Wednesday, 2 March 2016

Spackman Update: Contact Made With VP

As promised, I have followed up and finally made contact with someone representing Spackman Equities Group (SQG). He is John Pennal, Director & Vice President. You can contact Mr. Pennal at the contact information linked here. I encourage shareholders to get into contact with him personally, but I will share what he said during our email conversation over the past couple of days.

I asked:

"I am an investor in Spackman Equities Group. I estimate that SQG trades at over 75% discount to its NAV when considering the market price of Spackman Entertainment Group (40E.SI) of 13 cents SGD.  While I have seen some funds get discounted up to 50% from their NAV due to holding illiquid securities, 40E.SI trades tens of millions of shares a day. I see no reason why there should be such a steep discount considering the company has some options at its disposal such as initiating a stock repurchase plan funded by using liquid capital.

I appreciate the hard work that the Spackman team has undertaken to get 40E lively again over the past few months. But as a Canadian I feel left out from participating in this success. Since you appear to be the lead Canadian contact I was wondering if you have had any recent discussion with Charles Spackman for plans surrounding SQG above and beyond the focus on Spackman Entertainment. SQG played a significant role in 40E's successful IPO. The TSX Venture has been a disaster and I suspect that has played the major role in SQG being overlooked but I believe a focus back on this stock will lead to to substantial price improvement.

Please reply with your comments at earliest convenience.

This was his response:

I followed this up with:

"Another question, up until the Q2 report, SQG reported earnings through a press release, including up to date NAV. At the time 40E was dropping so the NAV looked bad and it played a role in the dropping stock price. The NAV at the end of November, as reported on the Q3 MD&A was 16 cents, but there was no press release. Why was that? Do you plan on issuing press releases for earnings going forward? With 40E year-end stock price being 14 cents and remaining steady in that area and aided by the tanking Canadian dollar vs the SGD, both NAV and Q4 financials should look pretty good, worthy of a press release in my opinion."

Overall I am pleased with his responses. It shows that Spackman's management team is working behind the scenes and have not forgotten about Canadian shareholders despite the current appearance. Let's hope whatever transaction they have for SQG gets completed. SQG trades at such a heavy discount that I think whatever they end up doing will be beneficial for those who have purchased shares recently such as myself.