ABS - ABC Learning Centres

[Nicks]

hmmmm whats up with a director offloading 2,000,000 shares on 22 Feb at $3.75. Could he have had foresight into this?

 

[TheAbyss]

hmmmm whats up with a director offloading 2,000,000 shares on 22 Feb at $3.75. Could he have had foresight into this?

You have probably seen this however it is an interesting read regarding directors of ABC and share holdings.

http://www.theaustralian.news.com.au/story/0,25197,23284317-5013408,00.html

 

[Nicks]

Thanks for that article. Damn shocking. I think he deliberately only offloaded 2,000,000 (I say only in comparison to his total holdings) so it didnt look so blatantly obvious. But I think it has anyway. I guess he figured it was still worth it as it would be enough to keep him above water.

I think as soon as directors sell shares it should be available to the market immediately.

 

[DionM]

What kind of a margin call requires you to offload ALL your holdings?

Sounds suspicious to me - an excuse for bailing out.

 

[TheAbyss]

Nicks

Bear in mind that a lot of companies pay salaries and bonuses via stocks and options particualrly at senior management level.

Put yourself in a directors situation. Paid millions in salary and bonuses via company stock and watching its value freefall. There goes the family holiday this year or sell now and lock in the bonus as cash in the bank? Call it lock in your salary if you will.

The temptation to sell before the fall must have been strong for Mr Kemp who has been with ABC a long time and is very highly regarded. Lets see what the end result is and i for one truly hope ABC are around to learn from their error which was a lack of transparency when their business model came into question. What the cloak of secrecy is hiding we will read about in the coming few weeks i guess.

Watch for a US private equity firm buying the US assets and sending ABC home to the antipodeans.

 

[ROE]

What kind of a margin call requires you to offload ALL your holdings?

Sounds suspicious to me - an excuse for bailing out.

The kind of margin you know the company is in trouble so better get a few millions than a few hundred K due to insider knowledge.

government should change laws so insider trading becomes a criminal and lock these guys ups with the real criminal..so they get a bit of loves from the sisters

As far as I'm concern insider trading is not different from robbing mum and dad hard earn cash and retirement funds.

 

[Nicks]

Nicks

Bear in mind that a lot of companies pay salaries and bonuses via stocks and options particualrly at senior management level.

Put yourself in a directors situation. Paid millions in salary and bonuses via company stock and watching its value freefall. There goes the family holiday this year or sell now and lock in the bonus as cash in the bank? Call it lock in your salary if you will.

The temptation to sell before the fall must have been strong for Mr Kemp who has been with ABC a long time and is very highly regarded. Lets see what the end result is and i for one truly hope ABC are around to learn from their error which was a lack of transparency when their business model came into question. What the cloak of secrecy is hiding we will read about in the coming few weeks i guess.

Watch for a US private equity firm buying the US assets and sending ABC home to the antipodeans.

Fri 22nd Feb - Mr Kemp CEO of Australian Ops and ABC Director sells 2,000,000 shares
Sat 23rd Feb - Market Closed, Weekend
Sun 24th Feb - Market Closed, Weekend
Mon 25th Feb - ABC releases Half yearly report
Tues 26th Feb - ABC Shares Tank!

Sorry - this doesnt look like he casually decided to sell some of his bonus at some random time!

You talk as though his submission to the temptation is ok? whilst other not so wealthy investors whom are not privy to the same things he is were not afforded the same privallege.

Also, regarding your US Private Equity firm comment - this is already occuring, as I also read that today! (it seems as though the buyer of 10,000,000 shares is a US Private Equity co).

ps. not holding ABS and never have, just find this extrordinary and very interesting.

 

[Nicks]

2,000,000 shares is $7.5 Million Dollars! What kind of a director sells that kind of stash the day before the Half Yearly reports which were not good!!??! Bet that kept him out of a Margin Call, unlike some of the Mum and Dad investors.

I agree with ROE and his comments regarding insider trading.

 

[Prospector]

ps. not holding ABS and never have, just find this extrordinary and very interesting.

Having been badly burnt with a similar (too similar actually) story of MFS, and considered buying ABS a few months ago, I too am looking back and asking - "how can this happen" - again, and then, "who might be next"

 

[Nicks]

Ditto, Centro for me.

Ive been reading some bad press on Babcock and Brown today, in fact its been all over the media and in the BNB thread. Perhaps they are next?

 

[TheRage]

Fri 22nd Feb - Mr Kemp CEO of Australian Ops and ABC Director sells 2,000,000 shares
Sat 23rd Feb - Market Closed, Weekend
Sun 24th Feb - Market Closed, Weekend
Mon 25th Feb - ABC releases Half yearly report
Tues 26th Feb - ABC Shares Tank!

Sorry - this doesnt look like he casually decided to sell some of his bonus at some random time!

I completely agree with what you are saying. Directors and company execs should be made to disclose their trading activities within 1/2hr of doing so. Or better still they should be made to disclose their sale prior to doing it with their stated reason. For instance I am selling 2 million shares to buy a new home. This would at least give the ordinary punter some idea that something might be going on. I don't own ABS but I would be super pissed that they come out saying earnings are down 50% but will be up 15% in total for the year due to trading conditions. That doesn't wash. How were the trading conditions over the last period so much better. Surely childcare is not like a retail business where at Christmas time everyone is buying. I am assuming people use it all year round.

 

[Prospector]

Bet that kept him out of a Margin Call, unlike some of the Mum and Dad investors.

Hopefully the mums and dads didnt get into margin lending, but that is an interesting point you make. They say he sold because of margin calls, but was that in anticipation or an actual call. Big difference, as you say! Has to be insider trading doesn't it? The market wasn't generally crashing on the day he sold, so why the hurry THAT day - oh yeah, announcement the next business day!

 

[TheRage]

Executives on margin were sold out around $1.80. Share price on Friday was around $4. Pretty big loss for those called.

 

[Birdster]

What I present in this post is only "food for thought". I have no intention of getting into some argument of speculation;

1. What will this do for the price of buying/selling a Child Care Centre?

Market prices for buying CCC's have gone high since ABS bought every one they could get thier hands on. (cannot find figures to show atm)

2. Will this force a shift in price for child care? As almost anyone with children will know, CC assistance is subsidised by the govt. in many facets. Will they step in and ???

3. CC workers are underpaid! (You can dispute me if you like) The livehood of some of these workers could be at risk if this causes centres to close to avoid the company disolving. Yes, you might say that "someone" will buy the centre and save the single centre, but refer back to "1".

I'm sure other factors come into play, just wanted to see what others have to say about the impact of the SP drop besides $$$.

Birdster

 

[Prospector]

Executives on margin were sold out around $1.80. Share price on Friday was around $4. Pretty big loss for those called.

Not for this smart cookie:

Board member Martin Kemp offloaded a whopping 7.64 million shares, leaving him with 2.76 million of the company's stock.

Mr Kemp has sold $16.8 million worth since Friday, offloading 2 million at $3.75 per share on February 22

http://www.news.com.au/business/story/0,23636,23284258-14334,00.html

 

[Prospector]

I'm sure other factors come into play, just wanted to see what others have to say about the impact of the SP drop besides $$$.

I think maybe an assumption, but few people here have children in child care and as this is a share forum, repercussions for actual child care issues is most likely unknown.

 

[Birdster]

I think maybe an assumption, but few people here have children in child care and as this is a share forum, repercussions for actual child care issues is most likely unknown.

What your asumption maybe, it does not elude the fact that it does affect the SP of the equity in question.


Investing or backing in any company involves more than trends on price. CCC trends have risen due to increased govt support. It's a fact. If you are going to put hard earned money (or someone else's) into a company, you should know the trend other than the price. I do believe you were "thinking" of investing in ABS somewhere stated in this thread. Don't you think know more than the price is substanstial if not in retrospect of what has happened, but for possible future investment?

 

[Prospector]

What your asumption maybe, it does not elude the fact that it does affect the SP of the equity in question.
I do believe you were "thinking" of investing in ABS somewhere stated in this thread. Don't you think know more than the price is substanstial if not in retrospect of what has happened, but for possible future investment?

I use technical indicators, or trends, to determine whether to buy or sell (hence my post 160 addressed to HangSeng where I talk about the charts) so I dont need to know as much about traditional yields/pe's etc, knowledge of business systems, salaries and wages etc. You went into detail about salaries etc - most people here wouldnt even think about such issues before investing.

The only thing affecting the SP is how well the business runs generally - macro versus micro if you wish. Hence my comment that people here wouldnt know if child care workers were underpaid, or what the likely ramifications are for individual child care centres. But I also know this is an assumption so I am happy to be proven wrong.

 

[derty]

The margins in child care are incredibly tight, even with the child care benefit and low wages paid (at our centre the hourly rate ranges from $17-$24 depending on qualifications and length of tenure) the utilisation rates need to be greater than 90-95% to make ends meet.

I am the treasurer for our local community based not-for-profit child care centre and we have a revenue of about $1.1M per annum and aim to be in the black by about $20k each year and that is with a $1 peppercorn lease. ABS bought out 2 of the existing centres in town and have just finished building a brand new centre that would have cost close to, if not more than, $1M. I guess their aim was to produce a glut of places, drive down utilisation rates and run centres at a loss until others went out of business. I know we have been very close to shutting the doors on a couple of occasions even without the new centre being open.

Even with the advantages economies of scale ABS has, it is going to be hard for them to service their debt from the profits generated from their centres. They will at least have to address some of their marginal centres, and who knows what sort of deal they are going to get for the fire-sale of their US assets?

 

[mark_au]

Geeze not having a good year
first ccp imploded and now abs.. getting really sick of scheming, lying and/or incompetent CEO's...
shoulda just sold out and put my money in the back in december...