Friday, November 28, 2008

Share Investor now at Findata

The guy in charge of content at Findata asked me to contribute some pieces for that site and so you can now find teasers of blogs from the Share Investor Blog if you are already a member of that site.

No money has passed under the table-mores the pity-so I am still going to be my occasionally objectionable self and "criticise" those individuals that don't pass financial muster.

The "community" part of the site is new but I have been using the data, news and analysis part of Findata for nearly a year.

Go take a look and if you like what I have to say ask the cheapskates there if they can pay me for my occasional gems of wisdom.

While I am here I highly recommend a blog called Trading Goddess It is irreverent, insightful, sexy and on the ball-give it a go why don't ya!

Related Links

Share Investor @ Findata

Trading Goddess Blog

c Share Investor 2008

Thursday, November 27, 2008

Long-term gain, short term pain

Chart for Sky City Entertainment Group Li (<span class=

The 3 month chart for Sky City Entertainments stock price doesn't tell the full story.
As a long-term investment it has managed to hold up well during one of history's
greatest market downturns.

OK readers, this piece isn't about Sky City it is about the benefits of investing for the long-term.

My critics-and I have quite a few because not everyone has the same approach to investing- would say holding onto shares long-term is a losers game and while every share in my portfolio is currently losing money, except for Fisher and Paykel Healthcare, ASB Preference shares and Sky City Entertainment [SKC.NZ]- Fisher and Paykel was added to and ASB Prefs have only been in the portfolio for a short term, Sky City was the first share in the portfolio and has been the base since its inception in 2002.

I would silence my critics simply by saying my Sky City holding has still remained positive during one of histories great market downturns and that is simply because it has been in my portfolio for a reasonable time.

Granted, the stockmarket has further to fall but Sky City has been the bedrock of the Share Investor Portfolio and will continue to provide a safety net in the current market turmoil.

My other losing stocks will recover-a couple may fail entirely-and looking at the long-term again (and I would contend that you must) they will provide a good return for my hard earned shekels.

Keep in mind if you are brave enough (some would say stupid but not me)to buy stocks in the next few months that your stocks may fall further in prices but as long as you have done your research and picked a solid company you will come out the winner in the long-run.

Related Share Investor reading

Why did you buy that stock? [Sky City Entertainment]
Long-term portfolio view wins the investing battle
10 Basic Buffett questions to ask before investing

Related Amazon reading

The Standard & <span class=

The Standard & Poor's Guide to Long-term Investing: 7 Keys to Building Wealth by Joseph Tigue
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c Share Investor 2008

Wednesday, November 26, 2008

Marketwatch: Michael Hill International

As you can see from the chart, Michael Hill International [MHI.NZ], the 200 plus store jewelry chain with stores in Australasia, Canada and most recently the United States, the share price is not looking great.

From a NZ$1.22 high over the last year down to a 59c closing price today, the company's shares are looking like a good buy.

What has kept the share price up consistently over many years was the regular increase in sales growth and profit that has historically just kept on coming.

Until now.

By no means is the slowdown due to anything else except recent rumblings over the global economic slump and various financial crises, so the negative impact on share price is nothing material about the viability of the business over the long-term but a macro economic factor that just cant be controlled by any business at the moment-sales and profit will be affected in the short to medium term.

This represents an opportunity rather than anything negative because once this economic slowdown is managed through Michael Hill should be back on its upwards trajectory again.

Now I am not saying go out and buy Michael Hill stock at current prices because the share price may well go further south before it goes north again but all financial indicators mark the company stock out as a screaming buy.

A current P/E ratio of 8.34 and a gross dividend payout of 8.68% alone make for attractive reading and historical financials should make any accountant leap for joy.

This is one of the stocks that I am looking at to add more of to the Share Investor Portfolio and will bide my time in current market conditions to hopefully get my fill at a lower price.

Related Share Investor reading

Michael Hill's profit shines
Michael Hill takes on the windy city
Why did you buy that stock? [Michael Hill International]
MHI has defined growth strategy
MHI profit sparkles

Essential Links:

Michael Hill Investor Information

From Amazon

Jewelry, Watches and Clocks Industry Report

Jewelry, Watches and Clocks Industry Report
Buy new: $23.95
Available for download now

c Share Investor 2008

Monday, November 24, 2008

Pumpkin Patch buy-back shows confidence in future

I was in the process of writing something about the obvious merits of buying Pumpkin Patch Ltd [PPL.NZ] shares at prices of around 85c when I heard the news that management have decided that their shares are a bargain too.

Pumpkin Patch are planning a share buyback of up to 8.5 million shares beginning 28 November ending on 23 November 2009.

This is good management of shareholders capital at a time when the share price has slid more than 80% to the pre-IPO level of NZ$1.25.

It also shows managements long term faith in the company's future and from the amount I have written about the subject I clearly agree.

It makes me wonder whether Jan Cameron and and Rod Duke are going to add anymore shares now that their large stakes 1.Cameron 2. Duke in the Pumpkin have nearly halved in value since July and March this year.

Pumpkin Patch shares have been marked down recently because of the slow down in the global economy, especially affecting the retail sector, and their big hit in full year profit announced in September.

The news of the share buyback today sent shares rocketing more than 10c or 13.5% on low volume.

Pumpkin Patch @ Share Investor

Pumpkin Patch takes a hit
Pumpkin Patch ripe for the picking
What is Jan Cameron up to?

I'm buying
Why Did you but that Stock? [Pumpkin Patch]
Rod Duke's Pumpkin Patch gets bigger
Buyer of large piece of Pumpkin Patch a mystery
Pumpkin Patch a screaming buy
Broker downgrades of PPL lack long term vision
Pumpkin's expansion comes at a cost
Pumpkin Patch VS Burger Fuel
Pumpkin Patch profits flatten
New Zealand Retailers ring up costs not tills

Related links

2008 Full Year Profit

Pumpkin Patch- Investor relations
Pumpkin Patch- The clothing

From Amazon

On Target: How the World's Hottest Retailer Hit a Bull's-Eye

On Target: How the World's Hottest Retailer Hit a Bull's-Eye by Laura Rowley
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How to Succeed at Retail: Winning Case Studies and Strategies for Retailers and Brands

How to Succeed at Retail: Winning Case Studies and Strategies for Retailers and Brands by Keith Lincoln
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c Share Investor 2008

Follow Share Investor's Portfolio

You can follow the Share Investor Portfolio now by scrolling down the left hand side of any page of the blog and go to the "Share Investor's Portfolio" module. Each stock in my portfolio is listed there with a 20 min delayed feed of prices from Yahoo Finance and associated charts, news and NZX releases for the day.

See how badly or well it is doing.

Here is what it looks like:

ASB Capital No.2 0.85-0.007(-0.82%)
Auckland International1.660.05(3.11%)
Briscoe Group Ltd0.750(0.00%)
Fisher & Paykel Healthcare3.01-0.04(-1.31%)
Fletcher Building5.550.13(2.40%)
Freightways Ltd2.9-0.03(-1.02%)
Goodman Fielder Ltd1.80(0.00%)
Hallenstein Glasson2.280(0.00%)
Kiwi Income Property1.040(0.00%)
Mainfreight Ltd4.250.04(0.95%)
Michael Hill International0.570.02(3.64%)
Postie Plus Group0.30(0.00%)
Pumpkin Patch Ltd0.930.13(16.25%)
Ryman Healthcare 1.450.05(3.57%)
Sky City Entertainment2.980.01(0.34%)
Steel & Tube Holdings2.70(0.00%)
The Warehouse Group3.60.03(0.84%)

Go here to see updated prices and refresh your browser to get the latest market price*

* 20 Mins delayed

You can also follow the daily market value of two individual shareholdings of mine, Sky City Entertainment and Pumpkin Patch, the best and worst performers in my portfolio respectively, just below the Share Investor's Portfolio module on the left-hand column of the blog. These update the dollar values of each stock and return they have given me thus far.

Related Share Investor reading

Why did you buy that stock?

Why did you buy that stock? [Fletcher Building Ltd]
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]
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 Share Investor Post

From Amazon

Portfolio Management for New ProductsPortfolio Management for New Products by Robert G. Cooper
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Project Portfolio Management: A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits (<span class=
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c Share Investor 2008

Ruminations, meanderings and recriminations

So many bargains!!

Come one, come all, its a giant pre-Christmas sale of listed NZX and foreign stocks.

Ah, Mainfreight's shares might be traveling south, Michael Hill's may have lost their sparkle and Pumpkin Patch's share price looks like it could reach the same figures as some of its clothing sizes but if you think stocks are cheap now just wait until the New Year sales.

To be fair markets have now overreacted-they always do whether up or down- to the credit crunch and its associated impacts and we now seem to be running on negative emotion caused by over zealous finance media ready to make a name for themselves and their media owners whose headlines grab at sensationalism in order to sell advertising.

This media inspired negativity is set to continue well into 2009 and the New Zealand stockmarket is unlikely to see any stability until next spring with an upturn looking promising for the 2010 year.

I thought I would be a smart arse sort of guy and buy beaten down stocks a few months back but my Pumpkin Patch purchase back in June at NZ$1.53 has nearly halved on Fridays closing price, my Michael Hill purchase of the same month went from 82c to below 60c and my Briscoes "bargain" is back in the high 70 cent range.

The only upside buy was my clear expertise led delve back into Fisher and Paykel Healthcare[FPH.NZ] Bought at $2.33 this stock is currently above 3 bucks and has at times been above $3.20, just going to prove that timing the market isn't the easiest thing to do-for me anyway.

To be fair the upside for Fishers was clear to the market because sales were going to be up and the US dollar strength meant that repatriated funds back to head office in New Zealand would be well up, so the only mistake I made there was not to buy more.

This will be one stock whose sales and profit will hold up during this economic downturn and any substantial stock slump below $2.35 will see me back in.

Having spilt my guts about some of my stock meanderings over the last few months I am nevertheless in it for the long haul and my purchases fit my investment profile and ability to eat should everything become worthless in 12 months time.

Having said that I am still very tempted to get the checkbook out again for some more "bargains" but human nature being what it is I am going to wait until prices drop further latter on in 2009.

I am looking at buying more Mainfreight Ltd [MFT.NZ] which is still doing well, Pumpkin Patch[PPL.NZ], which is struggling in North America, Britain and New Zealand, Michael Hill International[MHI.NZ], which is holding up so far, Fletcher Building [FBU.NZ] which is in the middle of a residential building slump and Briscoe[BGR.NZ]which is having the Christmas sale to end all sales at present.

So I am still optomistic for the economy and the stockmarket long-term. Short term?

Its a fools game.

Related Share Investor reading

Share Investor Portfolio: Taking a beating
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? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [Fletcher Building] this Share Investor Post

From Amazon

Why Stock Markets Crash: Critical Events in Complex Financial SystemsWhy Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette
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The Great Crash: How the Stock Market Crash of 1929 Plunged the World into Depression

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More stockmarket and finance books at Amazon

c Share Investor 2008

Sunday, November 23, 2008

Hanover's "White Knights" are really daylight robbers

Some of the tripe written recently about how positive the "rescue package" that owners of Hanover Finance have put forward this week has me concerned because it presents a false picture of what is going on at Hanover now, and what has happened with the company in the past.

This from Phillip Macalister of Good Returns, a company that used to advertise on its websites and magazines for Hanover:

"It has been pretty open about its situation and its plans. That is a major plus." Phil's Blog, Nov 2008

When asked if he thought that the deal would silence all the critics he said: “I don’t think there’s any solution which would deliver that.”

The package being put forward though is designed to show that the “shareholders are standing up and supporting the business in its time of need.”

Also it makes sure that there is a future for the business. Good Returns, News Centre Sept 2008

Macalister contends that Hanover and its two top monkeys, Eric Watson and Mark Hotchin have been "pretty open" about the situation of the company but nothing could be further from the truth.

If one did just a little googling one could find a plethora of writing from credible investigative journos that would give lie to Phil's assertions. Unfortunately many of the 16000 investors in Hanover are of an age that they think googling might be related to self abuse rather than information that they would find illuminating about Hanover.

As far back as 2004, Deborah Hill Cone-ironically writing in a piece originally written for the National Business Review but reprinted in one of Macalister's websites-discovered there was trouble brewing for Hanover and its 16000 investors:

But if you want to write anything about Hanover Group itself ­ why it has more than $100 million tied up in related party loans, say, or why it lent money to the sad sacks signing up for conman Henry Kaye's seminars or even the seemingly simple question of why it doesn't file consolidated accounts ­ that's not considered quite so charming. Deborah Hill Cone, The Secretive Rise of the House of Hanover, Sharechat, March 2004

Just in the last two years alone the NZ Herald reports that $NZ86.5 million in dividends were creamed from Hanover and went to Watson and Hotchin:

Hanover Finance yesterday told the Herald that of $86.5 million in dividends it had paid out to Mr Watson and Mr Hotchin over the last two years, just over $70 million had been used by them or their companies to repay "related party" loans. Investigators swoop on Hanover, NZ Herald, July 2008.

But as Deborah wrote back in 2004, financial figures supplied by Watson and Hotchin for Hanover don't show the full picture because of the vast amount of inter-party lending and the complex nature in the way Hanover and its dozens of interrelated companies are structured is able to disguise inter-party lending so that Eric and Mark could even buy a super yacht with depositors money.

Why aren't accounts filed for Hanover that would show the consolidated picture for the whole group?

Karen Toner, one of the authors of KPMG's Financial Institution survey laughs when I say I'd like to see the consolidated figures for Hanover Group.

"Wouldn't we all? I think everyone in the industry would like to know that."

The group has a complex structure, with Hanover Group Holdings as the overall holding company and Elders Finance and Nationwide Finance subsidiaries of Hanover Financial Services. Elders is the parent company of subsidiaries United Finance, Leasing Solutions and FAI Finance.

Another finance company, Onesource Finance, is owned by Hanover Group, a separate subsidiary of Hanover Group Holdings. Deborah Hill Cone, The Secretive Rise of the House of Hanover, Sharechat, March 2004

Now the way Hanover was structured and its vast amount of inter party lending-that is lending that personally lined the pockets of Eric Watson and Mark Hotchin-may not be different from the 2 dozen or so finance companies that have done investors dough over the last two years but for Greg Muir, the outgoing chairman of Hanover, to come out today on behalf of the dastardly duo to make them look like white knights coming to the rescue of investors and they should all be grateful and in awe of their generosity has got to be the joke of the year:

"I can't talk about their personal motivations, I don't know what they are...all I can say is I think the shareholders have dug into their pockets as deeply as they feel they possibly can and this is the best result they can deliver." Hotchin told the Star-Times that shareholders had no obligation to put in more money but had done so because they wanted the company to keep going and repay investors. "I personally don't owe that money [to investors], neither does Eric, the company does, but we're pledging fresh money to help ensure they get back their principal. Hanover Duo Dig Deep, Sunday Star Times, Nov 2008

Morally, the principal duo do owe investors in Hanover because they extracted at least NZ$300 million from the company since 2001 and possibly as much as half a billion, which puts this weeks offer of $56 million of cash and dubiuos "assets" in some context.

The most recent publicly available Elders accounts, for the year to June 2003, show related party transactions of $93.5 million, up from $83.6 million in 2002, and $67.7 million in 2001. ShareChat, March 2004

Hanover Finance yesterday told the Herald that of $86.5 million in dividends it had paid out to Mr Watson and Mr Hotchin over the last two years. NZ Herald, July 2008

This easy money went to themselves and other "related parties" but hey according to Hotchin there is nothing personal about it, it is the Hanover business that owes 16000 investors more than half a billion bucks.

If you expect the same people to look after you in a restructure of the company, through their moratorium, that ran it into the ground in the first place then you need to take a good hard look at yourself.

Related Share Investor reading

Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

Related Links


Hanover downgrade raises questions about credit ratings
Hanover Finance in troubled waters

Watchdog probes Hanover
Hanover et al, punt for the cash- Bruce Sheppard

NZ Herald on Hanover

Mark and Eric buy super yacht-TVNZ

From Amazon

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Paper Prophets: Fraudulent Accounting And Failed Audits

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c Share Investor 2008

Friday, November 21, 2008

Coke is it

People love it, it is ones of the worlds most enduring and loved brands. Warren Buffett loves it and has a massive shareholding in the American icon.

In this day and age of dwindling fortunes and sagging sales this brand is a stalwart and Lion Nathan [LNN.NZX], the Australasian brewer, wants a piece of the Australian company that makes the black sticky concoction in this part of the world, Coca-Cola Amatil [CCL.ASX]

Lion Nathan previously owned the loss-making Pepsi franchise in Australasia so clearly see a non-alcoholic soda drinks company as integral to its alcohol brands.

Buffett calls companies like Coca-Cola Amatil "economic moats". That is, a company that has a strong brand and a product that is unique, enduring, easy to understand and sells, even during hard times.

Lion Nathan execs must have been reading some of Warrens screeds of pronouncements on his investing principles because they have their target right. The only problem being they haven't offered CCL Amital stockholders enough for their sweet black goldmine.

Lion have offered only AU$ 7.7 billion for Coca-Cola Amatil . The cash and stock bid, made at a 25 per cent premium to cokes share price, has been roundly criticised by CCA management as "unattractive" and "complicated". The offer from Lion gives Coke shareholders stock in Lion Nathan which is majority controlled by Kirin, the Japanese brewer.

The parent company and approx 30% shareholder in CCA will not comment on the matter but its CFO said last month to analysts:

"if the purchaser had the financial and the management resources to really grow that market for the long term, and that when selling we would sell if at fair value."

The stock and cash offer, even at a 25% premium is still below "fair value" and its is unclear as to whether Lion's management would grow the Coke brand and its other products long-term but of course the answer to that would be why wouldn't they?

The CCL Amital parent company, The Coca-Cola Company [NYSE: KO], wouldn't necessarily go for a higher price for their 30% shareholding but a company that would provide a higher return for their providing the syrup for finished product, which they get whoever owns CCL Amital.

Coke is a strong brand with a massive market share in this part of the world and that and its other strong brands; Fanta, Sprite, Lift, Lift Plus, Powerade, L&P and Schweppes make Lions initial bid too low by far.

Hang on CCL stockholders, don't sell yet.

<span class= <span class=

Related Links

Buffett and Coke

CCA Shareholder centre

2007 AR

2007 SR

2008 NOM

2007 annual report
PDF format (802kb)

2007 Shareholder Review
PDF format (2.6mb)

Notice of Meeting
PDF format (235kb)

From Amazon

For God, Country, and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes ItFor God, Country, and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes It by Mark Pendergrast
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Other Coca Cola books from Amazon

c Share Investor 2008

Monday, November 17, 2008

Fisher & Paykel Healthcare set for healthy 2009 profit

In what will be one of the most positive and anticipated earnings announcements of the current New Zealand reporting season Fisher & Paykel Healthcare [FPH.NZ]is set to release their results for the 2009 half year to 30 Sept 2008, this coming 10.00 am (NZ Time) Thursday, 20 November 2008-Live Webcast

It is one listed New Zealand company which is set to increase profit and sales for the year because of strong demand for its products and a stronger US dollar.

I have been buying this stock as it dropped and recently bought 3000 at $2.35, taking my total holding to 5000, and I am kicking myself for not buying more.

It is one of only a handful of stocks to actually increase in price over the last few months as its quality has shone among the dross.

The main focus for me on Thursday wont be the currency advantage that they had over last few months of the quarter but the increase in sales, and there will be an increase.

New innovative products have been introduced since last reporting and it will be interesting to see how well they have done since.

In relation to the exchange rate, the company forecast a profit of $86 million for the year to March 31 2009 at its annual meeting on August 22. This is based on a US dollar exchange rate of 72c for the rest of the financial year.

This morning November 2008 the Kiwi buys US 55.76c

Every cent movement down of the New Zealand dollar/US cross means an approximate NZ$2.5 million profit to Fisher's bottom line.

Disclosure: I own FPH shares

Fisher & Paykel @ Share Investor

Big Fisher & Paykel share trades a curious tale
Why did you buy that stock? [Fisher & Paykel Healthcare]
Drinking and Trading
Share Investor's 2008 stock picks
Fisher & Paykel: A tale of two companies
FPH downgrade masks good performance

Related Links

FY2008 full year results to 31 March 2008

From Amazon

The Business of <span class=
Healthcare Innovation

The Business of Healthcare Innovation
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c Share Investor 2008

Fletcher Building down tools in short term

Like any other companies operating in the current market Fletcher Building Ltd [FBU.NZ] is going to find the next 18 months or so very hard.

It has already forecast a much lower profit guidance of $289 million to $354 million for FY 2009, such a wide ranging forecast because of extreme uncertainties in the market in which the company operates.

The domestic housing markets in which it operates in; New Zealand, Australia and the USA are experiencing major downturns and that construction downturn coupled with the associated slowdown in supplies of their building materials to said construction is having a big impact on revenue and of course profit.

In my opinion this is likely to get considerably worse before it gets better and shareholders probably wont be seeing anything positive coming out of these domestic housing markets until well into 2010-well later if governments in those countries make the economy worse.

Having said that there are bright spots for the company.

Fletchers has a long list of major infrastructure projects currently underway, especially in Auckland; with Mount Eden Prison upgrade, the Eden Park redevelopment, the Manukau Harbour Crossing(PDF)and the New Lynn Rail Trench among them and a backlog of other infrastructure work in the wings.

The newly elected National Government have also indicated an emphasis on State funded infrastructure projects to help New Zealand get out of its deep economic funk and hundreds of millions in contracts are bound to come Fletchers way in the next year or so.

Australian and American Governments have also indicated a preference to concentrate on crumbling infrastructure to kick their economies along as well.

All this bodes well for their commercial construction division and also the raw materials that they can supply as the inevitable upturn comes.

A question still remaining is how much negative impact the purchase of the Formica Corporation last year for nearly 1 billion Kiwi dollars will have on company bottom line.

Bought for a premium, the global maker of laminates was already in trouble before it was rescued by Fletcher Building and the company has had some trouble and unforeseen(although it should have been) expense so far in restructuring plants and manufacturing processes in order to make the initial decision to buy a relevant one.

The jury is still out.

Make no mistake, Fletcher Building is one company that will be especially hit hard over the global recession. What it has going in its favour though is good management and a backlog of work to fall back on when other sectors of its business get negatively impacted and once again a good decision by management to diversify the company geographically as well as sectorially have put the company in good stead.

As it was one of the first sectors of the economy-along with the retail sector- to show signs of this current economic slowdown, its eventual emergence from the gloom will be a good indicator that New Zealand is at the beginning of another economic upturn.

**Disclosure: I own FBU Shares

Related Share Investor reading

Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletchers got game

Related Links

Fletcher Building Investor Info
Fletcher Building Financials

Click here for full Media Release
FBU 2008 Annual Results

From Amazon

Running a Successful Construction Company (For Pros by Pros)

Running a Successful Construction Company (For Pros by Pros) by David Gerstel
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c Share Investor 2008

Saturday, November 15, 2008

Pick the biggest losers when buying stocks

On the subject of buying listed shares on the NZX stockmarket I am making a list of the shares I am going to buy.

It looks like the stockmarket is going to go South before it goes North again because there is more bad news to come in relation to the New Zealand economy-we simply haven't been fully hit by economic events overseas yet.

So stocks are going to get lower.

I am lousing at timing the market and have bought earlier on this year and lost some share price value and ironically making a 40% gain on a purchase of Fisher & Paykel Healthcare [FPH.NZ] which is doing very well because of increasing sales and a lower kiwi dollar.

I am looking at the following:

Pumpkin Patch [PPL.NZ]
Hallenstein Glassons [HLG.NZ]
Telecom NZ [TEL.NZ]
Mainfreight [
Fletcher Building [FBU.NZ]
Michael Hill International [MHI.NZ]
Ryman Healthcare [RYM.NZ]

I own every one of the above except Telecom.

All of the above have dropped in share price by more than 50% off their respective highs, with the exception of Pumpkin Patch and Telecom which have dropped by more than 80%, and Mainfreight by about 40%.

I am very tempted to buy now and at these prices the stocks represent good value for money in a long term portfolio but as I have already pointed out I think these stocks have more room to move-down.

The retailers will still be under considerable pressure, even though they are already among the biggest losers in the downturn this year, but the ones I have listed are good quality and will eventually bounce back to life, sales and share price wise.

I will wait until next year and see how bad the February reporting season is before plunging back in.

Meanwhile I am hoarding cash over summer to make my move in 2009.

Related Share Investor Reading

Why did you buy that stock? [Fisher & Paykel Healthcare]
Share Investor's 2008 stock picks
Drinking and Trading

From Amazon

The Economist

The Economist

c Share Investor 2008

Friday, November 14, 2008

CEO Spotting

While out doing a little pre-Christmas shopping at the Albany Warehouse at the crack of 8.30am this morning who should I happen to notice during a meeting of the staff on the shop floor was the cuddly little CEO of The Warehouse [WHS.NZ] , Ian Morrice.

The Warehouse is New Zealands largest general retailer and is currently subject to a possible takeover by either Woolworths Australia or the New Zealand supermarket cooperative Foodstuffs.

After purchasing my $4 hex keys-on my credit card no less- I made my way through the checkout and was about to head out the door when I decided I would regret not meeting Ian and having a word with him.

So I did.

I only mention my meeting him because I was impressed that he was so approachable and listened to some of the feedback I had about my experiences in his stores. Mostly negative on my part.

I made a couple of observations about a couple of items and he knew exactly the products I was talking about within seconds-shame his staff are not as knowledgeable-like he had an inventory of every product in his little Scottish CEO head.

Great big firm handshake too!

Asked him, "how is business Ian", "doing well", came his reply.

He looked relaxed coming up to Christmas.

A few more pleasantry's, and apology for breaking up his meeting then I was back out the door into the early summer morning Auckland sunshine, glad I met him.

Disclosure: I own WHS shares

The Warehouse @ Share Investor

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

Related Links

Audited Results for the financial year ended 27 July 2008.pdf (1MB)
Warehouse Corporate profile -Discuss this company

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c Share Investor 2008

Tuesday, November 11, 2008

But wait there's more!

The New Zealand election is over, we have got the desired result(for most of us anyway) so it is back to writing on my first love; money, business, finance and all that jazz.

Naturally my first piece back from writing at Political Animal is tinged with more than a little politics.


If you think New Zealand has seen the worst of its economic slowdown think again.

Currently New Zealand is suffering a recession brought on by profligate spending by our previous Finance Minister, Michael Cullen. Problems related to the credit squeeze have only just started to hit us and will reach their worst probably sometime mid 2009.

Some of the symptoms of the outgoing Labour Governments spending so far are; higher inflation, rising unemployment, a massive public deficit, lower spending on every level of consumer goods, high interest rates, low productivity, lower property prices, higher mortgage defaults and business failures, amongst other things.

These factors are set to get worse as we move into the New Year, save the higher interest rates, and clearly this is going to have a highly negative effect on the New Zealand stockmarket.

With the current NZX index at 2800, it is likely to go below 2000 points before it starts to get any better, probably towards the end of 2009 to early 2010.

Of course all the finer points of timing for recovery and or a worsening of the scenario outlined above hinge on what responses John Key's new Government makes to the current recession and whether it looms for longer or deeper.

The economic situation for our trading partners is also an important factor for any export led recovery and obviously the seriousness or otherwise of the global slowdown will have an impact and that impact we have largely yet to see.

Wasteful spending clearly needs cutting back in all areas of Government and the savings returned to taxpaying citizens via more tax cuts, this way the economy will be stimulated over and above any initiatives to speed the economy up via Government attached incentives or direct spending by them.

More of what we had from the Labour Party just isn't going to cut the mustard. Economies are best stimulated directly by citizens rather than by bureaucrats or politicians looking to spend taxpayer dosh on their favourite business charity.

Government spending on essential infrastructure is one notable exception.

New power stations, motorways in Auckland-another harbour crossing, a motorway through Mt Albert to finish the city's motorway system-and some decent school buildings would be a good start.

Any continuation of what got us in this mess in the first place will simply drag out out the recession for several years, rather than the likely 18 months or so.

Particular importance should placed on the speed and timing of the building blocks that must be put in place for us to start to grow the economy again.

A quick response is the best response and any impediment to economic development must be put aside so as to assist an economy that could get alot worse.

This means a fast tracking of a relaxing of the Resource Management Act and the immediate rescinding of the Emissions trading scheme, which will hamper economic growth by piling unnecessary cost into the economy when we least need it.

New Zealand finally has an administration that has the expertise to negotiate their way through financial management for the good and bad times.

New Zealand has made a choice by electing a new Government and our elected leaders must make the right economic choices, some of them difficult, in order for us to prosper again, sooner rather than latter.

The alternative is a continued slide down the economic ladder which will be extremely difficult to extricate ourselves from.

c Share Investor 2008

Monday, November 3, 2008

Sky City quarter results good by half

My reasons for praising Sky City Entertainment [SKC.NZ] management a few months back have been vindicated.

The most recent quarters results have been mildly pleasing, given the recession New Zealand has been operating under for most of 2008 and the associated drain on revenue from lower discretionary spending.

That has had an affect on New Zealand casino operations and especially the Auckland casino, currently the company's main profit driver and revenue earner.

It is difficult to be hard on the Auckland casino result because current economic conditions make like for like comparisons hard but the 2% revenue drop is reasonably acceptable to this shareholder.

Much more encouraging however are the quarters results from Australia.

Given that the Adelaide casino have recently introduced a smoking ban, its flat revenue results are very pleasing to me.

When introduced in New Zealand, revenues were crimped by more than 5% and the previous strong revenue growth up to that point stopped when the smoking bans were introduced .

I have banged on strongly about Sky City's Darwin casino and it has delivered the goods to the tune of a 7% rise in revenue for the latest quarter. A spectacular rise, but shareholders should note it could be pegged back with recent falls in commodity prices, the booming mining industry the main reason behind the historical revenue increases.

Long-term that should settle back into strong growth though and I pick the Darwin casino to be the main revenue earner within 5 years.

A good buy when it was purchased off MGM Grand, and I was one of the only positive commentators about that purchase at the time.

You have been told!

Nigel Morrison's appointment at the beginning of this financial year turned out to be a turning point for the company and his decisions so far have paid off. The next year- as it will be for most New Zealand companies-will be the true test of his management abilities. He needs to balance possible revenue slowdowns with increasing business costs and that will not be easy as gamblers put their purses away.

Once again the recent quarters results have found Sky City Cinemas results disappointing and things are likely to get worse over the next twelve months.

Sky City shares were up 10c on the news in an overall positive market.

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Sky City @ Share Investor

Sky City Entertainment: 2008 Profit Analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Underperforming
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

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c Share Investor 2008