Gulfsands Petroleum Update
One other factor that we feel encouraged by is the composition of the shareholders’ list as displayed below:
“They say that investment is all about avoiding losers (and also timing), and I’d certainly wholeheartedly echo this statement from my own experience, but, equally, success in investment is also about finding those trades where the upside far, far outweighs the downside – it is the few multi-baggers that really deliver the excess returns to a portfolio.” GULFSAND PETROLEUM SHAREHOLDERS LIST We can see from this disclosure that almost 80% of the stock is held by the top 13 shareholders – and which is quite a concentration. Importantly to us however, just over 10% is held by Directors. We have learnt of old that where there is no Director’s alignment in a stock, that the end result is usually bad for shareholders; while vice versa, in contrast, excessively large Directors holdings, as in the case of ENRC, can also be problematic. This is because the minorities can be kicked around, particularly when the concert party holding is over the key 75% level – the point at which you can vote through special resolutions and frankly treat the company as your own.
In GPX’s case, given the balanced “Goldilocks” Directors’ shareholding (not too large and not too small) and the fact that Waterford Finance & Investment, which is owned by Russian investor Michael Kroupeev, and also Soyuzneftegas Capital Ltd. appear to have paid close to 200p per share going by the dates of their stake declarations in 2011, it is logical, in our opinion, that a placing that dilutes existing shareholders is unlikely. Of course this cannot to be ruled out totally, but we believe a scenario in which existing stockholders would be shut out of the ability to participate and so be disadvantaged flies in the face of current vested interests.
April 2014
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