Letters of the Week

Long and short, Golden Gate Petroleum, and hopes of a post-election market rebound.

Net long and short

In Adam Carr's October 29 article “Ride the fiscal cliff wave”, he refers to “net long positions of Traders”. He in fact bases much of the article on this term and I do not understand what he is referring to. My understanding is that in trading someone always buys and someone sells so the net is always zero. I therefore have to assume that Adam is talking about a subset of traders in this article, perhaps small traders? Is this correct? If not then can you please elaborate on exactly how a net position of traders is calculated?

Name withheld

Editor’s response: The subset of the market Adam Carr refers to is ‘professional traders’ in the US futures market, as first explained in this article from May, and he writes there that the data does not indicate what real money managers, fund managers, are doing. The data is provided by the US Commodity Futures Trading Commission, or CFTC (http://www.cftc.gov/index.htm).

Tension at Golden Gate

I read with interest in The Speculator last week the comment executive chairman Stephen Graves made regarding the 249D issued to two directors of the company, Golden Gate Petroleum. I am a signatory to that document.

The Speculator article indicated that the company was not aware of this vote of no confidence coming. This is incorrect. He may not have known but the company certainly did. I flew from Queensland to Melbourne to meet a director two weeks ago and he chose to fly to Sydney and start shoring up votes instead.

Steve Graves’ comments that we are attempting to take over the company by stealth are also untrue and quite laughable.

We are all (now well over 100 ) retail investors trying to protect our investment against dilution from noteholders.

The facts are:

The company is attempting to raise convertible notes just prior to a rights issue. Those notes can be instantly converted into shares at a 10% discount and still retain a percentage of the company’s net profit.

The company was given ample opportunity to discuss shareholders issues face to face, which they ignored even after receiving two members’ resolutions, which they have also chosen to ignore.

We believe the previous auditor had concerns regarding director related parties and would not sign off on the accounts.

The proxy form has a confusing statement regarding the remuneration report, which will see many votes cast as invalid we believe.

We are a committed group of retail investors that combined under The GGP Investors Group hold a significant percentage of the register. That includes three out of the four top shareholders and many more with top 20 holdings. We have seen our investment halved in the last eight months. As Mr Graves resides in the US we have given him some benefit of the doubt but we are determined to make this company transparent and perform. We are not going away.

Alan Mitchell

Vote of confidence

T Best's query about the relative underperformance of the Australian stockmarket can be answered in two words: sovereign risk. Sovereign risk doesn't just apply to African dictatorships; it also applies to Australian governments which pull super profits taxes and carbon taxes out of nowhere. Hang in there, T Best. Within six months of the change of government, which must follow the next federal election, there will be a 1000 point rise in the ASX200. Trust me.

S Sturgess

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