The Dean factor, why you should avoid this stock

Griffin Group's chairman is Stephen Dean and controversy follows Mr Dean wherever he treads, Tony Hetherington of the Mail on Sunday refers to him as 'a colourful character', see:



and then goes on to note that:

"In 1992, Chequers Group, a company he founded under its original name of Dean & Bowes, threatened a lawsuit over a £200,000 pay-off he took when he quit as chairman, alleging it did not have shareholder approval.

In 1997, another of his companies, Dean Corporation, admitted 'inadvertent' breaches of company law, including paying £245,000 without shareholder approval to buy a business part-owned by Dean himself.

And in 2000, another Dean company, Artisan UK, admitted an 'inadvertent' breach of the Takeover Code. It bought am shares in technology company Enterprise Asia when it was a possible takeover target in the sights of a separate company, Weatherly."

This brief record alone should alert you to the risks of dealing with any company that is associated with Stephen Dean, but there are other reasons as well.


1. Links to illegal Spanish boiler rooms.
The Mail on Sunday covers this in detail in these two articles:






2. Incompetent Manager
Stephen Dean has been the director of many UK quoted companies but Griffin Group is currently his main "UK operations". Griffin Group used to be known as "Cater Barnard (USA) plc", see:



and used to be a subsidiary of Cater Barnard plc. In turn Cater Barnard plc was the vehicle that Stephen Dean used to use for his main UK operations. Its publicly available accounts show that at 30 September 2000 its net asset value per share was 12.27p. Over the following two years these accounts show a disastrous decline in shareholder value to a mere 0.051p per share at 30 September 2003. This represents a massive 99.6% destruction in shareholder value. It strikes me as more than reasonable to describe any director who has presided over an era of such monumental destruction in shareholder value as "incompetent", I would offer the above as evidence of my why I personally have formed the opinion that Stephen Dean is an incompetent manager.


3. Fat Cattery
But the issue that I personally find more disturbing is Mr Dean's preference to make money for himself, even when shareholders are suffering so much pain.

The total net assets of Cater Barnard plc at 30 September 2000 were approx £14.5m. However the accounts filed up to 30 September 2003 show that payments of the order of £2.35m were made by Cater Barnard plc to Mr Dean and to his personal offshore companies. Hence whilst shareholders suffered a disastrous decline in their investment Stephen Dean feasted heartedly on the carcass of Cater Barnard.

What stops him doing the same at Griffin Group?


4. Griffin Group Overvalued
Regarding Griffin Group itself, this is nothing other than a glorified investment company, its latest accounts can be read here:



As an investment company I would suggest that the main point of reference for calculating a measure of value is its net asset value per share. As at 30 September 2005 the above accounts show that GFF's net asset value per share is 4.71p, well below its current share price of approx 6.75p. In any case, see 2 above for an explanation of what can so easily happen to net asset value per share.

Conclusion

It is rare that such clear red warning lights are flashed in front of investors' eyes, buying shares in Griffin Group would be complete madness.


Note
You might reasonably infer from the above that I have a very low personal opinion of Stephen Dean and his businesses. I hope that I have made it clear exactly where my post is fact and where it is opinion. If anyone believes that I have made an error of fact or that I have expressed an opinion and not made it clear enough that my comments are merely my opinion then please feel free to either post here or email me using:

Jak dot nife at virgin dot net

and I will endeavour to make whatever corrections are necessary.

regards

JakNife