Hot-shot launch shoots a blank
It was the float that was supposed to shoot the lights out but iSelect's sharemarket debut on Monday has instead shot holes in the pockets of investors.
On a bad day for the market, the share price of the much-ballyhooed insurance comparison website bellyflopped, ending at $1.56 - well south of the $1.85 issue price.
Founder Damien Waller, pictured, was looking at a paper loss of $12 million for the day, although as he no doubt got his stock super-cheap he's certain to have made money overall.
Also taking a bath was Melbourne's Tauber family, down $1.43 million, fellow iSelect founder David Urpani (who these days fronts social media venture Moneytribe), Spotlight Group founder Morry Fraid and Computershare chairman Chris Morris.
For the record, brokers to this woofer were Credit Suisse and Baillieu Holst.
One well-known client of the house of Baillieu told CBD: "Holy shit, I dodged a bullet."
Floating awayAFR, May 20: "Floats are suddenly looking attractive again and even those who aren't entirely convinced about some aspects of iSelect's business admit this float will probably shoot the lights out."
The Australian, EXCLUSIVE on Monday: "Demand for the float has been strong."
BusinessDay, June 15: "It is certainly shooting the lights out on the fee front, with $11.9 million going to the float brokers Credit Suisse and other advisers."
They had it all
Human growth hormone, penis medicine and illegal deals.
The story of Redwood Anti-Ageing, a business that boasted as directors former adman Siimon Reynolds and his good buddy, marketing expert Brian Sher, has it all. Among Sher's many wise tomes is a book called The Anti-Ageing Diet, and back in the early noughties plugged human growth hormone as "an elixir of youth".
Redwood marketed the hormones, which were prescribed by a doctor.
The company had a supply deal with compounding pharmacist Darryl Knowles, who also supplies the potions relied on by Jack "Longer Lasting Sex" Vaisman's Advanced Medical Institute.
Under the deal, Knowles paid all the profits from filling the Redwood scripts through to the company as a "marketing fee".
But making things more complicated was a pesky law stopping anyone but a pharmacist having a pecuniary interest in running a pharmacy. To solve this problem, in February 2002 Knowles emailed Sher and proposed that Redwood would collect all the money but, "as a paper trail only", pay overheads back to the pharmacy. This would give "transparency to the whole process if any investigation should arise of our business practices" and "give the correct impression of true agent/client relationship to outsiders", Knowles said.
Of course, Sher and Knowles later fell out and the whole thing ended up in court, which is how we know about the email.
In a judgment in May in the NSW Supreme Court, Justice Richard White said he didn't believe Sher and Knowles when they said they understood the deal was lawful.
"The word 'transparency' and the statement that this would 'give the correct impression of true agent/client relationship to outsiders is double-speak," His Honour said.
Because the deal was illegal, Redwood was not eligible for more than $460,000 it claimed for "unpaid marketing fees", the judge said. He did make Knowles pay back a $42,500 loan, which with interest came to about $65,000.
Sher told CBD he disagreed with the judgment and was considering further legal action against Knowles.
Reynolds, who quit Redwood in 2007, has yet to respond to CBD's email.
Got a tip?
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free