06.16.08
A few questions for Maxlife Fund Corp
Here are a few questions that I would like the management of Maxlife Fund Corp to answer. Investors should consider what they believe the answers to these questions to be before investing in the company’s common or preferred stock.
1. I saw that you announced a dividend on the preferred stock today. How many shares are outstanding? As of February 29, there were no outstanding shares (as shown in the last 10Q).
2. Is Victor Delaet still working with your company? While the company has moved ahead with its joint venture with CGP, it has not announced any more developments with its joint endeavors with Delaet (see the original commitment agreement here). Furthermore, Delaet was to “agree to sit on the Board of Directors of Max Life”, and I have seen no announcement of such an event. One of Delaet’s responsibilities was to “promote the preferred share offering through Focused Money Solutions Inc” (quotes from the commitment agreement linked above).
3. If Delaet is no longer working with the company, who is working to promote and sell the company’s preferred stock? Has the company retained an investment bank?
I do not believe that the 10% yield on the preferred stock is sufficient to compensate for the risks to preferred stockholders of investing in Maxlife Fund Corp. For that reason, I believe that the company will not be able to raise substantial funds by selling preferred stock. The company’s ability to raise capital is the crux of the investment case for or against Maxlife Fund Corp. No matter how brilliant CGP’s management is, any insurance business requires capital and Maxlife Fund Corp has precious little of that (tangible equity of about $500,000 as of 29 February 2008), particularly in relation to its market capitalization of $848 million.
Disclosure: I have no position in MXFD. I have a disclosure policy.