Andrew Peller Ltd T.ADW.A

Should dual class shares be eliminated?

[TheCount11]

Many Canadian companies have dual class shares.  Many of those companies make decisions that benefit one class over another.  Many of those companies have long stretches of poor performance and depressed stock prices.

The following is a snapshot comparing 2012 to 2024 for Peller.

	2012		Q2 2024		change	Long Term Performance
		per share		per share
Share Count	14297870		43244723		302%	share dilution of 300%?
Long Term Debt	41456000	2.9	206294000	4.8	165%	LTD up by a staggering 500%!!!!
Equity	120552000	8.4	254156000	5.9	70%	Equity per share down 30%!

Over the last 12 years the number of shares has ballooned by 300% while long term debt is up by 500%. Long term debt PER SHARE has grown by 165% while Equity PER SHARE has decreased by 30%!

Was the Board of Directors giving the Peller family $9.5 million dollars after destroying equity and increasing debt per share over last 12 years negligent? 

I try not to make long term predictions because they are always wrong but 2027 will likely be a terrible year for the company as wine sales are liberalized.  Canadian Grocery stores are pretty unique in they are concentrated, vertically intergrated and take huge fees (slotting, core, ad, etc).

[TheCount11]

I asked Stockhouse to delete this post due lack of clarity.  I also don't want to get in trouble for asking if Board of Directors is negligent.

[Possibleidiot01]

Not a lawyer but I think you're asking for the post to be removed is an over reaction. You aren't making an accusation , in my mind , you're posing a question ( it even has a question mark at the end). JMO.

[TheCount11]

I am not a lawyer either.  After I publishing the post I worry that any Non Voting Class A shareholder who has lost a lot of money over the last few years would litigate the Board of Directors referencing my post.  I do not have the time or energy to get involved.  There is a strong possibility of litigation when people have lost a lot of money and feel cheated.  

[johnathamilton]

I doubt that a lawyer in Canada would reference a post on an internet chat board. The credibility just isn't there. Like the LIUNA director who is currently suing a local pro-Palestinian commentator for "libelous" comments made on Twitter - the judge is going to look at the litigant and say - "you knew that this was a cesspool - what were you thinking?". Similarly, I wouldn

[TheCount11]

"If the board has failed in its duties, which in my opinion it has, then any litigant will need to do far more due diligence than referring to an internet chat board." I agree 100%.  Due diligence takes a lot of time and expertise. I just don't want a litigants lawyer going through Stockhouse to talk to me as part of their due diligence as I don't have the time.  

[johnathamilton]

I'm sure for a fee, you would be willing to invest some time?? My rate starts at $225/hr. (not-a-lawyer) LOL! 

[TheCount11]

Haha.  You are a good investor and probably have good returns.  I bet your time is better spent on your investments.  Sooner or later you will be managing a decent sum of capital where you can lose a lot of money by being unfocused.

[johnathamilton]

LOL! I think you're the better investor! I watched ADW grow to a 10 bagger and then back to a 3 bagger. That's why I'm not retired. 

[TheCount11]

Haha thank you thats very kind.  I would say we are equals.  You pointed out many times how GA expenses were too high.  IMO executive compensation has been too high for such long term poor performance.  The $4M retirement bonus is just the cherry on top. From CC "I've pointed out to people you hear Warren Buffett, often speaking that he likes to invest in businesses

[Possibleidiot01]

Warren Buffett Quotes When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact. "From CC "I've pointed out to people you hear Warren Buffett, often speaking that he likes to invest in businesses that he feels have protective moats around them to support their growth and

[stopedout]

I am guilty of buying this because I thought there was "value" there, but I feel like the company is not being run with the interests of ALL shareholders in mind. This latest news of the retirement bonus and further payments during the transition are the final twist of the knive. Agregious is the word that comes to mind. New rule for me. If there are multiple voting shares, I will

[TheCount11]

I agree company is not being run with the interests of all shareholders in mind.  I also agree that the assets have a lot of value.  There are a variety of assets and inputs with the main outputs being food and wine.  Management has not used the assets to maximize shareholder value over the last 12 years if not longer.  When I look at a long term series of profits

[johnathamilton]

Your points remind me more and more of Hollinger Inc., in which Conrad Black's personal corporation had a management agreement with Hollinger for $millions per year. He bled the company white. I see the same thing happening here. 

[TheCount11]

You had this figured out last year!  I could write from memory but I will quote you Ordinarily, this would be an opportunity of a lifetime, but the history of management for Peller has been dismal. An inability to retain talent, poor decisions on currency exchange, a leveraged balance sheet and bloated SG&A means that there is a fundamental problem with the company. Perhaps it really

[johnathamilton]

Thanks for reminding me. The one thing that has changed since then is that Dr. Joe Peller passed away in 2016. He was the 2nd generation who worked with Andrew, his father, an immigrant from Hungary. . The current generation is the 3rd and seems to be following the same trajectory as other family dynasties: (30) Why The 3rd Generation Always Destroy A Family Business | LinkedIn

[johnathamilton]

"I am guilty of buying this because I thought there was "value" there, but I feel like the company is not being run with the interests of ALL shareholders in mind. This latest news of the retirement bonus and further payments during the transition are the final twist of the knive. Agregious is the word that comes to mind. New rule for me. If there are multiple voting shares, I

[TheCount11]

"Yes. It appears that a culture of corporate kleptocracy has become entrenched in the senior executive offices. If Peller were to be truly concerned about the company, the "retirement bonus" would be renounced and a salary of $1/yr would be announced, in addition to changing the share structure to assigning equitable voting across all share classes." I agree 100% and would add

[Tapcet]

Every since ADW started plummetting with aggressive dilution,, questionable management decisions, I've been asking where the regulator is when it comes to the governance of dual class share companies. The answer seems to be: nowhere. Going forward, my takeway is simply to never again but equity in a company with dual class shares. In my (hindsight) view, the governance issue isfirst flagged

[malx1]

When you invest in a business, you are investing in its management. Answer here was simple: If you don't like management, then don't buy the shares.

[johnathamilton]

Management used to be quite astute. Unfortunately, the next generation was less so. 

[malx1]

That's a business lesson for investors. Nepotism is often hidden in the next generation. With that, inflated egos from inflated compensation lead to inflated balance sheets. And down goes the ship...

[Possibleidiot01]

Many times , it's the third generation , where it all goes wrong. Second generation knows how hard the first generation worked and follows through with that kind of  effort. Third generation looks at second generation and goes Why?

[TheCount11]

Very true.  When things go wrong its Family first.  Sadly disclosure has been bare minimum over the years.  Management tries to pump the stock price based on assets which is like a Formula One team saying they have a great car after coming in last.  If its not the car then its the driver.

[TheCount11]

Haha Hope you enjoyed your Australian shiraz!  You are right there are few barriers to entry and many global competitors.  With that being said when a company takes public money but does not give them a vote they better run the company well.  The company is facing its biggest challenge yet.  Supermarkets have a variety of fees like slotting, core, stockout plus markups.&

[johnathamilton]

The only protective moat at the moment is the Ontario Government and the milch cows (taxpayers) who are pitching in to support the wine industry. France is dumping wine and given the growth in the domestic supply there are too many producers for the Canadian market, so pricing power is limited both domestically and internationally. 

[Tapcet]

Would love it if Pomerantz Law in NY investigated this.

[TimeBuilder1]

YES   IMO   as a very long term sharehold (investor) &  not Happy with  the results put forward by the company. Will continue to hold for a turn around in wine sales & growth.  Regards to ALL other shareholders, TimeBuilder