Wednesday, June 30, 2010

Chart of the Week: The Warehouse Group Ltd



The aim of this series of charts is to show the divergence - up or down - of the selected individual stock price away from the NZX 50 Index. The chart is a 1 year look to give some relevant background to any recent (two to three months) share price movements.

I will look at The Warehouse Group Ltd [WHS.NZ] even though it seems to have mirrored the NZX 50 Gross Index somewhat. The reason I have included it as a chart of the week is because of the big drop in shareprice over the last 3 months and a spectacular drop over the last week, where it has gone from $3.60 to trade today at an intraday low of $3.30.

I think the share is worth looking at but I think be patient as the price will go lower as the NZX drops because of the global economic uncertainty (which has always been there by the way but only secretly acknowleged by some)

Be patient and you could get this stock below 3 bucks.

Chart of the Week Series


Mainfreight Ltd
NZ Refining Ltd
Restaurant Brands Ltd

The Warehouse Group @ Share Investor

Long Term View: The Warehouse Group Ltd
Share Investor Short: Warehouse Group yield worth a look
The Warehouse Group: 2010 Interim Profit Review
The Warehouse: Big Brands, Big Opportunities
Warehouse strike opportunity to buy
Long Term Play: The Warehouse Group
Share Investor Short: Warehouse Group yield worth a second look
Woolworths supermarket consolidation an indicator of a move on the Warehouse?
Stock of the Week: The Warehouse Group
Warehouse 2009 interim profit a key economic indicator
When will The Warehouse bidders make their move?
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

Discuss WHS @ Share Investor Forum - Register free

Download WHS Company Reports

Shop online at The Warehouse


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Long Term View: Best Stocks from the Series

In the Long Term View series (see links to each individual stock at the bottom of this post) of posts I have looked at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns included dividends and tax credits and other relevant details.

The calculation of return is based on available data and may vary from stock to stock. An absence of data usually means a better return than I have calculated will be the case.

In each individual post the differences will be pointed out.

I have been surprised by the spectacular returns from some and not so surprised by the dismal returns of others but have learnt, once again, that the best returns come from holding good stocks for a long period.

My ideas on stocks as one of the better long-term investments have been reinforced by this series.

Below are rankings in the series from number one down to the bottom in terms of annual returns. Click on company name for more detail on returns.


Long Term View Series Ranking


1. New Zealand Refining Ltd [NZR.NZ] Over 21 years of available data NZR has returned 7800%, an annual return of just over 371%.

2. Port of Tauranga Ltd [POT.NZ] Over 18 years of available data POT has returned over 1475%, an annual return of just over 81%.

3. = Ryman Healthcare Ltd [RYM.NZ] Over 11 years of available data RYM has returned over 680%, an annual return of just over 60%.

3. = Mainfreight Ltd [MFT.NZ] Over 14 years of available data MFT has returned over 830%, an annual return of just over 60%.

5. Sanford Ltd [SAN.NZ] Over 22 years of available data NZR has returned over 895%, an annual return of just over 40%.

6. Sky City Entertainment Group Ltd [SKC.NZ] Over 14 years of available data SKC has returned over 540%, an annual return of just over 38%.

7. Auckland International Airport [AIA.NZ] Over 11 years of available data AIA has returned over 400%, an annual return of just over 36%.

8. Ebos Ltd [EBO.NZ] Over 13 years of available data EBO has returned over 455%, an annual return of just over 35%.

9. Freightways Ltd [FRE.NZ] Over 6 years of available data FRE has returned over 190%, an annual return of just over 31%.

10. The Warehouse Group Ltd [WHS.NZ] Over 16 years of available data WHS has returned over 500%, an annual return of just over 30%.

11. = Telecom New Zealand Ltd [TEL.NZ] Over 18 years of available data TEL has returned over 450%, an annual return of just over 25%.

11. = Telstra Corp Ltd [TLS.NZ] Over 12 years of available data TLS has returned over 300%, an annual return of just over 25%.

13. Pumpkin Patch Ltd [PPL.NZ] Over 6 years of available data PPL has returned over 125%, an annual return of just over 20%.

14. Contact Energy Ltd [CEN.NZ] Over 11 years of available data CEN has returned over 200%, an annual return of just over 18%.

15. Sky Network Television Ltd [SKT.NZ] Over 13 years of available data SKT has returned over 215%, an annual return of just over 16%.

16. Metlifecare Ltd [MET.NZ] Over 16 years of available data MET has returned over 540%, an annual return of just under 16%.

17. Delegats Group Ltd [DGL.NZ] Over 4 years of available data DGL has returned 50% an annual return of 12.5%.

18. Fisher & Paykel Healthcare Ltd [FPH.NZ] Over 8 years of available data FPH has returned over 93%, an annual return of just over 11%.

19. = Goodman Fielder Ltd [GFF.NZ] Over 4 years of available data GFF has returned over 30%, an annual return of just under 7%.

19. = Hellaby Holdings Ltd [HBY.NZ] Over 16 years of available data HBY has returned over 30%, an annual return of just under 7%.

21. Restaurant Brands Ltd [RBD.NZ] Over 13 years of available data RBD has returned over 60%, an annual return of just under 4.5%.

22. Briscoe Group Ltd [BGR.NZ] Over 9 years of available data BGR has returned over 21%, an annual return of just over 2.33%.

23. Fisher & Paykel Appliances Ltd [FPA.NZ] Over 8 years of available data FPA has returned over 11%, an annual return of just over 1.37%.

24. Air New Zealand Ltd [AIR.NZ] Over 8 years of available data AIR has returned over 6%, an annual return of just over 0.75%.

25. AMP Ltd [AMP.NZ] Over 12 years of available data AMP has returned minus 50%, an annual return of just over minus 4%.


Disclosure
: I own AIA, BGR, FPH, FRE, GFF, MFT, PPL, RYM, SKC, WHS shares in the Share Investor Portfolio


Download Company Reports from the Long Term View series


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
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Sunday, June 27, 2010

Long Term View: Sanford Ltd



In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Sanford Ltd [SAN.NZ] has been a good investment for those who have been shareholders since its listing in December 1960 and even better for its founder Albert Sanford and his generations of family who established the company in the late 1880s - see 2003 Annual Report for more detail (we will start at an adjusted $NZ1.00 per share from available 1989 data to make our comparison) $2.87c in net dividends (excluding the NZX listed period 1960-1997. No data can be easily found for dividends) and 30% more in tax credits (see chart above) and nine share splits/tax free share issues or share cancellations: 11:10 in 1991, 11:10 in 1992, 11:10 in 1993, 1:10 in 1996, 1:3, 1:4 in 1998, 1:8, 1:9 in 1999 and 24:23 in 1995 gives SAN a slightly more than 895% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) over the nearly 22 year listing of SAN (the period between 1960 and 1989 is excluded because no shareprice or dividend details are available so the return will be higher than stated here for this period), an approximate annual net return just over 40%.

This is approximately a 300% better return when compared to the average of all NZX indexes.




Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Metlifecare Ltd
New Zealand Refining Ltd
Port Of Tauranga Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Telecom NZ Ltd
Telstra Corp Ltd
The Warehouse Group Ltd


Sanford @ Share Investor

Discuss SAN @ Share Investor Forum

Download SAN 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
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Friday, June 25, 2010

Bothered by Simon Botherway

I made some comments about potential conflict of interest at the Securities Commission (SEC) in April and Simon Botherway was on my list because of his directorship on Fisher & Paykel Appliances [FPA.NZ] board while also being a board member on the SEC.

In an interview this week on National Radio's Nine to Noon Mr Botherway was explaining his appointment as chairman of the new regulatory body, the Financial Markets Authority (FMA) set up to oversee our financial markets.

While much of what I heard was commendable, his comments didn't really excite me enough to make me think that the FMA would be a force to be reckoned with - Remember Mr Botherway has been on the board of the SEC when they have been about as effective as a wet bus ticket slapper (without the ticket) on errant financial offenders or preventing offenses in the first place.

Mr Botherway and his SEC have been of course behind the statutory management of Allan Hubbard and his Aoarangi Securities, a crackdown which has apparently come out of the blue and inconsistent with the SECs track record in terms of the aforementioned bus ticket slapping.

It turns out that this is where things get really interesting in terms of Mr Botherway and his capacity as the a SEC board member. Stuff.co.nz has reported this morning that Mr Botherway has a conflict of interest of his own when it comes to his recommendation to send Mr Hubbard to Coventry:

A member of the Securities Commission (Mr Botherway) which recommended Allan and Jean Hubbard be placed in statutory management is also the brother of a businessman placed in receivership by South Canterbury Finance (SCF) last year. Stuff.co.nz

Allan Hubbard is the owner of SCF.

Mr Bothwerway only disclosed his conflict yesterday:

Commission member Simon Botherway yesterday declared he had a "potential conflict of interest" in the Hubbard case as the brother of businessman Jonathan Botherway.

Jonathan Botherway's hospitality empire collapsed in July 2009 after SCF, which was then owed $7.8 million, put him in receivership.

Simon Botherway would not comment yesterday and instead referred questions to the commission.

Commission spokesman Roger Marwick said chairwoman Jane Diplock was made aware of the connection yesterday, five days after the recommendation was made to Mr Power, but did not believe there was a conflict on interest.

"Mr Botherway was on the division of the commission that recommended that Aorangi Securities Limited and associated persons be placed in statutory management. Mr Botherway has informed the commission of matters concerning a family member and South Canterbury Finance.

"This was done at the monthly meeting of the commission today in the context of declaring a potential conflict of interest in relation to South Canterbury Finance." Stuff.co.nz

This is a clear conflict of interest on Mr Botherway's part and Jane Diplock has got it wrong when she says it isn't.

Mr Botherway needed to declare his conflict of interest before the SEC made its decision to put Mr Hubbard in statutory management and excuse himself from the process.

Perhaps there is no direct conflict of interest but the process has to be at least free of potential conflict.

Botherway should re-consider his position of chairman of the FMA. This incident over his brother and Mr Hubbard is a major oversight on his part and his inability to judge this correctly and excuse himself from the decision to put Mr Hubbard in financial limbo needs to be recognised by himself and by those that appointed him as below the standard for a person in his position.

When asked about his opinion on Mr Hubbard and the position he has found himself him in his Wednesday interview, Mr Botherway decided not to comment.


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Thursday, June 24, 2010

2011 World Cup Fever

With an impending game against Paraguay tomorrow morning, the New Zealand All-Whites are about to face one of the toughest games they have had in the 2010 World Cup. If they lose we will all pat them on the back but if they win they will be the nation's heroes and we will lavish them with praise and all the accolades they rightly deserve.

A great deal of those accolades will be over-hyped and far short of the mark - it is only a game (please don't hurt me)after all but I cant help compare the exploits and hype that has gone along with the All-Whites over their last two games and the expectations from some over the economic spin-offs from the Rugby World Cup in 2011 when it is held in New Zealand.

It has been suggested by Government (since when has any Govt been accurate with facts and figures) that the economic benefits to New Zealand of the 2011 Cup will be around $NZ 1.25 billion. Without a calculation as to how this figure is arrived at it is best to take this estimate with a large grain of something (salt is bad for you now apparently) because it is likely to be over-hyped.

The returns for New Zealand are likely to be negligible at best and loss making at its worst.



When one looks at just how much taxpayer and ratepayer money has gone into building stadiums and associated infrastructure you don't really have to grab a calculator to see that the Government's own estimate of a $1.25 billion gain is quickly gobbled up.

Ahh but your answer to my apparent negativity (I would say I am a realist though) would be that all this spending stimulates the economy. Well, it does if you own shares in Fletcher Building [FBU.NZ] or Steel & Tube [STU.NZ] or have a financial interest in Fulton Hogan but this money has been taken off you to simply circulate around the economy. No foreign exchange was earned and nothing productive sold - very incestuous stuff.

There are other direct beneficiaries too. The bars and eateries around the game towns will get more patronage, the hotels and motels will be booked out, Sky City Entertainment Group [SKC.NZ] are planning for an influx of rugby heads and companies like Tourism Holdings [THL.NZ] should get a shot in the arm.

Indirect benefits are difficult to quantify and a merely guess work without the facts and figures to support them. Government are saying that there will be exposure to new tourists from the 4 billion that will watch (another dubious figure) but how do you calculate that if there are benefits and how do you know any increase in tourist numbers might be from having staged the World Cup?

You simply don't.

Taxpayers and ratepayers are going to be saddled with paying off the giant stadiums that have been built for years and the drain from the ongoing running costs will only be eclipsed by the fact that these large holes with many seats in them will rarely be used to capacity.

South African taxpayers will find this out in the years to come and as with the 2010 World Cup the big winners will be the officials who oversee the world game. FIFA for Football and the IRB for Rugby.

They will make big quantifiable profits that are black and white on the balance sheet.

The proletariat are subsidising them.

Good luck to the All-Whites !

Disclosure : I own FBU, STU & SKC shares in the Share Investor Portfolio


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Wednesday, June 23, 2010

Ryman Healthcare: Big Sellers & Buyers

The huge pre-market trade of nearly 33 million Ryman Healthcare Ltd [RYM.NZ] shares yesterday is an interesting move for a number of reasons.

The seller is believed to be a Canadian deceased estate (WSJ and Scoop.co.nz) which held around 6.5% of the retirement villages outstanding shares and the buyers are institutional investors. The shares traded $1.97, at a considerable discount to the previous days close of $2.12.

From the top 5 Ryman shareholders listed in the 2009 RYM Annual Report as at June 2009, number 5 is the most likely seller:

1 Emerald Capital Limited 69,117,275 13.82%
2 Ngai Tahu Equities Limited 40,000,000 8.00%
3 K J Hickman, J Hickman, J W D Ryder & J A Callaghan 1 35,834,955 7.17%
4 Tea Custodians Limited 2 25,889,975 5.18%
5 833763 Alberta Incorporated 24,950,000 4.99%


The purchasers are probably more interesting than the seller though. Institutional investors have largely ignored this stock over the last 2 years and the stock was trading at a low of around $1.14 (from memory) in May 2009 (see chart below) and has been trading at a considerable discount for many months before a recent overall market move northwards. This is typical of institutions though, buying because a share price is going up rather than seeing the value of the company apart from the share price. Interesting that they are buying now and not a lower levels. Clearly they see upside in company prospects and expect the share price to go north as a result.

I expect a good long-term performance, always have, but my interest was piqued last year.



The company scored a 19% lift in 2010 full year profit, out last month, and this has been the modus operandi in terms of growth for the last ten years.

With an announcement yesterday that RYM are going to spend $100 million on a retirement centre in Tauranga and a number of other developments across the country proposed or being built, the growth of this company looks set continue.

I am surprised that they were not already a player in Tauranga, the retirement capital of New Zealand, but this move will help them get a foothold in the most lucrative retirement area in the country with much potential for further development.

I might retire there myself sometime in the future, on the proceeds from my shareholding in RYM.


Disclosure : I own RYM shares in the Share Investor Portfolio


Ryman Healthcare @ Share Investor

Long Term View: Ryman Healthcare Ltd
Stock of the Week: Ryman Healthcare Ltd
Why did you buy that stock? [Ryman Healthcare]
Long VS Short: Ryman Healthcare Ltd
Time for retirement?

Discuss RYM @ Share Investor Forum

Download RYM 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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c Share Investor 2010