Tuesday, April 29, 2008

Wrigley/Mars passes Warren Buffett's taste test

The merger of Mars Inc with Wrigley Jr Company and Warren Buffett's interest in helping fund the purchase, and having a subsequent minority stake in the merged company, to be held by his Berkshire Hathaway investment vehicle, is Warren Buffett in his element.

Wrigley and Mars as one, will make the largest confectionery business in the world and its combined brands, like Mars chocolate bars, Snickers, Doublemint and Juicyfruit will make Buffett a very happy man indeed.

Warren Buffett already owns outright or portions of some of the worlds biggest food, consumer and beverage brands: Coca Cola, Gillette, MacDonald's and America's Sees Candies among them.

He sees in Mars/Wrigley what he sees in his other holdings, companies and brands with strong histories and dominant positions in the marketplace that will survive through the turbulent times and good times alike.

He calls companies like these "Economic Moats", companies that have products to sell that have a point of difference, cannot easily be copied and are hugely dominant, and therefore see off competitors year after year. Mars/Wrigley strong brands easily fulfill this investment requirement.

Another requirement that fits Warren Buffett's investing criteria is the fact that Wrigley/Mars is a very easy business to understand. There is nothing complex about making chewing gum and chocolate bars and therefore huge continuing capital expense involved in such in industries as computing, in coming up with new technology to stay ahead of competitors isn't going to hurt the food-makers bottom line.

One thing I am not sure of, is if Buffett's main criteria for investing is being fulfilled in the Wrigley/Mars tie-up. That is, the value investing part of his investing principles. Whether he is paying too much for his stake in the merged company will only be known by the man himself and by the rest of us in time, as the merits and performance of the merged giant reveal themselves.

He is famous for making good investment decisions and I personally doubt he has made a mistake to get involved in this monumental marriage of these two sugar pushers.

In New Zealand the closest thing we have to a Wrigley/Mars is Goodman Fielder Ltd[GFF] , an Australasian food conglomerate with very strong dominant food brands and a long history of loyalty among consumers. Its brands are staples, its business easy to understand and its products consumed for breakfast lunch and dinner.

It definitely fits my investment criteria and I have a holding.

Further reading on the Mars/Wrigley merger

c Share Investor 2008

Monday, April 28, 2008

Vector sale decision hangs on political knife edge


From the Share Investor Blog an article with a political bite which continues in the vein of The Labour Party and its inconsistent political decisions purely based on returning them to power regardless of the real consequences and the impression it gives the voting public at large.


The dilemma I would be facing now if I was a minister in the New Zealand Government is, if I gave to go ahead for the Hong Kong based, Cheung Kong Infrastructure Holdings (CKI) to buy 100% of Vector (NZ Herald story) energy's[VCT] lines infrastructure, in the Wellington region, then I would be going against a decision I made just a few weeks ago to refuse the sale of a non-controlling interest in Auckland International Airport[AIA], to a Canadian pension fund, thereby making me look like an utter plonker.

On the other hand If I turned down the sale of arguably a much more "strategic" asset, again Wellington region power line infrastructure, then I would put the Chinese Government's nose out of joint by reneging on detail of various free trade agreements made only a couple of weeks ago and again look like an utter plonker.



Lets face it, our government is at least consistent in its inconsistency.The vetoed sale of the airport and Vector's Wellington lines is the same scenario whatever way one cuts the cable.To say otherwise is to be just ever so slightly more than economical with the truth. For Helen Clark to give the reasons for a go ahead for a Vector sale that "the sale doesn't include any sensitive or strategic land" is a pure unadulterated lie. She made reference to the Airport sale over this "land issue" but that deal wasn't turned down because of "sensitive land", it was turned down for political reasons.



The issue of land rights in the Vector deal may actually be applicable. The power infrastructure and lines that Vector is selling has to have easements over the land they transverse thereby making Helen Clark's claim just a generator or two short of a full load.



It is hard to say what the Labour Government will do in the Vector case, but one can be sure it will be a purely political decision, rather than the financial one it should be, and once again the investing public is unsure about how their investments will be treated by such Governments in future takeovers.The consistency we investors need, especially during these tough economic times, is found wanting by the very authorities that are supposed to be instilling security and a level hand to one of the backbones of our economy-the stockmarket and the essential funds it provides for investment and economic expansion.



The university trained political plonkers who make these decisions have clearly not woken up to the fact that they are not working in theories anymore and the real world consequences of their ludicrous strokes of the pen is costing us millions.Vector is going to retire some of its large debt with the proceeds of the sale, ironically established when management went on a buying spree around 5 years ago and borrowed heavily to buy the Networks now up for sale off United Networks.



Worryingly, Micheal Stiassny, Board Chairman and his management are also looking to use proceeds to buy more infrastructure assets, probably "greener" forms of electricity assets, like wind turbines, in which they already have interests in. Stiassny and his crew don't have a good track record in management or the purchasing of assets.



Investors marked VCT shares down 1c to NZ $2.10 on average volume on today's news.



Related Share Investor Reading



Cullen's move on Auckland Airport has far reaching effects



Related Reading



Stiassny.org

NZ Herald report on Vector sale

www.vector.co.nz

c Share Investor & Political Animal 2008




Vector sale decision hangs on political knife edge

The dilemma I would be facing now if I was a minister in the New Zealand Government is, if I gave to go ahead for the Hong Kong based, Cheung Kong Infrastructure Holdings (CKI) to buy 100% of Vector Vector Ltd [VCT.NZX] lines infrastructure, in the Wellington region, then I would be going against a decision I made just a few weeks ago to refuse the sale of a non-controlling interest in Auckland International Airport[ Ltd [AIA.NZX], to a Canadian pension fund, thereby making me look like an utter plonker.

On the other hand If I turned down the sale of arguably a much more "strategic" asset, again Wellington region power line infrastructure, then I would put the Chinese Government's nose out of joint by reneging on detail of various free trade agreements made only a couple of weeks ago and again look like an utter plonker.

Lets face it, our government is at least consistent in its inconsistency.

The vetoed sale of the airport and Vector's Wellington lines is the same scenario whatever way one cuts the cable.

To say otherwise is to be just ever so slightly more than economical with the truth. For Helen Clark to give the reasons for a go ahead for a Vector sale that "the sale doesn't include any sensitive or strategic land" is a pure unadulterated lie. She made reference to the Airport sale over this "land issue" but that deal wasn't turned down because of "sensitive land", it was turned down for political reasons.

The issue of land rights in the Vector deal may actually be applicable. The power infrastructure and lines that Vector is selling has to have easements over the land they transverse thereby making Helen Clark's claim just a generator or two short of a full load.

It is hard to say what the Labour Government will do in the Vector case, but one can be sure it will be a purely political decision, rather than the financial one it should be, and once again the investing public is unsure about how their investments will be treated by such Governments in future takeovers.

The consistency we investors need, especially during these tough economic times, is found wanting by the very authorities that are supposed to be instilling security and a level hand to one of the backbones of our economy. The stockmarket and the essential funds it provides for investment and economic expansion.

The university trained political plonkers who make these decisions have clearly not woken up to the fact that they are not working in theories anymore and the real world consequences of their ludicrous strokes of the pen is costing us millions.

Vector is going to retire some of its large debt with the proceeds of the sale, ironically established when management went on a buying spree around 5 years ago and borrowed heavily to buy the Networks now up for sale off United Networks.

Worryingly, Micheal Stiassny, Board Chairman and his management are also looking to use proceeds to buy more infrastructure assets, probably "greener" forms of electricity assets, like wind turbines, in which they already have interests in. Stiassny and his crew don't have a good track record in management or the purchasing of assets.

Investors marked VCT shares down 1c to NZ $2.10 on average volume on today's news.

Related Share Investor Reading

Cullen's move on Auckland Airport has far reaching effects

Related Reading

Stiassny.org
NZ Herald report on Vector sale
Vector.co.nz

Vector Ltd @ Share Investor

Long Term View: Vector Ltd

Discuss VCT @ Share Investor Forum
Download VCT Company Reports


Recommended Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A     Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $7.50
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Buy The Intelligent Investor & more @ Fishpond.co.nz

Fishpond


c Share Investor 2008

The Warehouse Group takeover saga continues

One to watch this week.

The Warehouse[WHS.NZX] takeover saga continues Tuesday 28 April (NZ Time) with the Court of Appeal case, and runs for a further 3 days. There will be no immediate decision, with weeks more to wait, well, we have waited nearly 2 years so far, and the likelihood that Foodstuffs and Woolworths Australia [WOW.ASX] will be able to make a bid looks more likely than not.

The Commerce Commission(CC), who are appealing against the affirmative decision in the High Court last year, have struck it lucky to some extent, with spiraling food prices making emotive headlines all over the place but it any judge worth his pay packet will look past this temporary wave of bio fuel inspired food inflation and make a fully emotionless decision.

The CC have a wafer thin case and any new arguments for their case will probably pin themselves on the possibility that The Warehouse and its "Extra" food format will be a serious player sometime in the distant future.

The Warehouse Group @ Share Investor

Long vs Short: The Warehouse Group
Warehouse bidders ready to lay money down
The Warehouse set to cut lose "extra" impediment
The Warehouse sale could hinge on "Extra" decision
The case for The Warehouse without a buyer
Foodstuffs take their foot off the gas
Woolworths seek leave to appeal to Supreme Court
Warehouse appeal decision imminent
Warehouse decision a loser for all
Warehouse Court of appeal decision in Commerce Commission's favour
MARKETWATCH: The Warehouse
The Warehouse takeover saga continues
Why did you buy that stock? [The Warehouse]
History of Warehouse takeover players suggest a long winding road
Court of Appeal delays Warehouse bid
The Warehouse set for turbulent 2008
The Warehouse Court of Appeal case lay in "Extras" hands
WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

Share Investor Forum-Discuss this topic


Unlikely given that The Warehouse itself has largely lost interest in the concept itself.

While many may groan when I mention government interference halting the other long running takeover saga, the Auckland Airport bid by the Canadians, this writer wouldn't put anything past New Zealand's socialist government putting their sticky mitts into this deal, should the Court of Appeal case come down in The Warehouse favour.

Whatever the machinations maybe in our courts this week, the outcome will be closely watched and a positive outcome for The Warehouse will be a serious shot in the arm for our local stockmarket, given its rather stagnant showing over the last 6 months.

Many shareholders will reinvest the collective north of NZ$ 2 billion proceeds of a sale in other shares on the NZX.

Keep watching here for further updates on this story.


Related Links

The Warehouse Financial Data


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c Share Investor 2008 & 2009

Friday, April 25, 2008

TIME Magazine slips inconvenient truths past it's readers


An absolute cracker of an editorial in a business paper that I picked up while in a recent visit to San Francisco.


The paper gives a more enlightened and investigative view rather than the left wing drivel that comes from the likes of the New York Times and Washington Post.


On issues like so-called climate change the papers writers are spot on. In reference to the latest dross written in this weeks TIME magazine the magazines authors leave out the inconvenient truth(thanks Al) about an article they wrote in 1974 about an impending ice age. They do not reference THAT article in their 2008 diatribe.


Politicians in New Zealand and globally would do well to pick up and read such fact based writing, for the fairy dust stuff they are basing economically disastrous rorts such as carbon trading and associated taxes is only going to see an end to our way of life as we know it.

Food shortages because of wasteful and environmentally unfriendly bio-fuel production is only the start.



By INVESTOR'S BUSINESS DAILY Posted Friday, April 18, 2008 4:20 PM PT


Media: Time calls green "the new red, white and blue" and likens global warming to the fight against Nazism and fascism. As it insults World War II vets, the magazine seeks to impose a tyranny all its own.

We never cease to be amazed by the inability of the left to feel shame and its lack of reverence for America and those who defend its freedoms, including the right to be stupid. The cover of the April 21 issue of Time, taking the famous Joe Rosenthal photo of Marines planting our flag on the blood-soaked island of Iwo Jima and replacing our flag with a tree, qualifies for obscenity of the year.

It echoes the greenie theme first advanced by Al Gore in his book "Earth In The Balance" that the internal combustion engine is the greatest threat in the history of mankind. Gore and Bill Clinton have both said that global warming is ultimately a greater threat than terrorism.
That, admitted Time managing editor Richard Stengel, was the thinking behind the cover story. "One of the things we do in this story," he said last week on MSNBC, "is we say there needs to be an effort along the lines of preparing for World War II to combat global warming and climate change."


This trivializing of the sacrifice of American blood and treasure to defend freedom ignores the fact that in World War II we faced a real enemy with a terrible agenda. The bombs that fell on Pearl Harbor were quite real, not the output of some badly fed computer model.
"Global warming may or may not be a significant threat to the United States," Tim Holbert, a spokesman for the American Veterans Center, told the Business and Media Institute (BMI): "The Japanese Empire on February 1945, however, certainly was, and this photo trivializes the most recognizable moment of one of the bloodiest battles in U.S. history."


It was not that long ago that the media, including Time, was singing a different tune and waging a different war.


An article in its June 24, 1974, issue entitled "Another Ice Age?" told of how, "when meteorologists take an average of temperatures around the globe, they find that the atmosphere has been gradually cooler for the past three decades."


Time spoke then of a "global climatic upheaval" and "climatological Cassandras who are becoming increasingly apprehensive, for the weather aberrations they are studying may be the harbinger of another ice age."


Reputable scientists and satellite and other observations have noted another cooling period under way since 1998. Declining solar activity in the current cycle correlates with other cool periods in Earth's history. It ties in perfectly with climate history that shows the warming and cooling of Earth is a natural and cyclical process.


A man who knows a little about fighting totalitarianism, Vaclav Klaus, president of the Czech Republic, wrote in the Financial Times last year:


"As someone who lived under communism for most of his life, I feel obliged to say that I see the biggest threat to freedom, democracy, the market economy and prosperity now in ambitious environmentalism, not communism. This ideology wants to replace the free and spontaneous evolution of mankind by a sort of central (now global) planning."


Lt. John Keith Wells, leader of the platoon that raised the flags on Mt. Suribachi, told BMI: "That global warming is the biggest joke I've ever known." He knows a real enemy and a real threat when he sees one.


Related Political Animal reading
Kyoto critic comes to town - Sunday Star Times
Ponder the Maunder - 15 Yr old Kristin Byrne explodes the GW myth

c Political Animal 2008

Notes from San Francisco


Just some observations before I kick off writing on the Share Investor Blog again next week.

I have spent the last week and a bit touring around San Francisco and attending the wedding of my Texas outlaws.

I have been commenting for several months on the nature of the credit crunch, economic conditions and things sub prime and it is interesting to see and hear the reality of things when you actually get to speak to the people that it is most directly affecting.

The majority of individuals that I spoke to were largely uninterested in talking about important issues like the coming election or the state of the economy but those who were seemed unconcerned about a probable recession and generally viewed such things with a stoic matter of fact nature.

Getting on with the business at hand seemed the order of the day.

Talking to Chuck from Manhattan, a real estate investor with years of experience, on the airport shuttle to our hotel in Geary Street, I was engaged by the positive attitude to his investment outlook. He was in San Francisco to do business and back in New York he was buying commercial property with a view to a long term gain by buying run down properties on Long Island and refurbishing for higher rentals.

Americas favorite pass time, shopping, seemed in good health in San Fran, as I imagined it would be, and tourists like my good self, from inside and outside America, were spending bucket loads of money on food, goods and services.

On the unfortunate side,depending on which side you are on, one of my Texas outlaws has just spent US$220,000.00 on a foreclosed house in Dallas that cost the previous owners $325,000.00. She has a 30 year mortgage at 5.75%! Kind of puts New Zealand rates of nearly 10% in the shade huh?

In a related matter, it seems the sub-prime lesson hasn't been learnt yet. Glancing at bank windows with "sweetheart" interest rates of 0% for business loans left me with a cold uncomfortable feeling. Like the sub prime loans for mortgages the low rates were for a limited time, after which more substantial rates would kick in.

I know there is cheap state funded credit out there but I'm just hoping the borrowers are such that they can afford to repay their loans. We don't want to be re-visiting a similar credit blowout story a few years from now.

Finally I'm heartened and disgusted at the same time by the huge numbers of "homeless" people begging for money on the streets on San Francisco.

Heartened because at least Americans don't hide their indigent by handing out welfare and disgusted because, well, these people are walking the streets and have no shame anymore.

American capitalism at its best, or worst, depending on ones world view.

Oh, the Golden Gate was lovely...Dude.

Related Share Investor reading


State backed Sub-prime Mortgages in NZ a recipe for disaster

Current credit crunch a blessing in disguise
What happened to risk?

c Share Investor 2008

Tuesday, April 15, 2008

Helen Clark: Ian Wishart's "Absolute Power" book

Absolute Power - coming soon, pre-order now for guaranteed delivery

www.helenclarkbook.com

Looking for Ian Wisharts full account of the donations for passports scandal involving Yang Liu, Shane Jones and Dover Samuels, currently engulfing the Labour Party in October 2008? 

Please go here.

Related Political Animal reading

Labour's State control out of control

Trevor Mallards anti Violence advert
Sign anti smacking petition
Anti smacking law puts young boy at risk
Electoral Finance Bill: The purpose is clear
Ian Wishart: Passport Scandal- two ministers, one MP implicated

I must have been asleep over the last 3 weeks since this wee ditty was announced.

Now I'm not a big Ian Wishart fan but I'm guessing that this is going to have a decent sort of impact when it comes out and as Wishart has said in his statement below he might be lucky not to have an injunction served on it by the great leader herself.

Having said that the book's contents may have me dancing and singing like some demented Labour Party member with a fetish for Kenny Rogers and John Key and I could well celebrate with a cheeseburger and Coke, before the Food Police pass new sweeping powers to stop me having a coronary.

On the other hand I could get so angry with malice over the mere thought of the cover photo of the beautiful leader and throw an item of clothing at my child, get arrested and charged with assault under the new anti smacking law and then have the case thrown out of court.

Its serious stuff and deserves far more serious consideration than I can give it in my present mood but this is probably all the subject of the book requires.



COMING SOON: PRE-ORDER THIS TITLE NOW OR RISK MISSING OUT! JUST DAYS AWAY

*APRIL 21*

Ian Wishart's major new title, "ABSOLUTE POWER: The Helen Clark Years" is coming soon. We used to joke “buy it before they ban it”. But now the Electoral Finance Act has been passed. All we can say is, if you don’t pre-order a copy for Day One, you might not get a chance on Day Two.

SEE THE ONLINE TV COMMERCIAL FOR ABSOLUTE POWER BY CLICKING HERE


c Political Animal 2008

Monday, April 14, 2008

Why did you buy that stock ? [Goodman Fielder]


To be honest I bought Goodman Fielder[GFF] because I noticed just about everything I shoved in my fat mouth was made by the company.

Everything from Vogel's bread, Olivani olive spread Tararua milk and cheese products and a whole range of food for breakfast lunch and dinner.

I thought before buying, that this company has a huge clutch of branded, staple, food products that New Zealanders and Australians have grown up with and people simply keep buying them!

What more could you want from a business?

That is pretty much the the main reason why I bought the company. Goodman's dominant brands give it the "economic moat" advantage that Warren Buffett talks incessantly about and the fact that the company, what it sells and how it functions, is very easy to understand, puts it above other more complicated industries, whose balance sheets are only decipherable by specialist forensic accountants with xray vision.


Why did you buy that stock?

Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]

Discuss Goodman Fielder at Share Investor Forum


Goodman's competitive advantage over its competition lies in its ability to leverage off those strong brands, excel during good economic times and plod boringly through the tough years, as we are having now-we all have to eat and that will never change.

Going back to Buffett again, he has a massive holding in Kraft Foods[KFT], a company similar in its branded food focus to Goodman Fielder, but alot bigger of course and he has been adding to his holding over the last year as the stock price tumbles.

Would I buy the stock again today? of course, I still hold it and have done for around 4 years and have been adding to my portfolio over the last few months.

The only crimp for the short to medium term are commodity prices like wheat and raw dairy ingredients, which add to retail product cost but are not always able to be passed on to the consumer.


Related Share Investor reading


Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger


Related reading

Kraft good in a recession -Everything Warren Buffett
Goodman Fielder - Corporate Website


c Share Investor 2008

Friday, April 11, 2008

Why did you buy that stock ? [Auckland International Airport]

In this second of a series of columns about why I bought a particular stock for my portfolio, lets hover over Auckland International Airport[AIA.NZ] for a while a see what motivated me to buy.

Recent political interference involved over a possible Airport sale aside, there wasn't a lot negative about this company to speak of before I plunked down my dineros.

Perhaps a large requirement for capital expenditure in the short to medium term, to expand the business to meet growth expectations was the only thing that would keep the company taxiing down the runway, the rest looked blue sky to me.

Why did you buy that stock?

Why did you buy that stock? [Freightways Ltd]
Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse Group]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]

Discuss this stock @ Shareinvestor.net.nz

Again, like Sky City Entertainment [SKC.NZ] Auckland Airport stood out as a monopoly, protected in its position for the foreseeable future and it has that "moatability" that Warren Buffett talks about :

The competitive advantage that one company has over other companies in the same industry.
The wider the moat, the larger and more sustainable the competitive advantage. By having a well-known brand name, pricing power and a large portion of market demand, a company with a wide moat possesses characteristics that act as barriers against other companies wanting to enter into the industry.

Warren Buffett

Auckland Airport, because of its monopoly position, has the ability to raise prices well above the rate of inflation and does so within its division of different businesses. From car parking and retail rents, to landing and departure fees, regular price rises seem the order of the day.

The economic moat factor is the main reason I bought shares in the company, although there are a couple of others.

The history of passenger growth for the company is excellent and more could be expected, but not guaranteed, in the future if history is any measure of the company going forward.

The individual share purchase cost relative to the various financial ratios and measures of the business in comparison to international airports was also an attractive carrot.

Bids by The Canadian Pension Plan Investment Board and Dubai Aerospace Enterprise for a premium of over 60% of my purchase price is evidence of how cheap the shares were. In a relative sense anyway.

Now the question I must answer. Would I buy this stock again?

Again political interference aside, yes(I will go into this in another column but I don't want politics to enter here)

The affirmative answer is reinforced by the long term growth prospects and again the fact that the company is unlikely to be challenged in its monopoly position in its industry.

Auckland International Airport @ Share Investor

Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Related Links

AIA Financial Data


Related Amazon Reading

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c Share Investor 2008



MARKETWIRE: CPPIB reaction to Auckland Airport veto

CPP Investment Board

Statement From CPP Investment Board Following Government's Decision on Overseas Investment Act Application

AUCKLAND, NEW ZEALAND--(Marketwire - April 11, 2008) - The Canada Pension Plan Investment Board (CPPIB) today said it was disappointed in the outcome of its Overseas Investment Act application, which has been declined.

CPPIB's partial takeover offer for Auckland International Airport required CPPIB's Overseas Investment Act application to be approved in order for the offer to become unconditional.

The offer received the necessary levels of shareholder acceptance and approvals.

CPPIB's Vice-President - Head of Infrastructure, Graeme Bevans, said: "We are naturally very disappointed in the outcome.

CPPIB appreciates the support we have received from the 29,000 largely New Zealand, Auckland International Airport shareholders who accepted our offer."

Under the terms of the offer, the offer will now lapse. Shareholders who accepted the offer are now free to deal with their holdings as they wish.

About CPP Investment Board:

The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. As at December 31, 2007, the CPP Fund was C$119.4 billion (NZ$148.7 billion) of which C$2.5 billion (NZ$3.1 billion) represents infrastructure investments. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is investing in publicly-traded stocks, private equities, real estate, inflation-linked bonds, infrastructure and fixed income.

Based in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments.

UBS has acted as financial advisor and Bell Gully has acted as legal advisor to CPPIB.

For more information, please contact

In Canada:
CPP Investment Board
Joel Kranc
(416) 874-5163
Email: jkranc@cppib.ca
Website: www.cppib.ca

or

In New Zealand:
Consultus
Coran Lill
+64 27 600 8602
Email: clill@consultus.co.nz


Labour Vetoes voters' rights

From the Share Investor Blog today, in a unsurprising and but naked grab for votes in this 2008 election year, 50000 voters have just had their property rights trampled on because the Auckland Airport Merger with the Canadian Pension Plan Investment board has been turned down.

http://www.parliament.nz/NR/rdonlyres/2F9625A5-6D25-44B5-925E-D316DD5F5DF8/0/7801DavidParker.jpg
David Parker, Minister of a ship of
Fools.


Watch for the Poodle Party and its titular head Winston Peters come out waving the New Zealand Flag today. Its hard to keep a straight face though when he supports a government that has signed a "free trade" deal with China.

The politics of envy is alive and well in socialist, communist Aotearoa.


State Services Minister David Parker and Associate Finance Minister Clayton Cosgrove have vetoed the sale of Auckland International Airport[AIA]

After over a year of negotiations by two prospective parties, The Canadian Pension Plan Investment Board and Dubai Aeronautical Enterprise, all the time money and expertise that has gone into brokering a deal has been reduced to an international farce by the stroke of a socialist government pen.

The intervention has come at a time when markets are shaky and the economy is on a downturn and this added uncertainty has disappointed the market again and the 50000 odd voting age Mums and Dads who voted overwhelmingly in March to allow the CPPIB to buy their shares.

It is not hard to imagine what the CPPIB next move might be, but they have 3 options. Walk away completely, walk away while making a financial claim against the New Zealand Government, for their costs involved in axing a deal by retrospectively changing an overseas investment law, or push on in the courts to allow them to seal the deal.

The Auckland Airport would also have a claim for the millions of dollars of costs incurred for its shareholders because of the retrospective law.

NZ Herald's Auckland Airport merger coverage to date

The Battle for the Airport

Share Investor merger coverage to date

Latest Airport coverage
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Auckland Airport deal vetoed by NZ Govt

State Services Minister David Parker and Associate Finance Minister Clayton Cosgrove have vetoed the sale of Auckland International Airport [AIA.NZ]

After over a year of negotiations by two prospective parties, The Canadian Pension Plan Investment Board and Dubai Aeronautical Enterprise, all the time money and expertise that has gone into brokering a deal has been reduced to an international farce by the stroke of a socialist government pen.

The intervention has come at a time when markets are shaky and the economy is on a downturn and this added uncertainty has disappointed the market again and the 50000 odd voting age Mums and Dads who voted overwhelmingly in March to allow the CPPIB to buy their shares.

It is not hard to imagine what the CPPIB next move might be, but they have 3 options. Walk away completely, walk away while making a financial claim against the New Zealand Government, for their costs involved in axing a deal by retrospectively changing an overseas investment law, or push on in the courts to allow them to seal the deal.

The Auckland Airport would also have a claim for the millions of dollars of costs incurred for its shareholders because of the retrospective law.

Disclosure: I own AIA shares


NZ Herald's Auckland Airport merger coverage to date

The Battle for the Airport



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c Share Investor 2008

Thursday, April 10, 2008

Why did you buy that stock ? [Sky City Entertainment]

I'm going to kick off a series of articles about what drew me to the 15 stocks that I hold in my portfolio.

While it is interesting to know what different investors hold in their stock portfolio, it is clearly more intriguing as to why they made the decision to buy an individual stock in the first place.

Let me begin with the largest stock holding in my top draw, the often much maligned Sky City Entertainment[SKC.NZ] the Casino, Hotel and Cinema operator.

I have held this company since buying in 2002 and it has cost me just under $2 a share when the very generous dividend is accounted for.

Why did you buy that stock?

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Why did you buy that stock? [Sky City Entertainment]

Discuss this stock @ Shareinvestor.net.nz

The main reason I purchased is the monopoly position that it holds in all the markets it operates in. The constant cash flow that this sort of business provides, even during tough economic conditions, is another quality that attracted my hard earned cash.

Initially, before I plunked my shekels down, I visited a couple of the company's casinos, talked to some middle management and harassed employees on the shop floor to see what sort of business it was.

Naturally there was both good and bad feedback but mostly it was positive stuff.

I made a few more visits to the company's main gaming floor in Auckland, New Zealand and after reading the prerequisite company financials, was convinced to put about NZ$135,000.00 on the table.

I came to the conclusion from my interactions with Sky City, that it was a pretty easy business to understand, a principle that Warren Buffett uses to gauge a possible company purchase, and there wasn't too much that management could do wrong with such a basic business. I was wrong about that, but that is another story for another time-a Buffett principle that escaped me at the time, look carefully at management when buying!

Would I still purchase Sky City today?

A good question stockmarket investors should all ask of ourselves about stocks in our portfolios.

While there is much that has gone wrong with the management of this company, some very bad decisions have clearly been made, cash is still flowing into the tills, the company rides out downturns in the economy well, and profit is there, albeit slowed considerably, I would indeed purchase at anything below 2 bucks.

Sky City @ Share Investor

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Discuss this stock @ Shareinvestor.net.nz


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c Share Investor 2008

Wednesday, April 9, 2008

Fisher & Paykel Healthcare profit downgrade masks good performance

It was almost inevitable that Fisher & Paykel Healthcare [FPH] would come out with a new lower profit guidance to March 31 2008 today, from a former guidance of NZ$67 million down to $58 million dollars.

A higher NZ dollar marks down profit to the company when repatriated back to New Zealand of approximately NZ$2.5 million every percentage point the $US goes down against our currency.

The very good news that should put shareholders minds at rest is that US revenue was up strongly by 18% to US$ 270 million.

On the back of that though high demand for the company's respiratory humidifier products outstripped supply in the all important United States market.

Clearly this shouldn't have happened and management should be well displeased with their efforts in letting down buyers and consumers alike. This highly competitive market doesn't like mistakes such as these.

High demand also for Fisher's consumables and their respiratory and acute care products allowed CEO,Michael Daniell to comment,"we expect a strong start to the new financial year and continuing increase in demand for our products".

Fisher and Paykel Healthcare have grown strongly in the US market over the last five years and are one of the most innovative and technologically driven companies of its type in the world.

FlexiFit 405 Nasal CPAP/BiPAP Mask with Headgear from Fisher & Paykel
Image courtesy FPH





Fisher & Paykel FlexiFit 405 Nasal CPAP/BiPAP Mask with Headgear



Its disruptive sleep apnoea products are especially world leading and it is a fast growing market because of snoring problems caused by overweight and obese patients. The United States is clearly the centre of the sleep apnoea universe because of its sheer number of affected patients and therefore potential consumers.

Its latest sleep apnoea product has been given FDA approval to be used in a home setting.

The size of the Sleep apnoea market and the company's products excited me so much I invested.


FPH shares closed down 12c today to NZ$2.93 pr share on heavy volume.

Historically Fisher & Paykel Healthcare have grown revenues and profits steadily and their innovation and continued R & D spending will assure they will stay on the cutting edge when it comes to product updates and consumer satisfaction and their future looks bright if the innovation continues.





Fisher & Paykel Healthcare @ Share Investor

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c Share Investor 2008