Monday, March 30, 2009 - The Home for New Zealand Stockmarket discussion

I launched a stockmarket forum last year but haven't had the chance to spend much time on it for one reason or another and it hasn't had much traffic as a result.

Diddly squat really.

It is still there, it has been since May last year and it isn't going anywhere. I still intend to compete with the big boys.

So here is what you get.

The site is called and can be reached by using that address.

The site is free to read and join, you can post text, pictures, attachments and video and email other members if you want to have that option.

You also have the ability to social bookmark posts.

The forums covered are companies listed on the NZX, ASX and global indices as well-listed with the company prefix.

Forex, property and a beginners section is also included.

There is also the obligatory off-topic section.

Oh and you should see the smiley icons!

Come and have a look, join up and have your say.

Related Links

c Share Investor 2009

Sunday, March 29, 2009

A Hickey in Bernard's Advice

I usually rate Bernard Hickey very highly, he basically tells it like it is and is right more often than wrong.

He knows interest rates, property and all investment categories generally very well.

His latest column on the death of stocks as a long term investment bugs me a little though because I think he has got things horribly wrong.

There has been much talk about the end of equities or the end of buy and hold but my experience in the stockmarket would prove otherwise.

After more than 10 years of market experience(not long at all and still learning) and my stock portfolio which is 7 years at its oldest and 2 years at its youngest and given one of the worst stockmarket routs since the Great Depression my portfolio is still in the green.

Granted things could get worse and they probably will but the thing that Bernard et al are forgetting is that investing in good companies and time will take care of your stock investment for the positive.

Generally, the longer you have held the stocks in your portfolio the better for your wallet.

In my series of Long VS Short columns I have proven after looking at six different stocks in my portfolio that the longer you have held the better you have done.

Bernard either has a different view to me what long term is (10 years plus is my interpretation)or he has neglected to take into account all aspects of long term investing; tax credits, compounding dividends when combined with length of time.

Any asset class (bar residential housing for living in) is better for your pocket in the long-term, especially if you have chosen well and at the right price at the get go.

You simply cannot beat compounding investment over time and while getting out of that investment is usually inevitable the timing of that must be made before you make that investment.

Stick to your initial investment intention(if it is a short term investment, stick to it as well) and only alter it if you know you have made a mistake or see circumstances drastically change.

Bernard Hickey may be right now but I can almost guarantee that years from now he wont.

Be patient!

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c Share Investor 2009

Saturday, March 28, 2009

Nuplex rights decision a dilemna for shareholders

I have been chatting to a customer about his Nuplex Industries Ltd [NPX.NZ] shares for around a year now.

A year ago he was very positive about the company and its prospects for the long term.

He was also in the money because his shares had risen, up to over 8 bucks.

Oh how times have changed.

Since then then the stock has crashed 90% to finish at 89c today (it hit a low of 51 c on Mar 23) it has announced a big drop in profit and also a rights issue to raise more capital because of high debt levels and therefore a lack of cashflow for the day to day running of the company.

The rights issue key points are:

- Entitlement Ratio: 7 new shares for every 1 existing share
- Issue Price: NZ$0.23 per new share
- Total New Shares: 577,643,738 million new shares to be issued
- Gross Proceeds: NZ$132.8 million to be raised (fully underwritten)

My customer asked my advice on whether he should in effect chase good money after bad by participating in the issue.

I wasn't about to give him advice because everyone has different financial circumstances but I did tell him what I would do given the same situation.

It went sort of as follows.

You would have to consider that given they are in their current situation after the beginning of an economic downturn, then when things get worse will they have the cap out again in another 12 months for more money?

If the answer is no and the company will recover and you may get a recovery in profitability and share price.

Then and only then if I was sure about the long term viability of Nuplex then I would participate in the rights issue.

If not then the only other thing to consider is when to cut and run before the share price is diluted, presumably down to 23c, the rights issue price.

I am not sure if I was helpful at all to my client but I think he is erring on the side of pluncking down some more money.

I hope his hunch is right.

Related Links

NPX- Rights Issue Offer Doc

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c Share Investor 2009

Thursday, March 26, 2009

Share Investor's 2009 Stock Picks: Looking Back

Back on December 17 2008 I picked a handful of stocks that I thought were good ones to pick up while they were cheap. Most of them I already own but some I don't.

It has been the most read article on the Share Investor Blog and like every successful smash hit it deserves a sequel.

I have added 3 additions to the picks at the end of 2008. They are at the end of this post.

Over 3 months later lets see how they have done. The chart below compares my four original picks; Fisher & Paykel Healthcare, Mainfreight Ltd, Pumpkin Patch and Ryman Healthcare against the NZX 50 gross index.

The NZX 50 gross is down around 2% since December 17 2008.

Fisher & Paykel Healthcare

My first pick was Fisher & Paykel Healthcare [FPH.NZ] and I picked it for its very good long term outlook and its resilience in times of economic downturns.

How has it done since then ?

Well against the NZX 50 about 20% better and against itself share price wise around 4% better than December 17 2008, to finish at $3.16 today.

It has been as high as 15% up from December 17 levels on March 11 2009 and the company is due a good result in May thanks to higher sales and a stronger US dollar.

Not a bad pick by me and the share price will pick up more this year.

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Fisher & Paykel Healthcare financial data

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Fisher & Paykel set for a healthy 2009

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

Ryman Healthcare

Ryman Healthcare was my second pick and one again its long-term prospects was the main reason I included it in my 2009 picks and in my long-term portfolio.

How has it done in the last 3 months?

Down 4% more compared to the NZX 50 and down 3% as of publish date of this column compared with its share price on December 17 2008.

Pretty good result so far.

I also picked Metlifecare [MET.NZ] for my watchlist. A competitor of Ryman Healthcare it has done badly since December 2008.

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Why did you buy that Stock? Ryman Healthcare
Time for retirement?

Mainfreight Ltd

Mainfreight Ltd [MFT.NZ] is one of the better run companies on the NZX but the share price hasn't done well since we last met it in December.

It is down 8% compared to the NZX 50's 3% since December 17 2008, even though its recent profit was up slightly.

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Mainfreight Ltd financial data

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Long vs Short: Mainfreight Ltd
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Mainfreight 2008 Annual report worth reading
KiwiRail will cost Mainfreight
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A rare breed

Pumpkin Patch Ltd

Pumpkin Patch Ltd [PPL.NZ] was well and truly battered and bruised during 2008 with a 60% share price drop so I figured there was room for some upwards movement in share price.

It reached a low of 78c earlier this year but it is actually up by around 4% since December 17 2008.

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Pumpkin Patch Ltd financial data

Pumpkin Patch @ Share Investor

Pumpkin Patch buyback shows confidence in the future
Pumpkin Patch takes a hit
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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

Other Quotable Notables (Part 2)

Telecom NZ [TEL:NZ] is at exactly the same price it was on December 17 and my pick remains to buy on weakness close to 2 bucks.

Contact Energy [CEN:NZ] Trustpower [TPW:NZ] and Vector[VCT:NZ] are still good buys and Contact Energy has lost 15% of its share price since December 18, mainly due to regulation uncertainty and clearly the weakened share price makes it even more attractive. Trustpower remains pretty even and Vector has risen around 5%.

Auckland International Airport[AIA:NZ] has rise a few percentage points and still remains a strong buy on weakness.

Westpac [WBC:NZ] and ANZ Bank [ANZ:NZ] have both risen by 15% in the last 3 months .

Additional Stock Picks for March 26 2009

I would include all my December 17 2008 picks on share price weakness and would include the following.

Goodman Fielder [GFF.NZ] because it is near its all time lows while still an attractive long term proposition.

Michael Hill International [MHI.NZ], like Goodman, its share price has been given a good beating and I think great value. Its in good financial shape but under short-term pressure from a sales slowdown.

Sky City Entertainment [SKC.NZ], my biggest holding, has been beaten down since December 2008 but has still managed a good profit result for half year ending December 31 2008, buy on any weakness below the current share price of NZ$2.78.

Disclosure: I own RYM, FPH, PPL, AIA, SKC, MHI, GFF and MFT shares

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c Share Investor 2009