melbourne IT

The monopoly registrars of the .com.au domain name surged from a $2 float price in 1998 to a peak of more than $16 in March 1999. I bought 300 at $9.40 for Paula on April 14 and contained the loss to $971 by dumping them at $6.80 a share on June 2. We were driving back from Sydney to attend the AGM when we blew the engine in Paula’s Peugeot so this investment achieved nothing. Then again, they’re now at 64c so if we still held them the loss would have been $2970. I went to the AGM the other week and actually reckon these guys are a screaming buy at these prices. But I have neither an ASIC licence or a good track record of late so treat that with a grain of salt.

Open Telecommunications

Packer and Cisco were backers of this telco software and network company and they soared in the tech boom. Paula bought 225 of them at $12.90 for $2992 on April 10 last year and after a 5 for 1 share split she sold all 1125 at $1.74 for a loss of $1122.50 in just 7 weeks. As with so many others, I didn’t end up making it to the AGM in that period but thank god we sold as they closed at 12c last week so the loss could have been $2850. Still, the Murdoch family company invested $30 million around the time we sold out and have lost about $26 million. See Paula, Lachlan got sucked into this bubble as well.

PMP

Paula had enough trouble with me buying her crap in the open market without having to worry about dogs being transferred from my name to hers. But that is exactly what happened with magazine and printing group PMP. Paula paid a nominal $1.80 a share when 1500 were transferred in April 2000and now finds herself sitting on an unrealised loss of $1950 with the shares now sinking under mounting debts to a recent low of 49c. Still, the Packers bought their 5 per cent at more than $1recently so some of the big boys have called this badly too. Others, namely Rupert Murdoch, were a bit smarter and got out for an average of $2.40 a share. Even former chairman Ken Cowley was dumping large licks of stock shortly before announcing a big profit warning. You’re a class act Kenny and will be in for some special treatment at this year’s News Corp AGM.

Sausage Software

When the froth and bubble merger with Solution 6 was announced I bought Paula 700 of these at $4.30 on April 5 with a view to going to the EGM. They’d tumbled from a peak of almost $8 in March but then the deal never happened and Wayne Bos, Steve Outtrim and Gil Hoskins all jumped the sinking ship. Decided to cut the losses by selling out at $2.20 a share on June 22 booking an ugly loss of $1647.05 in 11 weeks. Then again, losing 55 per cent is better than 95 per cent because they closed at 43c last week so Paula could have lost $2900. At least I got to blast Gil Hoskins at the 1999 AGM for coming up with the www.jeff.com.au strategy for Kennett but I’m still sorry about this one darling.

Smorgon Steel

Everyone reckons the Smorgons are very smart so when their $2 shares plunged to $1.41 in April last year Paula’s husband swooped on her behalf and snapped up 2000 of them. Today they wallow around the 85c mark so she’s dropped $1150 in 14 months. Still, Paula recently read Rod Myer’s excellent biography on family patriarch Victor Smorgon and admires the family who have cost her two weeks in mortgage repayments. She deservedly admires her husband less because we could have waited until April Fool’s Day this year and picked them up for 60c. Who’s the fool now?

Solution 6

Two bags Tyler sucked us in along with everyone else. On my instruction, Paula bought 500 at $5.90 for $3039.50 on April 26 last year whilst the Sausage merger was still live. Thankfully, we sold out at $3.50 on July 7 but still lost a hefty $1385.70 in 10 weeks. Then again, they’re worth about $1 today so we could have lost $2500 if we’d hung on. I waded back in at 90c and made about $300 with a quick sale for $1.30 a few weeks later but by this stage I’d blown up most of our spare capital and was only punting $500 a hand. Also got to ask questions at last year’s AGM so it has not all been bad news. Dick Pratt may have got out with a $115 million profit on this play but at least Telstra have taken an absolute bath.

UEComm

This was the last madly priced tech float that got away and Paula bought 4000 at $1.90 for $7600 hoping for a quick stag. United Energy shareholders got a 5c discount and I didn’t think underwriter Deutsche Bank would let it open at a discount. This was the case so we sold 3700 at $1.90 for $6925.85 on September 11 last year which was the opening day. Brokerage meant this was a $104.15 loss in one day but Paula is down $480 on the remaining 300 shares which have plummeted to 30c so the loss here could have been $6400 but we never planned to hold them. Also, we made $486.52 on Paula’s United Energy shares which were sold as they spiked up leading into the UEComm float so the net loss is negligible from the whole exercise.

Village Roadshow

Another rotten hospital handpass from her husband saw Paula sign the transfer form on 1000 of these in April 2000 at $2.80 a pop and they’ve done nothing but go south since then. Village has the worst corporate governance record of any top 200 company so you wouldn’t hold them unless you liked the pile of two for one Village cinema deals that Paula’s sister Patricia so enjoys. Even after getting the Austereo float away at a massive profit, Village shares are still wallowing around $1.50 so Paula has dropped $1300 on these and our regular Tuesday night half price visit to a Village cinema at Crown has been less enjoyable ever since.

What about the rare profits

We shouldn’t be too gloomy because I’ve made the odd trading profit for Paula. Woodside is perhaps the best with a profit of about $1000 and we’ve made $300 on Coles Myer but I’m banned from selling them because we love the discount card. MYOB, Investorweb, United Energy, ERA, PBL and Austereo have also produced some negligible profits. I could have saved the day with North but we sold out at $2.75 a share last June just weeks before the takeover battle between Rio and Anglo broke out which saw patient North shareholders pocket $4.75 a share. That was another $3000 missed profit that just gets a “don’t talk about it, I don’t want to know” response from Paula every time I mention it.

Crikey also had some shockers in his own name

One.Tel, HIH, Centaur, Infosentials, 05you name it and I’ve owned it. Rest assured that the $33,000 capital gain notched up in 1999-2000 could never be repeated because I sold all the good stuff and left the crap in the portfolio for this year. And crap it is. Take a look at this howling pack of dogs that have helped sink the net worth this year:

Amalgamated Holdings

Bought 700 of these at $4.16 on September 21, 1998 and managed to lose $1655 in just over two years by selling them for a paultry $1.91 a share in December last year. These guys used to soar every year until the Thredbo disaster an ill-fated overseas expansion by Greater Union and countless problems in sister company Village Roadshow sent the stock into reverse. Founder Alan Rydge clings to his spot on the Rich List and appeared positively depressed at last year’s AGM. Seems like a genuinely nice guy who has seen the stock dive 70 per cent in three year and halved the stock and Amalgamated Holdings: 21/9/98 buy 700 at $4.16 for $2995. 6/12/00 sold 700 at $1.91 for $1339.25. Lost $1655.75 in 2 years and 3 months.

Centaur Mining & Exploration

I still can’t work out how Joe Gutnick can be running around threatening proxy fights at Melbourne Football Club and suing Dow Jones for defamation when he has just presided over one of Australia’s biggest corporate collapses. I paid 54c for my 5000 Centaur shares in 1998 and did have great fun asking Joe about 16 questions on the trot at the 1998 AGM. They are now worthless so the full $2600 has been written off this year after the administrators were appointed and the creditors stand to lose $500 million before us shareholders get a brass razoo. Joe’s reputation with me and other shareholders has fallen but what about the US bondholders who are owed about $500 million and must think Australia is a complete broke given that Joe forward sold more than twice the amount of gold produced by his Mount Pleasant gold mines. Talk about cooking the books. Where is ASIC when you need them?

HIH Insurance

Like 30,000 other Australians, I’m still on the HIH register and have lost $3900 paying $2.60 a share to those Swiss shifties Winterthur for 1500 of their shares. However, in the scheme of things this is almost worth it because I asked more questions than anyone else at the last two HIH AGMs and have followed the company closely ever since my broker tipped me into the Swiss sell down since 1998. I even asked Rodney Adler a stack of questions at the last FAI meeting before HIH took it over in 1998 but, like Rodney, managed to get out of FAI without taking a haircut.

One.Tel

Amazingly, I’m the proud owner of 1000 One.Tel shares but still managed a $600 profit from the company. How so? Well, I bought 2500 at $1.19 a share for $3050 in mid 1999 and then dumped 1500 of them at $2.44 for $3660 on the day after News Corp announced its last $200 million injection. This one was actually worth a big loss given the great action at the last two AGMs and then the importance of still being on the register at the death for any subsequent class actions that fire up.

Peter Fray

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