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Flaherty Financial News Newsletter #24 With a projected P/E of less than two, 11 winners in its starting venture portfolio and another new fund forming to raise up to $100 million for expanding Western-tech companies into Asia, especially China, PEGG Capital AG (PGU.DE) is an unrecognized bargain and you are first to get the story. Follow Up Expose Part 11: Insiders at The Invisible Man's GEROVA Financial Group Ltd. (NYSE:GFC) appear in emails dealing with redemption requests at scandal-ridden Westmoore funds, whose assets were frozen afterwards by an emergency court order by the SEC on June 16, 2010 for orchestrating a Ponzi-like investment scheme. December 30, 2010
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| Bob Flaherty Rides Again!
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Bob Flaherty Rides Again! I hope everyone had a Merry Christmas. Peace on earth; goodwill to each and every reader of every faith. And Happy New Year too! With trust in God and in ourselves we will meet all the challenges ahead as our ancestors persevered though wars, depressions plagues and famines. Fortune Favors the Brave! Now let's rumble. I bet you have never even heard of PEGG Capital AG (PGU.DE) featured in this issue. That's only partly because this public private equity group is headquartered on the Isle of Man. It's just putting new global pieces in place to grow spectacularly. We are thrilled to write the very first article ever done on PGU.DE in the U.S. Another scoop for Bob. In the best tradition of my late friend and financial pathfinder Sir John Templeton, who loved to boast, "I cannot resist a P/E of two", we have found in PGU.DE just such a bargain for you |
| PEGG Capital AG (Frankfurt: PGU.DE) with a P/E of less than TWO.
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PEGG Capital AG (Frankfurt: PGU.DE)
www.peggeu.com
A projected P/E of less than two and a starting venture portfolio of 11 winners! A separate unique new fund to expand Western tech ventures into Asia, especially booming China.
An Experienced Team Devoted to Helping Profitable Private Companies to Grow. A Story you will be the First to Read in America. How Can You be More Ground Floor than that?
PEGG Capital AG's ambitious private investment cross border strategy should enable the products and services of PEGG's still private portfolio companies to jump start each venture's global marketing and profits. Changing the typical equity model, PEGG's private equity model is fee free, offers liquidity, diversification and transparency. With a projected P/E of less than TWO, a starting venture portfolio of 11 current winners, new investment and an evolving global expansion strategy, PEGG is also launching a venture fund that will focus on taking growing U.S. technology companies into Asia, especially China. Spectacular 2011 anticipated from harvesting some winners in 2011 or at the latest 2012.
Price: €0.54 Balance Sheet December 2010
Market Capitalization: €9.7 million Total Assets: €20.25 million
52-Week Range: €1.91 - 0.42 Long-Term Debts: €1.25M
Shares Outstanding: 18 million Shareholders' Equity: €19M
Book Value per Share: €1.05
By Robert J. Flaherty and Arnaldo Arroyo
How many of you know of a fund which is poised to grow "phenomenally" next year no matter which way the economy goes? Ever since I took Management of New Enterprises course at Harvard Business School I have had fun observing and sharing the thrills and chills which come from starting up new ventures.
For today's twittering younger generation who just want the skinny, here it is. The year 2011 could be spectacular for PEGG Capital AG (PGU.DE - €0.45), recently down 76% from its 12- month, all-time high of €1.91. The goal is to make the moves which will restore the stock price back near the all time high as soon as possible. While formation plans can and do go astray, PEGG's hope is 2011 earnings per share of about €0.33 which on recent prices of €0.45 to €0.56 produce a projected P/E range of 1.4 to 1.7, which is less than TWO.
PEGG's plan is to have a structured dividend policy with 50% minimum of earnings distributed to shareholders annually. Net Asset Position per share of the private portfolio venture investments is an estimated $1.56 (€1.12), which is a discount of 52% of the recent trading price.
Why does this bargain exist?
Management decided to locate in the Isle of Man to create a fund which would benefit from favorable tax treatment. On Feb.18, 2010, for reasons of economy, PEGG decided to go public on Germany's Frankfurt Stock Exchange, also accepting a €20MM PIPE (Private Investment in Public Equity) offering with a hedge fund. Alas, in these troubled days hedge funds not only finance young companies but they also profit by shorting many of their own investments. During the recent Euro crisis, Germany banned short selling and liquidity instantly dried up for hundreds of small companies, including PGU.DE. In fact, its stock price went down when the Euro went down. Few were buying and even a little volume sent or kept stocks like PGU.DE down. The week that Germany banned short selling everything in Germany went down, Clearly, a new strategy is required and management has an exciting one. Reaching out to the U.S, PEGG is forming a partnership and acquiring 44.8% of San Francisco-based Gramercy Ventures Advisors and Gramercy Private Equity. The new enterprise will have an outstanding, hands-on leadership team with in the trenches experience in building high-value companies. Sixteen full-time staff across Britain, EU, USA, Australia and direct presence in China. Additionally, 15 experienced shareholder executives can drop down into portfolio companies to strengthen private management as required. The fundamental strategy is making sure PEGG's portfolio companies perform and achieve results for the portfolios which translate to earnings and dividends. As necessary, the team embeds itself into a portfolio company to accelerate growth beyond the home base to achieve global cross-border penetration of products and services. PEGG also has a new $100 million in assets PEGG/Gramercy, "Asia BrandTech Fund", to expand successful Western tech products and services cross border into Asia, with emphasis on booming China.
Everyone knows (I hope) that while venture investments in private companies can produce spectacular winners and good runners up, there are also lots of limited successes and disappointing losers. So, here is what is so special about PEGG's portfolio. To make its core more attractive during this flight from micro-cap investments moment, PEGG has taken out of scores of past investments and kept 11 current winners to launch the existing portfolio. Using a cross-border strategy, PEGG's management services unit plans to take these successful private technology ventures, on the brink of revenue and earnings breakouts, and assist each in expanding into new global markets. All venture investments are in technology (information, communication, telecom, and other innovative technologies). So success in one country means a good chance of taking products and services globally into new markets. Members of the PEGG team have been doing this for decades with many hits.
Looking just at what management hopes to achieve in 2011 PEGG is an irresistible bargain. But what has PEGG planned to keep up momentum? Plenty. Already a U.S firm has signed a letter of intent to invest $5 million and also plans, if due diligence checks out, to invest another minimum of $5 million in the new $100 million run by PEGG/Gramercy Asia BrandTech Fund. This is no "me too" enterprise. It will have many Asian, especially Chinese, core investors whose local knowledge can help and assist Western technologies expanding cross border into China. The hope is that many of the fumbles and stumbles made so often by famous Western companies entering China can be avoided. That can be big. In case you haven't noticed, China is booming like the U.S. in the roaring 20's as housing, roads, cars, trains, dams, infrastructure, improved food purity, better delivery of healthcare, and alas, military, lead the world in growth. The synergy of Asian investors who know the turf with profitable Western tech companies on the cusp of success could be dynamite.
Right now, daily average trading is often only a few hundred shares, but PEGG has begun an Investor Relations program to raise its visibility. Among its goals, when qualified, is a listing on a major U. S. exchange. This path appears better than joining London's AIM because Londoners are so familiar with trading stocks listed on Frankfurt. It is best to shoot for obtaining the greater liquidity of the U.S. markets.
Initially the 11 winners in the PEGG portfolio all have the potential to be harvested over the next few years providing cash flow for new investments. PEGG will go for the surer but less spectacular winners, but the strategy is broader than that. They will also keep their eyes open for spectacular winners which make venture capital so exciting.
Today, an atmosphere of flight from risk and avoidance of micro-cap investments is prevalent. That is why this bargain exists. Now it is very hard for private companies to raise growth capital and so "up-and-comers" can be acquired for as little as 3X booming projected earnings. But moods can change overnight, from fear to greed, and those super gainers are always out there. Many entrepreneurs in the past stood in similar shoes and created great companies and highly successful funds. Ground floor investors now have a chance to decide if PEGG will be another one of them.
Above is the sound bite version of the PEGG's start-up effort in less than 1,000 words. For those fans who don't want to read too much, who loves you?
Now for our thin red line of hard core readers, who still like more depth in their company stories and details besides sound bites, let us go a bit deeper. Meet the players, some of the starting investments, and what is taking place during this early moment of rapid formation.
PEGG Capital - Building Cross-Border Transaction Bridges between the U.S. and Asia
During the last few years the private equity industry weathered one of its toughest economic periods. As the world's economy slowly recovers, the outlook for the global private equity sector is picking up with leverage returning to some markets, the value of acquisitions increasing and cash out exit harvesting opportunities on the rise.
Without question, the crazy boom years are gone when high leverage gambling defined the sector. In order to be successful today private equity firms have to focus on creating value and finding talented management teams with revenue producing operations and growing market position.
With that strategic focus in mind, PEGG Capital - shorthand for Private Equity Gateway Group - launched a fee-free technology trust earlier this year which backs up information and communications technology companies with the potential for cross-border transactions as well as the potential to be profitable and cash flow positive within 12 months of investment.
In February 2010, PEGG EU acquired a 4.8% stake in Gramercy Private Equity to strengthen its presence in North America and Asia, and in July 2010, announced that the acquisition had increased to 44.8%.
To advance its plans, PEGG recently signed a Letter of Intent (LOI) for a $5 million investment from a U.S.-based private equity firm. The money will be used to expand the business base, advance the process of merging PEGG Capital and Gramercy during 2011, and move ahead with its plans to list on a U.S. exchange. The investor also intends to participate in the funding of the upcoming $100 million PEGG/Gramercy Asia BrandTech Fund by investing at least an additional $5 million. The fund, which is focused on cross-border technology investments between Asia and the U.S., plans to complete limited partner investments within the first half of 2011.
Australian-born Michael Gale is Director of PEGG Capital and Managing Director of Gramercy Private Equity, the private equity arm of Gramercy Venture Advisors. He has lived through venture capital thrills and chills and we hit it off with him. He loves what he is doing -helping companies grow and making a good living by often succeeding. Right now he is very excited by the new Asia BrandTech Fund.
"The fund is totally focused on taking successful U.S. companies-but not new companies-into Asia," he adds. "It's mostly Asian money with Asian connections looking to leverage technology out of the U.S."
Since PEGG will be managing the fund, shareholders of PEGG, who are not directly invested in the fund, could gain from returns generated by the fund.
In March 2010, PEGG secured an equity line of up to €20 million from Global Emerging Markets Ltd. (GEM), a U.S. institution which also plans to invest more capital as PEGG expands.
PEGG is domiciled in the Isle of Man, where the company receives favorable tax treatment. To date, PEGG and Gramercy acquired equity stakes in 11 companies through a combination of direct investments and via investment advisory and capital restructuring services rendered. To make the starting core more attractive to new investors, only winners from past efforts were put into the current portfolio. Gale figures the 11 companies chosen were the best of about 40 efforts.
Adapting to today's more conservative times, PEGG's business model shuns the old private equity tendency to leverage-up a business. There is no lock-in period for investors - a far cry from the private equity norm of three years ago.
Ideally, new initial investments will be made on a price-to-earnings ratio of less than 3X on a one-year forward earnings forecast. Sounds low, but Gale points out some Up-and-Comers have projections which almost rise up off the page. Exits are expected to be made through IPOs and targeted trade sales.
PEGG doesn't just sit around and wait for its investments to mushroom. As part of its hands-on approach, the company works closely with the top-management of its investee firms to help them define their strategic goals, broaden the number of opportunities, and improve future development plans. The company charges for its services. "Most of the companies we work with need our help," says Gale. "The ideal scenario is going into a portfolio company and putting a few people from our team in there for a concentrated period of time to transform the level of opportunity or the way in which they're executing. Then we step back out."
Naturally, every company needs money. But some of the other problems holding a company back can be quite odd. Besides taking those away, Gale likes to see what new relationships he can bring. Naturally, Gale knows every swing won't be a home run. But just a few homers and venture investors who enter at the current bargain basement stock price should be way ahead.
That's what is exciting about New Enterprises!
By embedding itself into each portfolio company, PEGG also hopes to accelerate cross-border penetration, which is a major part of its global-growth strategy. "These are firms that are in secondary markets wanting to move their company to primary markets," says Gale. "The attractive thing about cross-border opportunities is that you quite often get companies that are somewhere close to over $10 million in revenue, and profitable, but haven't had an outside investment. This is because it's hard to get seed capital in a lot of countries that don't have venture markets like the U.S. Those are the companies that you can grow earnings out of relatively quickly. "
In doing cross-border transactions, PEGG believes that investee firms have a much better chance of expanding more quickly if they recruit a new management team that has substantial knowledge and experience operating in the new primary market; rather than transplanting the old management team, which usually does not work. Sometimes they can't even speak the language. Among the cross-border transaction services that PEGG provides its investee firm is vetting a new management team.
PEGG does not charge a fee. Instead, the management has stake in the trust; meaning their interests are closely aligned with investors. Indeed, the company gives investors the opportunity to invest in technology companies with the prospect of high returns without getting locked in. While listed private equity firms normally keep all of their money for further deals, PEGG will return a high proportion of all earnings from its portfolio - a minimum of 50% a year - to shareholders in the form of dividends and the balance of earnings will then be available to be reinvested in new opportunities.
"We only do technology," says Gale. "It is a truly global market. People in China, people in Australia, and people in Austria are using the same computers as everybody else."
While PEGG does not intend to be an operating company, it does want to be a listed venture firm. Earlier this year, PEGG listed on the unofficial regulated market of the Frankfurt Stock Exchange. The reason was joining the German exchange was less costly than being listed on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange, the number of parties involved was fewer, and the whole process was quicker. PEGG's goal is to list in the U. S, preferably the tech-heavy Nasdaq exchange.
Because the stock price crashed when the Euro went down, the stock is currently a bargain trading at less than 2X projected earnings. Since PEGG has received little news coverage at home or abroad, the stock price has languished. Hopefully, investor awareness will improve as Flaherty Financial News does the first story on PEGG for the Western investment community.
You can't be closer to the ground floor than this. More articles and coverage are sure to follow elsewhere as PEGG begins to expand its presence in the U.S.
PEGG's Management Thinks Globally
PEGG is backed by a management team with strong global experience, which is vital to success considering that an investment in the company is actually an investment in the abilities of its management team.
Executive Chairman Simon Blagden has more than 20 years experience in the telecom and IT industries and has lived and worked in most regions of the world. In 1995, Blagden joined Quante Group's main board as international CEO, with operations in over 50 countries worldwide. He led the sale of the company to 3M in 2000.
Director Michael Gale has over 20 years of business, investment and managerial experience in the Asia-Pacific and U.S. markets. A substantial amount of that experience involves doing cross-border transactions between the US and Asia Pacific. He was part of the team that built Macromedia's Asian operation during the three years leading to its NASDAQ listing in 1993. In 2001, Gale co-founded Gramercy Venture Advisors, named after Manhattan's famed park. As Managing Director of Gramercy, Gale has established Gramercy as a leading merchant bank-building business models, value chains and cross-industry partnerships on a global scale. In all, he has helped in the development, funding, growth and exit of over 100 early-stage technology companies from around the world.
Managing Director David Daniel is one of the original founders of PEGG in Asia Pacific and subsequently in Europe. Prior to founding PEGG, Daniel held top executive positions for 17 years for the Asian-based operations of three British PLC's, including: Chubb PLC, Metsec PLC, and SIEBE PLC. Daniel subsequently has spent over 10 years in corporate advisory and private equity and has directly worked with over 100 early-stage companies as key e-strategy and/or funding advisor, investor. He also founded and led an Australian-based Web CMS business into 27 countries, including partnerships with Shanghai Telecom. Mr. Daniel specializes in strategic and capital structuring, capital facilitation, listing and commercializing businesses throughout the UK, Europe and U.S.
Executive Director Elaine Harris is a Partner with Gramercy Private Equity and is the latest addition to PEGG's Supervisory Board. As a former partner of Ernst & Young, Ms. Harris served in various leadership roles in the US, Asia and Europe. Currently based in London, she brings over 27 years of risk management, technology and governance and compliance experience to PEGG and the portfolio companies.
Executive Director Randy Boyer has over 25 years of strategic business development, sales, marketing, corporate development, legal and management experience with high-technology companies in U.S, Japan, South Korean, China, SE Asia, Latin America and Europe. Boyer has negotiated and closed more than 100 complex strategic business development, licensing, distribution and investment deals worth more than $100 million in software, Internet, hardware, mobile and e-learning sectors. Many of these deals were cross-border licensing, distribution or investment transactions between U.S and Asia. As Director of Macromedia's Japan subsidiary, Boyer was responsible for developing and managing Macromedia's Japanese business for over 5 years. He has worked with Michael Gale at Double Impact and managed a 30-person global consulting practice with offices and consultants based out of New York, San Francisco, Tokyo, Sydney and London. Boyer was a key part of Double Impact's consulting business was providing "market entry" consulting and services for U.S. and European companies to enter Japan and Asian markets. Additionally, Boyer set-up subsidiary companies for U.S. and European-based high-technology companies in Japan, Singapore, Taiwan and the U.S. and he was named by the Governor of Minnesota as a Special Trade Representative for the Software Industry to China.
Advisory Board Member James Walsh has over 30 years in capital markets, investment management and private client services in the U.S., Europe and Asia including 11 years in Japan. He is currently Managing Director of Prisma Capital Partners LP ($4.5 Billion alternative asset manager) and Chairman of the Investment Committee of the Board of Trustees of Stevens Institute of Technology. Walsh held senior positions managing and building businesses at firms including: Zurich Financial Services (Zurich), Société Générale Securities Corporation/SG Cowen Inc. (NY), Prudential Securities Incorporated (Tokyo) and The First Boston Corporation/CSFB Ltd, now Credit Suisse (NY, London, Tokyo). He is a member of the Board of Governors of the Foreign Policy Association, a member of the American Chamber of Commerce in Japan (1984 - present) and a past member of its Board of Governors.
Advisory Board Member Steve Tolchin is a Silicon Valley technology entrepreneur. Tolchin is an advisor to, and investor in, multiple star technology companies including: Relational Technology Corporation (later Ingres), Bridge Communications (prior to the 3Com merger), Pyramid Technology Corp., Ramp Networks (from early stage through IPO), and Détente Technology (prior to acquisition by Cadence). He has served as a Technology Partner at El Dorado Ventures, and held CEO positions at Webflow Corp. (now Accentuate) and HAL Software Systems (a Fujitsu company). Prior, Tolchin was Vice President of software development at Pyramid Technology & Technical Director Johns Hopkins.
Two Firms get Closer to the Selling Block
To strengthen its business model, PEGG likes to include some more mature 2X or 3X potential winners companies in its portfolio. "More mature companies might make the money, but we're going to make solid earnings that we could reinvest and drive earnings to our shareholders," says Gale. "But we also have to really take a leap of faith and bet on people, bet on their success. Like any other venture firm, we're looking for those golden nuggets where you're going to get 50 to 60 times your money back."
Management anticipates a couple of harvest exits either in 2011 or at the latest 2012. PEGG Capital's two most advanced investee companies are Azurn EU Limited and Data Insurance International Limited. Based on PEGG's investment criteria, these two companies have the potential to deliver significant revenue and profitability in their first year of operations.
Azurn EU Limited has the exclusive distribution rights to ASX-listed Azurn International Limited's technology implementation across the UK and Europe. Azurn is a global provider of business collaboration applications that enable full-unified communications (voice, video, data, co-browsing, document and application sharing) to occur simultaneously in real time. The applications are centered Azurn's Merlin™ hardware platform, a simple to use collaboration platform that enables large groups and/or web customers and contact centers to interact globally in real time across all media and communication types. Contracts have been signed with Freemans Grattan Holdings, one of German-based The Otto Group's 123 companies. The functionality of the technology has also been assessed by BT Labs and the potential benefits that the technology can provide are being reviewed by British Telecom Global Services.
PEGG has a 35% stake in Data Insurance International Limited, a global provider of data re-instatement insurance, allowing business critical data to be saved and protected in a security system designed so that insurance companies can indemnify and protect it under international standards for safe keeping, protection, storage and reinstatement of data. Where a client loses its data the insurance policy pays the cost of re-installing the data on the clients IT system or compensates financial losses to the level of the indemnity provided. Data Insurance currently has trading operations in New Zealand and is set to launch UK and USA in 2011.
Some of the other portfolio companies do such interesting things as providing recycling technology for major printer brands to enable toner cartridges to be recycled instead of refilled thus eliminating the waste and contamination of disposal. Other companies lead the online advertising sector in China and one is creating the next generation Macromedia killer tool and it's developed by one of the Macromedia founders.
Naturally, there are always risks involved in every type of venture investment and PEGG will be no exception. But our late guru, Sir John Templeton, always preached finding bargains by buying out of style-like straw hats in January. He loved to find those rare stocks with a projected P/E of TWO. Also isn't it fun to read about honest, bright experienced people dedicated to helping young companies grow producing not only profits but new jobs?
If you want to see the latest price quote for PEGG, just Google or Yahoo! "Frankfurt Stock Exchange" and several links (in English) to the exchange will appear. Or you can, like Bob F, just go to Yahoo! Finance and put in the symbol PGU.DE. Up will pop a quote on the Frankfurt Stock Exchange in Euros. Then just divide that Euro price by the exchange rate (recently 1.31 per dollar) and you will have your price in U.S dollars.
BROKER CONTACT
PEGG can be bought on the open market through many retail brokers. PEGG's ISIN # is DE000A0YCBX4. In the event you need assistance purchasing PEGG stock please contact:
E1 Asset Management, Inc.
Newton James
Managing Director
1-212-425-2670 Ext: 162
njames@e1am.com
CONTACT
Private Equity Gateway Group (EU) Ltd.
(IoM registered Co. # 123009C)
11 Hope Street Douglas Isle of Man, British Isles IM1 1QD
www.peggeu.com
Mr. Michael Gale, Director
Tel: 415-378-7364
mgale@peggeu.com
or
Mr. David Daniel, Managing Director
Tel: +44 (0) 7624 350 484
david@peggeu.com
INVESTOR RELATIONS:
Cooper Global Communications, LLC
Tel: 212-317-1400
Mr. Richard E. Cooper, President
rcooper@cgc-us.com
Ms. Jennifer K. Zimmons, Ph.D., Managing Director
jzimmons@cgc-us.com
www.cooperglobalcommunications.com |
| Expose Part 11: Insiders at The Invisible Man's GEROVA (NYSE:GFC) appear in emails at Ponzi-like Westmoore funds shut down by the SEC last June.
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 | | The Invisible Man's name does not appear in his ETF IPO prospectuses, yet Jason Galanis has helped launch 20% of America's actively managed ETFs including the very first DENT. |
Expose Part 11: The Invisible Man Jason Galanis Returns. Now let us conclude this issue by performing our most important role as a reporter and doing our best job to inform and protect the average everyday investor. Our task is nothing less than considering and reporting on the truth or falsity of new shocking charges on the Yahoo.finance message board, especially "SEC Stops $53 million Ponzi. Strong GEROVA Ties!!"
This connection to the Ponzi is being vigorously denied by Jason Galanis' defenders.
Because of the fact Jason and his group have tied up most of the GEROVA stock with restrictions and shares are hard to borrow to use in shorting only a modest short position of 376,000 has been reported by Shortsqueeze. Still Jason's unknown defenders attribute most of the criticism to naked shorts, not injured investors.
Angry parties respond, "No Shorts! Scam Alert!" A follow up posting reveals "2007-2009 articles show hundreds of GEROVA (previously Stillwater) properties were drastically over-valued at bogus appraisals that created criminal charges and convictions."
With skilled misdirection unknown parties are floating wildly sensational bullish rumors. Several postings imply that a short squeeze will keep the stock soaring. Another asks, "When does Seymour Pierce (a London -based broker being acquired) become a part of GEROVA? What is the date this closes and revenues/earnings start getting booked through GEROVA?" This posting builds on a previous rumor posting that the CEO of Seymour Pierce is close to Middle Eastern families who may be poised to invest in GEROVA. All this positive hype levitated GEROVA shares up hundreds of millions to about $780 million. Allah, be praised!
The raging message board battle has resulted in GEROVA shares moving like a ping pong ball, being up some days on the daily list of the biggest gainers on the NYSE and down others on the NYSE's list of the biggest losers. Understandably average investor readers don't know what to believe.
Let's help the confused poor little lambs. A posting of Dec. 16 reads "There is a clear link floating around showing GEROVA's Robert (Robbie) Willison and Jennings (Westmoore CEO) were working together as Westmoore investors wished for redemptions." This is a serious charge.On June 16, 2010 the SEC got an emergency court order to freeze disappearing assets at scandal-ridden Westmoore Capital's funds "for orchestrating a Ponzi-like investment scheme on investors."
Willison Westmoore's Head of Client Relations
After just a little bit of digging, we hit pay dirt. Dirt anyway. The names of insiders at The Invisible Man's GEROVA (NYSE:GFC-29.97) pop up in emails concerning redemption requests at now shuttered Westmoore funds.
Let's not waste a lot of words on proving this. Item one: "From the Desk of Matt Jennings" with the title "Account Verification Process Proceeding" addressed "Dear Westmoore Investor" ends with this sentence. "If you have any questions, please feel free to contact Robbie Willison at ROBBIE'S PHONE NUMBER or rwillison@westmooreinc.com. Sincerely, Matt Jennings, CEO, Westmoore." (I called ROBBIE'S PHONE NUMBER above, spoke briefly with Willison and confirmed it is still his active number. It is also on Willison's business card as Director of Business Development for Bermuda-based GEROVA's Net Five Group LLP.)
Another email from the Desk of Matt Jennings has the heading Westmoore Business Update -Merger strategy making progress. Distribution of stock to begin.
In that above memo Westmoore Investors are told about progress merging Westmoore assets into public companies in an effort to create liquidity and avoid the other option of complete "fire sale " liquidation which would produce pennies on the dollar. The memo also notes Westmoore is ready to begin distribution of shares from the first completed mergers and that Westmoore remains a shareholder of three companies including Fund.com. The latter is the base where Jason Galanis has been involved in launching actively managed ETF funds. The above Jennings communication to investors stresses that all the staff is entrenched in their duties and urges investors to direct their communications to someone new. "I'd like to introduce Robert "Robbie" Willison as Westmoore's primary contact for investor information. He joins us as head of client relations. In this role, he will be responsible for communicating with all our stakeholders, which will include regular in-person meetings and availability to answer your questions regarding your investments with Westmoore."In this memo Jennings also mentioned the ongoing SEC investigation which about a month later resulted in assets being frozen with the reassuring sentence, "We continue to be optimistic regarding the outcome."
Robbie is a long time associate of Jason Galanis way back to their days together at Penthouse, which led to Jason signing an SEC consent decree relating to accounting fraud in changing a loss to a profit at Penthouse and also related to an electronic CEO signature forgery to meet Sarbanes Oxley sworn certification requirements. Later a judge barred Jason from being an officer or director of a U.S based public company.
Still not convinced? For any remaining Doubting Thomas here's part of another email sent on Sept 27, 2009 to Gary Hirst: Robbie Willison, and CC Matt Jennings. It is about a Westmoore redemption request. "Actually, if you look at page 2 of the attachment, he does indicate that he wishes to liquidate both his MPP and PSP. Robbie, will you be following up with him to discuss?" Dr. Gary Hirst, among his many other activities, has been president of GEROVA.
Frankly, I am stunned how many millions are involved, the dozens of related separate companies , how long this has gone on while $30 million in fund redemption requests at GEROVA's Stillwater are left unfullfilled and how brazen the players are. Now that The Invisible Man's name is starting to appear regularly I am being attacked personally on the message boards to hinder or stop my continuing my coverage.
The new string of personal attacks brings back fond memories. At Forbes I wrote a particularly negative story and a stooge for the CEO wrote Malcolm Forbes that if the stooge had a particularly dumb employee he would want to know so he could fire him. And in that helpful spirit he suggested Malcolm fire me. Laughing, Malcolm came into my office and said with his mischievous smile, "Bob, here's a reader who knows you well." Forbes published the letter. Thank you, God. At 77 I can still write stories which stir up controversy. Hey, Malc, Forbes old Bloody Red Baron still knows how to do it.-RJF
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Flaherty Financial Newsletters Because They Work!
If you have a good company or overlooked fund which only needs more exposure to become better known, we know how to make enterprises come alive and to put your activities into perspective using words ordinary investors can understand. In addition to just doing regular financial reporting, Flaherty Financial News Newsletter also offers for a properly disclosed fee sponsored distribution over the Internet of ideas we uncover. Also we offer more detailed sponsored company profiles and separately BUY reports in our sister Flaherty Special Situations Newsletter, which can be distributed beyond our core base to millions of online investors. We will also carry banner advertisements. For details, please call our President and Publisher Brian Flaherty on the phone at 914-539-0688. |
| Disclaimer and Safe Harbor Statements: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Disclaimer: This Flaherty Financial News Newsletter contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected. We caution readers not to place undue reliance on any forward-looking statements and to supplement this newsletter with specific company SEC filings and their own research. Please be aware that there is risk in every company stock that you buy. Coverage or other mention of a stock in this newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. We are not investment dealers or investor advisers registered with the SEC or State Security Authorities. We do not guarantee all the information in this newsletter is correct or will be updated. Remember some errors are inevitable. Reproduction without written permission is forbidden. No individual at Flaherty Financial News Inc. is a shareholder or is short any stock featured in this issue, and our policy forbids editorial from buying or selling a featured stock until this issue is out at least ten business days after its issue date of December 30, 2010. PEGG Capital AG did not pay to be featured in this issue. In cases where a report or profile is subsidized, readers should consider such subsidized articles as paid advertorials and understand that sponsored material will not be as objective as non sponsored editorial. Flaherty Financial News Inc. or any individual at FFN did not receive a penny from anyone, especially short sellers, for its expose Part 11: Insiders at The Invisible Man's GEROVA Financial Group Ltd. (NYSE:GFC) appear in emails dealing with redemption requests at scandal-ridden Westmoore funds, whose disappearing assets were frozen afterwards by an emergency court order by the SEC on June 16, 2010 for orchestrating a Ponzi-like investment scheme on investors. Our mission in Expose Part 11 is to protect uninformed investors. As FFN editor I always reserve "Final Copy Responsibility" on what to include and what to leave out of every issue. We have tried to be objective, but may have failed. We are not security analysts or stockbrokers engaged in buying or selling, but financial journalists with all the many failings of that profession. You readers must decide the merits of each company yourself and whether to invest. -Bob Flaherty, Editor
Flaherty Financial News Inc. (FFN) and its newsletters Flaherty Financial News and Flaherty Special Situations are not registered as broker dealers or investment advisers with the U.S. Securities and Exchange Commission or any state securities authority. Our newsletters and their information and content providers make no representations or warranties of any kind in connection with the subject matter, performance or suitability of the information contained in the publications for any purpose and are not liable for the timeliness, accuracy or completeness of the information. The information is provided for general information purposes and is not a substitute for obtaining professional advice from a qualified person or entity familiar with your personal circumstances. Please seek the help and advice of professionals as appropriate regarding the evaluations of any specific security, report, opinion, advice or other content. FFN is not responsible for trades placed by recipients. All opinions expressed, information and data provided are subject to change without notice. FFN, its officers and its employees may have positions in and may from time to time make purchases or sales of the securities discussed or mentioned by FFN. (However, we will avoid front running and the buying or selling of any security about to be discussed until ten business days after our particular report is released to the public.) FFN shall have no liability for any newsletter that is lost, intercepted or not received in a timely manner, or not received at all, for any reason.-RJF |
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