Czech Position emphasizes the necessity of learning from people of experience and genuine experts in their fields. The managers of the joint-stock brokerage Key Investments are such experts who provide valuable advice to important people such as former prime minister Stanislav Gross, important public bodies such as the districts of Prague 6, 10 and 13, and the state-owned forestry enterprise Lesy ČR.
Therefore, we tried to map this valuable know-how and to make it available to the widest range of readers possible. We should all be in the know — it makes sense. Click here to read previous articles for information about the services provided to Key Investments to some of its clients.
Better to inspect from the inside
A company’s greatest asset is its people, so the saying goes. In an attempt to map the DNA of the professionals at Key Investments, we first had a look on the Internet. The company’s website doesn’t reveal much of anything; therefore, it’s necessary to search the Company Register. Here the results are encouraging. Almost everyone involved with the company doesn’t appear anywhere else. That’s how it should be — no obvious conflicts of interests.
One exception is Ivan Kocourek. Until 2007, he was on Key Investment’s board of directors; a member of the supervisory board ofIf you are such an investment whizz that you buy E Side Property’s bonds for your clients, you wouldn’t want to share your hard-earned information with the public Sincom Leasing (now renamed Borsay) until 2009; led the country office of UK-registered E Side Property until 2009; and headed the country office of Key Oak Ltd. — the parent company of E Side Property until 2008.
The fact that Key Investments has been purchasing bonds issued by the firms Sincom and E Side Property for the portfolios of its clients is a detail which evil tongues are distorting in order to attack the brokerage. Of course, those in the know realize that when we want to buy something good for somebody, it’s necessary to have a proper look for oneself, preferably from the inside.
On its website, Key Investment doesn’t say anything about its business strategy nor its principles when forming portfolios for its clients. After all, if you are such an investment whizz that you buy E Side Property’s bonds for your clients, you wouldn’t want to share your hard-earned information with the public for them to copy.
The fact that the trustworthy bank Unicredit provides Key Investments clients with credit cards bearing the brokerage’s name notably raises its reputation. Do any politicians in Prague 6 have this credit card?
The Key Investment website does contain some information required by law. What is of interest are the reports published under edict 605/2006 — declaration of volumes of trade in securities. According to the edict, this information must be published each quarter and no longer than a month after the end of the quarter, but that’s just an unimportant detail.
In the third quarter of 2010, Key Investments bought securities for Kč 5,786 and sold securities for Kč 748,582 on behalf of clients for whom the brokerage doesn’t manage portfolios, i.e. those who themselves decide what stocks and shares to buy and sell.
For clients with portfolios managed by the brokerage, the company bought securities for Kč 839,366 and sold for Kč 90,803. The average volume of trade on the Prague Stock Exchange (BCPP) is about Kč 1.5 billion a day, which means that Key Investments doesn’t have any significant share of the Czech brokerage market to speak of.
With a provision of one percent, Key Investments would have made a profit of around Kč 17,000 in the third quarter of 2010. This number could be accurate because the last financial figures available for Key Investments — the company’s annual report for 2009 — show a loss of Kč 126,000, thus it appears that the whole business is somehow running on charity.
Two transactions — much amazement
If you’ve read this far there’s now a small bonus. As a company that is exemplary in its openness of information, Key Investments naturally and willingly fulfills its legal obligation to publish information about its securities transactions conducted Apparently, Key Investments has such good contacts it can obtain Spolchemie shares (untraded since 2007) for its clients.outside stock exchanges (click here to read the document for yourself).
This makes more than interesting reading. The company declares that it performed two such transactions since 2009: the first on March 9 was the purchase of 349,124 shares (ISIN CZ0005092858) in the company Spolek pro chemickou a hutní výrobu (Spolchemie) — probably around 9 percent of the company’s total shares.
Here respect is due. With the exception of a transaction in October 2009 of 33 Spolchemie shares for Kč 200 a piece — i.e., for a total of Kč 6,660 — the company’s shares have not been traded on the Prague bourse since 2007. Apparently, Key Investments has such good contacts that it is capable of obtaining Spolchemie shares for its clients. Where could they have come from?
The layman could look in the 2009 annual audit report of Via Chem Group, which owns 62 percent of Spolchemie shares, and may have off loaded some of its assets. Only it didn’t. Of course, who would want to get rid of such a gem of an asset? So, where the hell could the share certificates could have come from? Could Spolchemie itself …? Bingo! Documented in Spolchemie’s annual report for 2009 is the sale of exactly the same number of shares.
The price was set by an expert. Of course, we resolutely disagree with the insolent rumors in Internet forums that the value was set by auditor Jan Svoboda (no. 433), who advises Via Chem Group on the value of receivables. But it would be of interest to know who it really was. We hope that Spolchemie will tell us, and we will then recommend the expert to our readers with no strings.
But we do have an idea where the shares Key Investments bought for its clients ended up. The administration of Prague 6 has 92,417 Spolchemie shares in its portfolio managed by Key Investments. Intuitively, we would look into the portfolios of Prague 10 and 13 for the remaining 256,707 shares. In any case, we wish the lucky owners all the best. If any scandalmonger even attempts to say that the aim of the transaction was to pour Kč 91 million into the desperately cash-strapped Spolchemie in the critical year 2009, we shall immediately expose him to the public. Until now, legal science has wrongly presumed that a company’s shares essentially cease to exist when the actual company is wound up.
But this is just foreplay. We still have the second off-exchange transaction by Key Investments: 173,939 certificates for the share title number (ISIN CZ0005092859) for Kč 28.75 per share, i.e. a total of around Kč 5 million. Here, first-hand information is missing and Google can’t find the issuer. Another attempt is, however, successful and the lucky issuer is: joint-stock company Sigma Brno. The good news is somewhat spoilt by the fact that Sigma Brno has been absent from the Company Register since the end of December 2010, after the sell-off of its assets following bankruptcy proceedings. The transaction of the shares was made on January 31, 2011.
Until now, legal science has wrongly presumed that a company’s shares essentially cease to exist when the actual company is wound up. Key Investments put a definitive end to this presumption and acquired shares in a non-existent company which could amount to fraud. As long as Key Investments — which isn’t communicating with journalists — doesn’t come out and explain that it was a mistake or a misunderstanding, we congratulate the owners of the Sigma Brno shares. In any case, we would be interested in the Czech National Bank’s (ČNB) opinion about this transaction.