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How a HedgeLender stock-secured loan helped a farm meet his business and  financial objectives

Michael Irely Lance was a sheepherder near Watagon Mountain in New South Wales, Australia. A grizzled veteran of several bitter “sheep wars” with other farmers and with imports for a variety of products,  a man who weathered subsidies and drought and poor support from his own government from time to time, he had stayed the course for almost 40 years because of a love of the land. His former friends and neighbors had long since left their farms around him for steadier work in Sydney, or Brisbane, or Melbourne, even if that meant a loss of freedom and all the headaches of urban life. But for “Iron Mike” Lance, famous for dogged determination, bone-jarring rugby hits in college, and profound focus – leaving the farm could never be an option.

They’d started calling his farmstead “Iron Farm” years ago, and it stuck. He had roots on Iron Farm as deep as a Cazneaux tree’s and he was just as resolute. Whether he had a bumper year or barely put bread on the table, Mike was a success, none the least for his apparent savvy in the market. Every profitable year, Iron Mike had put aside half his earnings into solid, slow growth stocks, just as his late wife June had asked him to do before her death. With an eye for detail, he had seen his shares grow over the years.

On this blue-and-gold Saturday Mike chuckled to himself while hauling feed out of the barn lot down at  NZ Agritech, which sported a broad array of rooftop solar panels extending for half the length of a football field. Every time he came down there it always reminds him of the day he bought $20,000 worth of the penny stock Frontier Solar after his wife’s brother told him about how the company had found a way to cut the cost their solar panels by half.  He got in just when another conflict broke out in the Mideast, sending shivers through the oil markets, followed by a boom in alternative energy research. Mike had ridden that wave well,  turning a $20,000 inevestment into $200,000, the first of several good hunches he’s made on his own or through friends. He was almost a legend in the sheep ranching community.

Iron Mike’s stocks. Not just any stocks, mind you. Not to Mike. They were his stocks, stocks he’d pick, stocks that won and won again. He wasn’t ashamed to admit that he loved the ego stroke he received when he dropped in at HiLo’s with his account statement in tow to hang out with his gang over a beer. Chad Chimbers, the tiny Welsh-born bartender, greeted him always the same: “Why, it’s the Mike, ladies and gentlemen!” Mike loved Chad’s lame takeoff on Donald Trumps monicker, loved the sound of it reverberating around the dark wood-paneled booths but tried not to show it. Everyone always turned to see him. His techniques, his methods, his accuracy -  he was on-the-money every time. A reporter for a local paper once asked him what his secret was. He had replied that it was not unlike the sheep business, that livestock was not a lot different from Wall Street stock when it came to picking winners. Feel your way around, he had said. Pick the right genetic pool, pay attention to the details. Then watch the entire thing grow in to something that wasn’t there before. The only thing that felt better was Sunday on Pike’s mountain with is wife and son and a late Spring picnic.

But he never sold. That’s was the big difference between Mike’s sheep world and his stock world. He simply couldn’t bear to part with his favorite shares, nor did he want the tax burden that came with sale. He liked the feeling of picking right, but always believed still better results were just around the corner.

The system was fine – until the recession of 2008 hit. Exports of lamb meat dried up almost overnight; the government tried to help with subsidies, but they were ineffective.  Feed costs shot up 200% as non-oil fuels and Chinese consumers vied for the world’s available grain stores and oil. Worst of all, shoppers were cutting costs wherever they could. Letting go of the monthly leg of lamb was considered a necessary if temporary end to a luxury by many housewives. Mike knew things would pick up again, but all of a sudden his net worth plummeted.

Mike realized that unless he moved quickly to enlarge his farm and diversify, he could lose it all. Time had come to find money. Fast.

He’d used his savings to help cover costs for six months. But he needed revenues. Sheep margins were so thin that he couldn’t come close to paying for the feed to keep a large enough herd to make it profitable. And that was on top of a mortgage on 40 acres in the north quarter of his spread, an expensive new harvester that was half paid for, and a son in college.

His financial advisor told him about a company called  HedgeLender LLC back in the US, a firm that offered institutional loans against securities in Australia, Malaysia, Korea, Japan, and other countries as well as back in their U.S. home market. He went to their website while in town over at the library – www.hedgelender.com – and sent them an email inquiring about his Fronteir Solar FSX.AU stock, his baby, his pride and joy, the evidence to the world that a simple rancher could be just as smart as the big guys on Wall Street or anywhere else, stocks he hated to lose.

With 350,000 shares, he was given several different types of loans to consider by HedgeLender. He selected an 85% LTV, 4.35% interest, limited-recourse institutional loan which permitted him to pay if off any time without penalthy.

He was introduced to HedgeLender’s institutional lending partner in the U.S. to commence processing. Frank Black, his attorney, assisted. A licensed advisor from the institution was put in contact with Mike and they began hammering out this final characertistics of his loan. Once agreed, the loan documents were generated and Frank then recommended Mike sign them. “Large American brokerage with branch in Australia” he noted with satisfaction, as he was dialing his broker. “Please transfer my FSX.AU shares to my new account in Brisbane” he said.  The loan documents were signed and three days later he got notice from his bank that loan cash totaling $2.89 million dollars as in his account.

Then something strange happened: his FSX.AU stock price started dropping in value. At first it wasn’t really noticeable — but then he saw a lot of selling activity and wondered what was up. So he went back into town after putting the chores in his son’s hands for the day, and did a little research online again at the library. “Frontier Solar” he typed into Google. Suddenly up popped some astonishing news. The company was unable to deliver its solar panels on time, had huge backlogs, and many customer complaints. Investors were getting spooked.

Mike’s $7.15 stock was now worth only $1.10, and hadn’t stopped falling yet. The Australian Stock Exchange, it appeared, was preparing to stop trading in the stock altogether at least for a little while.

He looked at his HedgeLender loan. He found that he’d have an institutional loan where his shares remained in his account and title. He saw that his interest rate was a very competitive monthly LIBOR +4.  He saw he could avail himself of U.S., SIPC-member management and licensed account advisors in a fully regulated loan that allowed him to craft a limited recourse HedgeLoan as well. Low interest-only payments, and high loan-to-value, and his shares under his watchful eye online or in person as with any modern brokerage account.

Then he started looking for some new stock to invest in. After a few hours of research on various “hot” recommendations, he decided to give a call to his friend Knute Closter. Knute was the nerd’s nerd, a technophile who never met a gadget he didn’t fall in love with. Thinking that energy issues were still the key to investing, Mike asked Knute if he had any candidates or knew of any potentially good technologies.

“Mike, if I had $50,000 I’d invest in Global Reference Research right now. They’re going to shake up the search engine world” Mike nearly gagged on the tuna salad sandwich he had clandestinely smuggled into the library internet room.

“Excuse me?” he managed to spit out. “Haven’t you heard what happened to them? I just read it in the business section of the paper yesterday.  Bankrupt, they said — or nearly so. Can you spell L-E-M-O-N?”

Knute was not to be dissuaded. He smiles as if he knew something nobody else knew.

“I know all about it. But what most people don’t know is that their data collection system is patented and a major search engine company starting with a “G” is going to announce partnership next week. I put 14 different news stories together and to me that spells a huge move up. This will flip their stock right back up to over $7 a share within the week. THAT’S why I’d buy GRR right now.”

Mike thanked him and hung up, then started straight down into last ice cube in his cup of ruby red Kool-Aid Fruit Punch. Knute had never been wrong before, he reminded himself. Two minutes later Iron Mike was back on the phone with Sewell Simon, his stock broker, buying 350,000 shares or GRR at 50 cents each.

“You’ve gotta be nuts, Mike” said Sewell. “Maybe you didn’t see the story in today’s paper.”

But Mike was focused and working a gut level hunch from a guy he had always trusted. “Hope he’s right” he mumbled to himself as he hung up the phone.

A week later Knute and Mike were enjoying a burger at HiLo’s downtown when he asked Margie to switch the TV to the cable Business News. The two sat back and watched the nattily dressed young anchor go over the highlights of the market day to that point. “In a stunning turnaround for a company that seemed on the brink of bankruptcy last week, Global Reference Research has now moved back over $5 a share, and is still climbing on heavy buy volume, apparently triggered by a report that Google will be making a major investment in the company through a joint venture arrangement that will greatly enhance Google’s data collection capabilities. What a roller coaster ride for GRR.” Mike nearly dropped his drink. “Told you so” said Knute. Mike just stared in disbelief.

That evening sitting in his lounge chair Mike thought about his good fortune. Thanks to his HedgeLender securities loans, he now had all his land and equipment paid off, livestock feed sufficient for 5 seasons, new subsidies from his own government to help stabilize his market prices, $1.2 million in the bank to purchase more stock and land, and the same number of stocks he had started with, except that the shares he had bought at fifty cents each were not worth $5 and rising. He had found a way to make the most of his securities with a loan that permitted him to tap his assets’ value without losing those assets in the process.

For more information on HedgeLender institutional securities-backed loan services, please visit http://www.hedgelender.com; To reach HedgeLender by phone, call 1-877-345-0008 X 2, 3, or 5; To reach HedgeLender by email: support@hedgelender.com.