Friday, October 19, 2007

Share Investor Friday free for all: Edition 8

It was 20 years ago Tomorrow



The day the market took a dive
in 1987.


No not Sergeant Peppers Band but the Great Stock Market Meltdown of 1987.

I didn't follow the Stockmarket 20 years ago. I vaguely recall a news incident at the time but didn't equate it with anything serious.

I was living in Sydney at the time, so the fallout from it wasn't as bad as it was apparently in New Zealand.

My introduction to the Stockmarket came almost exactly 10 years later, when I bought shares in the fast food operator Restaurant Brands (RBD)

Since then I have taken a great deal of interest in equities and my 10 years invested in it has taught me much.

Investing in the NZX has given me an appreciation of business, how fear and greed work in financial markets and most of all made money for me.

The biggest lesson that I have learnt is from losing money in a couple of stocks. That hasn't dulled my obsession with the market though.


Craig <span class=
Craig Heatley (left), and Allan Hawkins
after Rainbow Corporation lists on
the Stock Exchange in the mid 1980s


Unlike some who lost their shirts and more back in 1987 my loss wasn't very large and thousands of Kiwi investors haven't forgotten those heady days and wouldn't touch the sharemarket with a barge poll today.

The New Zealand Sharemarket was one of the worst affected back in 1987 and still hasn't recovered from the hit that it took. Most other global markets have multiplied their values many times in the last 20 years. The US market is now worth more than 5 times what it was worth all those years ago.

True, the NZ Stockmarket is a much more stable and regulated market than it was back in those wild west days but there are still some negative elements that linger today, most notably the insider trading that is done by NZX sanctioned broker firms and management of its listed companies.

Lets hope for a more positive next 20 years. NZX's Mark Weldon is doing a good job so if he straightens the rest of the markets kinks out then we might get somewhere.


Burger Fuel Shares get a Fuel Injection

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Burger Fuel Outlet

It hasn't been only the global oil prices climbing lately.

Burger Fuel(BFW) the New Zealand based gourmet burger maker, has had its shares climb from a low of NZ$.60c to 70c over the last week.

On very low volume again but the down trend has reversed.

No news about how the new Kings Cross outlet is going and I will be waiting with with great anticipation for the lowdown.

Good news for this outlets sales will push shares a lot higher.


The Dice get Fluffy

First it was then it wasn't and now it is again.

Sky City Entertainment(SKC) the casino, hotel and cinema operator had its shares halt trading for 15 minutes on Monday because the NZX feared that the company was trading without full disclosure to the market.

http://www.auckland.ac.nz/uoa/fms/default/uoa/for/prospectivestudents/living/auckland/images/Auckland-City-cinema.jpg

Sky City Metro, Auckland
City


This was because there had been rumours that another company had approached SKC management with interest in the entertainment group mainly because a director of the company mentioned it to a reporter on Sunday.

This was initially denied then days latter it was confirmed by SKC management itself that there would be indeed another "interested party" doing due diligence with a view to buy the company.

The other company is possibly US private equity firm TPG which is examining the books of SKC, sources familiar with the matter said today, with any bid seen worth over $US2 billion ($NZ2.7 billion).

The new contender is unnamed.

The complexity and ups and downs with the possible takeover of SKC has seen much confusion and speculation over the last 3 weeks since the M & A speculation was mooted.

I'm still hoping the buyout is a failure because I see more value in the company long term and substantial capital returns to shareholders as cinemas in New Zealand and the Adelaide Casino go on the block.


Fishing for returns


Fisher Funds, the highly successful New Zealand fund manager is currently offering what could be a good investment in years to come, if their track record is anything to go by.

Their New Zealand and Australian listed investment funds have done very well since their inception, with excellent returns so far.

Their latest offering is Marlin Global Limited. "Marlin will provide investors with access to a handpicked portfolio of outstanding growth companies selected from around the world", according to the company website.

This is an excellent way to get exposure to global markets without the attendant fees and taxes to complicate things.

You can download a prospectus here but keep in mind that it may not perform as well as Fishers other funds.

I may apply for a small parcel myself.


The Dots get the Hots

Domino's says Europe's fragmented market offers openings. Photo / <span class=
Dominos Australia wants
a slice of the Global Pizza
Market.


Doing what our domestic Pizza Franchisee with the Pizza Hut license, Restaurant Brands couldn't do, the Australian arm of US giant Domino's is successfully expanding overseas.

It will open at least 35 stores in Europe each year until it reaches 1000 stores, betting on rising demand for home delivered food.

Domino's has a total of 667 stores, with 404 in Australia, 65 in New Zealand and a combo of 198 in France, Belgium and the Netherlands.

Restaurant Brands delivered appalling results when it bought the ailing Pizza Hut chain in Victoria Australia in 2000, with a total of around 60 stores.

Poor management was unable to turn company fortunes around and RBD has now almost finished selling their OZ arm after losing 10s of millions of shareholder dollars.

The pizza biz is a very competitive industry but if Domino's OZ expansion works then their slice of profits will get bigger.

Domino's Australia is listed on the ASX .


NZX Market Wrap



Today, the NZSX-50 benchmark index closed up 3.2 points at 4316.31, just 26 points below May's record high. Turnover was light, totalling $89.2 million. Air New Zealand(AIR) rose a cent to $2.12, Steel and Tube (STU) fell a cent to $4.38, Michael Hill(MHI) lost 20c to $10.30.

Carpetmaker Cavalier(CAV) was even at $3.25, Tourism Holdings(THL) dropped 16c to $2.32, Nuplex(NPX) fell a cent to $7.69 and NZ Refining(NZR) jumped 18c to $7.70 stimulated by rising world oil prices.

Fletcher Building(FBU)was up 4c at $12.38, F&P Appliances(FPA) was flat at $3.70 and F&P Healthcare (FPH) down 4c at $3.34.

Telecom(TEL) rose 2c to $4.54, while Contact Energy(CEN) was a cent higher at 943.

Sky TV(SKT) was up 9c at $5.95 amid talk over the company's planned on-market buyback. Small shareholders have been advised to vote against the buyback, which would increase the stake of Rupert Murdoch's News Corp to around 45.95 per cent, and possibly over 50 per cent eventually.

Sky City(SKC) was up a cent at $5.48, having added 7c yesterday over takeover activity.

Auckland Airport(AIA) rose 1c to $3.08, Freightways(FRE) was up 7c at $3.98, NZX climbed 10c to $9.50, and Rakon(RAK) was up 13c at $5.19, possibly over speculation of a good profit statement.


NZ Dollar Wrap

NZ Currency



The following are Reuters currency rates:

(5pm today - 5pm yesterday, NZ time)

NZ dlr/US dlr US74.90c - US75.22c

NZ dlr/Aust dlr A83.72c - A84.16c

NZ dlr/euro 0.5235 - 0.5284

NZ dlr/yen 86.20 - 87.57

NZ dlr/stg 36.55p - 36.86p

NZ TWI 69.98 - 70.56

Australian dollar US89.37c - US89.32c

Euro/US dollar 1.4300 - 1.4231

US dollar/yen 115.12 - 116.44


Disclosure: I own SKC Shares

C Share Investor 2007