Cockroach theory plagues PaperlinX

Posted July 11, 2012                                               Twitter: @PaperlinXsuX

An intrusion of cockroaches

Cockroach theory is a market theory that suggests when a company reveals bad news to the public, there may be many more related negative events that have yet to be revealed. The term comes from the common belief that seeing one cockroach is usually evidence that there are many more that remain hidden.

This is why share prices go into free fall as investors overreact to bad news and disbelieve or discount good news. 

We saw this in May 2011 with PaperlinX when Toby Marchant had his cockroach moment, see Toby's cockroach moment on Black Friday. 

It was really a smaller version of this one and this one too. Notice how they look similar?

Then, when its all over, someone dares tell the truth as seen here. This video interview with ABC TV is alarming. Bill Wild talks of "flawed strategies", "poor governance" and a "dishonest culture" at Hastie, where Harry Boon was a director for seven years. 

By then, everyone has lost their money. The insolvency practitioners step in to take their share of the spoils, employees get paid out but often lose ther job and shareholder lose the lot. Sound familar?

An intrusion of cockroaches? Yes, "intrusion" is the collective noun. 

What are the tell tale signs of an intrusion of cockroaches?

There are many:

When the market ignores the Chairman's or CEO's BIG message. Recall End of Another Beginning or Beginning of THE END published by suX. Our summary then was:

"We believe that Black Friday, May 13, was the beginning of the end for PaperlinX. Nothing that has occurred since has changed this view."

Tell tale signs

1. When a long serving well regarded senior executive resigns for no apparent reason.
       
2. When senior executives avoid giving straight answers to simple questions. Toby, when will you ever answer the question asked of you at the EGM - "what was the cost of Milton Keynes?"
        
3. When serious questions are trivialised. Remember when Harry Boon said at the EGM words to the effect "we wont save PaperlinX by removing flowers from the foyer."
       
4. When statements or responses fail to adhere to the whole truth and nothing but the truth. Remember the Amsterdam office? It was reported that the office was closed but unreported that the property was still vacant and remained a long term liability for PaperlinX.
       
5. When things are "compliant" but designed or timed to be awkward - like announcing financial results at 5 pm Thursday and holding an analysts' presentation at 9 am Friday, knowing full well journalists work late. Guess what - no questions. Compliant YES, transparent NO. It happened in February 2012.
       
6. By refusing to respond to legitimate questions knowing that 99% of people give up eventually - like here.
       
7. Blaming or exaggerating external events or people - like  here.
       
8. By saying one thing to one stakeholder audience and the same thing differently to another, like here. Then when it blows up, blame suX. Apparently someone assumed the staff are unaware of the internet!
       
9. When non-executive Chairmen become manic and start being executive Chairman.

Just look at PaperlinX and you'll get a good idea of Cockroach Theory in action. Or, read the history of Hastie Group.