Australian (ASX) Stock Market Forum

LM Investment Management - Lack of confidence

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ASICK, LM have appointed administrators to themselves due to concerns of solvency... Reported this morning in the Gold Coast Bulletin. No link yet, however is in the main paper and iPad Edition...

Very similar to Equititrust, I suspect to try and restructure and buy some time...

ASICK said:
Good morning No Trust.

Is there a link to go with what you've posted?

Typically, LM does not appoint administrators, rather it does the work itself for all those extra $$$$.

See page 5:
http://moneymagik.com/FMIF-financials-30-06-12.pdf

$4,817,414 - "Loan management fees paid to the responsible entity for loan management and receivership services provided by the responsible entity on behalf of the scheme in replacement of appointing external receivers. These fees are charged directly to the borrower to facilitate futher possible recovery."

Of course, if the loans are already impaired then recovery of these monies will be impossible. The $4,817,414 is gone - and the only winner is LM - making money from bad loans that LM itself made. And on top of that, LM made $9,103,864 in management fees.

A frozen fund is surely a "Manager's Delight".
Click to expand...
 
The Clayton's Change of Manager

No Trust said:
ASICK, LM have appointed administrators to themselves due to concerns of solvency... Reported this morning in the Gold Coast Bulletin. No link yet, however is in the main paper and iPad Edition...

Very similar to Equititrust, I suspect to try and restructure and buy some time...
Click to expand...

http://www.stuff.co.nz/business/ind...-campaign-blamed-for-voluntary-administration

The Clayton's Change of Manager: The change of manager you have when you don't have a change of manager.

Well, no - in my view, not at all like Equititrust. I think it's a move to push Peter Drake (and LM) out of the picture. I've been of the view for some time that the whole LM thing's got very personal, especially the law suit against SMH, and that talk about bathrooms. LM hasn't fared well, and the only option on the horizon is Trilogy: not a good situation for investors.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

If LM didn't have the $$$$ (NTA), it would have to relinquish its managership of the remaining LM funds. Clearly from the BIG $$$ its earned these past years, I don't think its suffering a lack of $$$$s.

Now the voluntary administrators will make decisions about fund assets, and that's a good thing. Decisions will be made "outside the box" (so to speak), and at arm's length to LM's directors.

From my perspective, I think investors might see this as a "sea change", and a much better option than either of Trilogy or LM (as it was).

This willl be especially important when it comes to dealing with second mortgages and first mortgages behind which LM's related parties have second mortgages. The voluntary adminstrator should take away any perception that LM is self-interested.

I think it will be a good thing, and the really best possible outcome for investors since it should put the Trilogy matter to rest.

I would have thought that LM would have passed any potential voluntary administrator past other interested parties, say, the ANZ bank.
 
ASICK, lets agree to disagree on this one... This has all the hallmarks of Equititrust in LM appointing their own "Administrator"... Call me a skeptic, however I believe the strategy between LM and its administrator has already been formulated and it has nothing to do with any benefit for investors... This is all about saving the founder and his precious beachfront bolt holes, and adjoining Skateboard park...

Drake may complain about a smear campaign, however the performance of the funds and the greed in terms of fees speaks volumes. Its a tough world out there and if you don't perform you don't survive...

In situations like this, there is usually a lot more going on in the background which hasn't been fully disclosed "as yet"...




ASICK said:
http://www.stuff.co.nz/business/ind...-campaign-blamed-for-voluntary-administration

Well, no - in my view, not at all like Equititrust. I think it's a move to push Peter Drake (and LM) out of the picture. I've been of the view for some time that the whole LM thing's got very personal, especially the law suit against SMH, and that talk about bathrooms. LM hasn't fared well, and the only option on the horizon is Trilogy: not a good situation for investors.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

If LM didn't have the $$$$ (NTA), it would have to relinquish its managership of the remaining LM funds. Clearly from the BIG $$$ its earned these past years, I don't think its suffering a lack of $$$$s.

Now the voluntary administrators will make decisions about fund assets, and that's a good thing. Decisions will be made "outside the box" (so to speak), and at arm's length to LM's directors.

From my perspective, I think investors might see this as a "sea change", and a much better option than either of Trilogy or LM (as it was).
Click to expand...
 
No Trust said:
ASICK, lets agree to disagree on this one... This has all the hallmarks of Equititrust in LM appointing their own "Administrator"... Call me a skeptic, however I believe the strategy between LM and its administrator has already been formulated and it has nothing to do with any benefit for investors... This is all about saving the founder and his precious beachfront bolt holes, and adjoining Skateboard park...

Drake may complain about a smear campaign, however the performance of the funds and the greed in terms of fees speaks volumes. Its a tough world out there and if you don't perform you don't survive...

In situations like this, there is usually a lot more going on in the background which hasn't been fully disclosed "as yet"...
Click to expand...

Here's LM's release:
http://www.international-adviser.com/ia/media/Media/LM-Investment-Management-statement.pdf

Well, No Trust, we have to agree on the facts, which are:

Equititrust Limited (EL):

Voluntary administrator appointed.
No external criticism - no need to please/perform.
EL is NOT managing the fund.
EL has little to no $$$ in the bank.
EL has NO income stream.
EL's Income fund is being wound up by a court appointed receiver.

LM Investment Management Limited (LMIML):

Voluntary adminstrator appointed.
External crticism - need to please/perform - needs to please investors in the funds.
LMIML IS managing funds.
LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream.
LMIML funds are not being wound up externally.

Appointing a voluntary adminstrator does not protect Peter Drake from anything - it merely takes the control away from the board of LM and places it in the hands of an adminstrator. Let's face it, if investors aren't satisfied with the outcome, then LM is out, administrator or not. The administrator makes no difference.

Yes, and as you correctly say, "Its a tough world out there and if you don't perform you don't survive", so when you comparre and contrast the facts (above), you'll note that the voluntary administrator appointed to LM has to perform, or LM will suffer - the same cannot be said for the administrator appointed to EL.

Clearly the purpose of appointing an administrator is to take control of both LM and LM's funds away from LM's board and place it in the hands of an independent entity - one which will have to perform to the best of its ability.

Although I'm not an investor in any of LM's funds, I see this as positive and a much much better option to a takeover by Trilogy.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

By the way No Trust, Trilogy's fees from the Pacific First Mortgage Fund are at about $20m, and they returned a whole $0.0875/unit back to investors in nearly FOUR YEARS - and the only option for LM investors was Trilogy! Yipes !!!!!

I think the voluntary adminstrator is a great option for investors, much better than either of LM or Trilogy.

PS. I wouldn't be surprised to see some legal action in the near future - "Whilst the creditor issues rest with LMIM and are quarantined from the Funds, the Funds need to be shielded from any ensuing reputational damage."(emphasis added)

http://www.international-adviser.com/ia/media/Media/LM-Investment-Management-statement.pdf
 
LM - Voluntary Administrator

I'm told the procedure is that the adminstrators will take over complete control. The directors will work with the adminstrators until the administrators have a 'handle on things', and then all the directors, including Peter Drake will stand down.
 
Re: MW in fine form

ASICK said:
http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html
Click to expand...

"Now that administrators have been appointed to the RE of this fund – and investors should bear in mind that these voluntary administrators have been appointed by the directors of LM – the true value of the units is unlikely to be so high."(emphasis added)

I'm curious about the emphasised portion of this excerpt. I mean, does it really matter what the value spruiked is? All that really matters is just how much comes back to investors' pockets. We investors in other damaged funds have learnt that lesson - the value of units is the basis of a manager's fees, but from experience, it's got nothing to do with what's left for investors.

What do other members think? Everyone seems to be so quiet of late.
 
Well that's the Gold Coast cleaned up now, lets hope that these spiv's like McIvor never resurface...
 
Re: MW in fine form

No Trust said:
I agree, however he did predict all of this some time ago, read the article below, he was absolutely right:

THE GOLD COAST TRAIN WRECK

http://www.smh.com.au/business/the-gold-coast-train-wreck-20080912-4f4n.html
Click to expand...

I don't think anyone was surprised: it was an accident waiting to happen, but the first "wreck" is not necessarily the last, it might only be the first of two "wrecks".

The PFMF lost 52% under City Pacific's management, and then lost a further 56% of what was left under Trilogy's management.

I think this fund is lucky that an administrator has been appointed - but, then only time will tell.

If Trilogy gets the fund, I'm predicting a "Four Part Trilogy Tragedy"

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php
 
ABC News coverage and mooted Class Actions which will stymie any hope of LM coming back from the dead. As with Equititrust as soon as the class action was mooted no insurer would touch them... Looks like Drake has entered the perfect storm... This is where reality sets in and the beachfront mansions must go...

Edifices to huge egos and nothing more...

http://www.abc.net.au/news/2013-03-...administration-after-4-corners-expose/4583470
 
BS - There More of it Than You Think!

No Trust said:
ABC News coverage and mooted Class Actions which will stymie any hope of LM coming back from the dead. As with Equititrust as soon as the class action was mooted no insurer would touch them... Looks like Drake has entered the perfect storm... This is where reality sets in and the beachfront mansions must go...

Edifices to huge egos and nothing more...

http://www.abc.net.au/news/2013-03-...administration-after-4-corners-expose/4583470
Click to expand...

and such is not limited to managers of managed investment schemes, as is not BS and spruiks:

I note the "ambulance chasers" (Piper Alderman) last at Equititrust, have appeared on the scene - all full of what? hope?

It's so easy to spruik about litigation to recover losses in managed funds, but it's altogether another thing to pull it off.

Look at the MFS legal action, seemingly going nowhere - in fact, IMF have given up chasing the directors.

What's happening down at Equititrust No Trust?

Look at the PFMF litigation:
http://www.moneymagik.com/litgation.php

After spending $2m on the supreme court public examination, IMF walked away. Trilogy sues four individuals for $60m after spruiking years before that the insurance was only worth $20m. Does anyone think that IMF would have walked away even if there was a small chance of a successful $20m claim?

The ABC likes to gloat, but I think "A Current Affair" did a better job last night - I especially liked the car park confrontation.

If anyone thinks the BS is limited to the PDS you all signed up on, then you've got a lot to learn.

It all sounds so easy, but it's not.
 
From the SMH a damning indictment.

http://www.smh.com.au/business/when-drakes-empire-came-crumbling-down-20130320-2geq9.html

It is estimated that up to $15 billion in savings has been blown up in mortgage funds in Australia, much of it by Gold Coast entrepreneurs such as Drake.
Advertisement
The spiel was simple: invest with us in property. Look at our 8 per cent returns. Can’t go wrong with property – we are talking ‘bricks-and-mortar’. Drake’s salesmen even used words such as ‘bank-like’.
But it was never property that his clients were really buying. As the global financial crisis loomed, they were buying loans to property developers – often associates of Drake and even Drake’s own companies – loans in highly leveraged funds.
The peoples’ savings came in – mostly from financial advisors - and they went out in loans to developers, after the manager LM had taken its clip. And a mighty clip it was too, tens of millions every year in assorted fees, all up.
While most of his investors had their savings frozen with no return, Drake and associates were going for the proverbial doctor on the fee-front.
Not only were the financial advisors still being paid “trailing fees” on their client funds they had already placed in LM – frozen or not – but the banks were making off with penalty interest payments, and LM was ratcheting up its management fees while forking out money on expensive lawyers.


Read more: http://www.smh.com.au/business/when...mbling-down-20130320-2geq9.html#ixzz2O4BCR400
Click to expand...

Lessons

1. It is very unwise to invest in mortgage funds.

2. Financial advisers are not to be trusted unless paid on an hourly basis, if at all.

gg
 
ASICK said:
LMIML IS managing funds.
LMIML IS $$$ healthy (it has to be to keep its lincence)
LMIML has a really good income stream.
LMIML funds are not being wound up externally.

Appointing a voluntary adminstrator does not protect Peter Drake from anything - it merely takes the control away from the board of LM and places it in the hands of an adminstrator. Let's face it, if investors aren't satisfied with the outcome, then LM is out, administrator or not. The administrator makes no difference.

Clearly the purpose of appointing an administrator is to take control of both LM and LM's funds away from LM's board and place it in the hands of an independent entity - one which will have to perform to the best of its ability.

Although I'm not an investor in any of LM's funds, I see this as positive and a much much better option to a takeover by Trilogy.

http://moneymagik.com/three_part_trilogy_funds_management_tragedy.php

By the way No Trust, Trilogy's fees from the Pacific First Mortgage Fund are at about $20m, and they returned a whole $0.0875/unit back to investors in nearly FOUR YEARS - and the only option for LM investors was Trilogy! Yipes !!!!!

I think the voluntary adminstrator is a great option for investors, much better than either of LM or Trilogy.
Click to expand...

I'm not sure why you think LMIML is $$$ healthy with a good income stream. I thought have thought it would be pretty obvious that a business that actually was $$$ healthy with a good income stream would not be calling in an administrator. Sounds more like having heaps of BDMs and offices around the world was quite an extravagance.

Also.. I'm not sure if you quite understand the role of an administrator. The administrator is there to look after the interests of the creditors of LM, not the unitholders of the fund. Administrators are never long term REs. They'll look to either fix up the business and return LM to RE duties, or if they feel the business is not fixable, they will move to appoint a new RE.
 
bigheadache said:
I'm not sure why you think LMIML is $$$ healthy with a good income stream. I thought have thought it would be pretty obvious that a business that actually was $$$ healthy with a good income stream would not be calling in an administrator. Sounds more like having heaps of BDMs and offices around the world was quite an extravagance.

Also.. I'm not sure if you quite understand the role of an administrator. The administrator is there to look after the interests of the creditors of LM, not the unitholders of the fund. Administrators are never long term REs. They'll look to either fix up the business and return LM to RE duties, or if they feel the business is not fixable, they will move to appoint a new RE.
Click to expand...

Hi, nice to see you bigheadache.

About the $$$:

http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"All licence conditions of the Responsible Entity have been and continue to be met, and there has been no breach in this regard. The financial requirements (Net Tangible Assets) of the Responsible Entity licence remain in order. The Funds are unit trusts, the assets of which are separate and segregated from those of LMIM."

And of course, there's the (quite considerabale) cash flow generated by (1) management fees, and (2) receiver fees.

As to the role:

http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"The Voluntary Administrators will be working with senior LM investment personnel to optimise investor outcomes."

http://www.lmaustralia.com/Download...lting-Appointed-Voluntary-Administrators.aspx

In relation to the role of the administrator:
"The Board of LMIM advised that the appointment of FTI Consulting was made after full consideration of its obligations as a company and its duties to ensure it acts in the best interests of investors in the LM Funds."

Yes, the administrator will have to make a lot of decisions - who knows what the future is? I certainly don't.

However, given the choice of LM (as it was), and Trilogy (as it is), the outcome (as I see it) is the best in the circumstances.

I think the real problem was with Peter Drake's LM - that was the LM that was struggling, but if I can differentiate LM (the company) from Peter Drake's LM, then the company (LM) is in good order and needs management from someone from "outside the box" to resolve the issues that had clearly become too personal.
 
ASICK said:
Hi, nice to see you bigheadache.

About the $$$:

http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"All licence conditions of the Responsible Entity have been and continue to be met, and there has been no breach in this regard. The financial requirements (Net Tangible Assets) of the Responsible Entity licence remain in order. The Funds are unit trusts, the assets of which are separate and segregated from those of LMIM."

And of course, there's the (quite considerabale) cash flow generated by (1) management fees, and (2) receiver fees.

As to the role:

http://www.lmaustralia.com/Downloads/documents/inv-LM-announcement-20-03-13.aspx

"The Voluntary Administrators will be working with senior LM investment personnel to optimise investor outcomes."

http://www.lmaustralia.com/Download...lting-Appointed-Voluntary-Administrators.aspx

In relation to the role of the administrator:
"The Board of LMIM advised that the appointment of FTI Consulting was made after full consideration of its obligations as a company and its duties to ensure it acts in the best interests of investors in the LM Funds."

Yes, the administrator will have to make a lot of decisions - who knows what the future is? I certainly don't.

However, given the choice of LM (as it was), and Trilogy (as it is), the outcome (as I see it) is the best in the circumstances.

I think the real problem was with Peter Drake's LM - that was the LM that was struggling, but if I can differentiate LM (the company) from Peter Drake's LM, then the company (LM) is in good order and needs management from someone from "outside the box" to resolve the issues that had clearly become too personal.
Click to expand...

Rather than quoting press releases from LM verbatim, I'd suggest you think about it critically instead of buying into the LM spin.

Again, if everything is hunky dory, why would you call in an administrator? How many healthy businesses do you know have all of a sudden decided to call in an administrator? You only call it in if there is a question of solvency. Directors become personally liable and criminally liable for insolvent trading. Any inkling of such, they've got to call in an administrator. The implications can be extreme. Knowing how most debt covenants work, I imagine all of LM's debts fall due now as an implication. You'd have to also wonder what the debt covenant on Deutsche's facility says now that the RE is under administration.

As for the role of the voluntary administrator, of course LM will say as such. Here is what the role of an administrator actually is
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Voluntary_administration_guide_for_creditors.pdf/$file/Voluntary_administration_guide_for_creditors.pdf

Clearly the role of the administrator is to act in the interests of the creditors. It's no different for administration of any other company.

Also, I don't quite understand your assertion that there are effectively 2 LMs. How can there be 2 LMs, if LM has only 1 effective shareholder?
 
It doesn't pay to have a few days of at golf, what a lot to catch up on going through all the postings and Newspaper articles.
 

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