AACo chair Donald McGauchie in hot seat at AGM over poor returns
An activist investor has attacked Donald McGauchie over AACo’s ‘moribund’ performance as the wagyu beef exporter failed to promise a return to paying dividends.
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Activist investor David Kingston came out swinging at the AACo annual general meeting on Wednesday, asking chair Donald McGauchie if the business is “chronically flawed” given its one per cent annual return during his 15 years at the helm of the beef producer.
AACo is an oddity on the Australian stockmarket. By any measure, its returns have been abysmal and yet it has attracted the attention of billionaire investors as a listed company. It owns about 1 per cent of the nation’s landmass.
The nation’s biggest wagyu exporter is 53 per cent owned by British billionaire Joe Lewis, who last year pleaded guilty to insider trading in a Manhattan federal court and whose family trust controls English Premier League soccer club Totthenham Hotspur.
Andrew and Nicola Forrest’s private investment vehicle Tatterang now owns 22.4 per cent of AACo.
Mr Kingston asked one of Lewis’s AACo board representatives, Sarah Gentry, to explain to shareholders why “they are not investing in a moribund company with zero returns”.
But Mr McGauchie shut down that line of questioning and also appeared to take issue with Mr Kingston’s repeated attempts to extract a commitment for better returns to shareholders.
He told the private investor at one point to “sit down”.
Some of Mr Kingston’s questions were backed up by the Australian Shareholders’ Association, which asked Mr McGauchie what the “motivation to stay public” was for AACo.
The beef producer was listed on the ASX in 2001 and has been a billionaire fascination ever since.
The Holmes a Court family were initial investors and Peter Holmes a Court its first CEO. Monaco-based retailer Brett Blundy – the man behind the Lovisa jewellery chain – was also once a significant shareholder.
“It is what it is,” answered Mr McGauchie about remaining publicly traded. “If I had my way it would never have been a public company.”
The Brisbane-headquartered group is 201 years old and operates grazing land and feedlots across The Gulf Country in Queensland and the Northern Territory, accounting for 6.5m hectares of land.
There are plenty of reasons why the company should be a good earner for shareholders. It’s the world’s biggest wagyu beef producer and Australia’s biggest cattle producer by value. Its lands include Lake Sylvester, home to the second-biggest pelican hatchery. It has seven road trains, 150 passenger vehicles, manages 14,000km of road, and has more watering points than Shell has service stations.
AACo’s scale is enormous. At one point it had 600,000 head of cattle, with the number now closer to 456,000 as it rebuilds after devastating floods several years ago.
But despite the straight-speaking country people who work at AACo, the company has always had a splattering of drama.
Earlier this year, one of the most influential men in the northern beef industry, Michael Johnson, suddenly left his role at AACo running all its rangelands and pastoral business across The Gulf and NT. He was in charge of most of the workforce, cattle and most of AACo’s stations.
AACo kept a lid on his shock departure for over a week and neither MJ, as he is known, nor the company would confirm the reason for his sudden exit.
Former CEO Hugh Killen also left in sudden circumstances a few years earlier.
AACo shares have risen 55 per cent since listing in 2001. The company has a market capitalisation of $855.9m but some shareholders at the AGM questioned how much more valuable it would be if assets were sold off.
The upcoming sale of Macquarie’s Paraway Pastoral Co was raised specifically.
Mr McGauchie responded that there was “no comparison” between the two.
Originally published as AACo chair Donald McGauchie in hot seat at AGM over poor returns
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