Briscoe's cash worth looking at

Rod Duke, majority owner of the Briscoe Group [BGR.NZ] is a stingy bastard. He would make Scrooge McDuck look like the free spending Donald Trump.

This is meant to be a compliment.

I knew Duke and his company was sitting on a pile of cash, around NZ$ 40 million, with NO DEBT, but it turns out that over the last year this pile has increased to some $63 million, up from the previous years $49 million.

We know he has been busy with his own money building up a stake in kids clothing retailer Pumpkin Patch Ltd [PPL.NZ] but Briscoe's penny pinching ways over the last year have worked a treat:

"We've been very frugal. It's been very fruitful our efforts to save and minimise costs," Briscoe managing director and majority shareholder Rod Duke said.

He said there had been no consideration given to paying out some of the extra money as a special dividend.

He has also hinted at acquisitions:

There might also be acquisition opportunities. "That hasn't passed me by either. It would have to be pretty good to coax some money out of me right now, but look... when things look as though they are going to be good, Rod's going to be there with a pocketful of money.

May I suggest Pumpkin Patch or Postie Plus? [PPG.NZ]

Full Year Profit to 25 Jan 2009 was down 48% in a depressed retail market.

Meanwhile back to that cash.

Briscoe's $63 million cash hoard means there is almost 30c for every share and at today's closing of 62c that makes Briscoe one of the better companies on the NZX in terms of financial robustness.

I am seriously looking at adding more and kicking myself for not noticing this earlier.

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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.


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Why did you buy that stock? [Mainfreight]
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c Share Investor 2008

Why Did you buy that stock? [Briscoe Group]

A recent addition to my portfolio, Briscoe Group[BGR], like every other listed New Zealand retailer, has had its share price slashed over the last few months because of a stagnant economy and poor sales. Briscoe Group is the operator of 3 store types, Briscoes Homeware, Rebel Sport and upmarket homeware store Urban Loft.


Why did you buy that stock?

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]

In this Why Did You Buy that Stock? I have to reveal the compelling reason why I bought was the cheap historic price. Not a singular good reason to buy a stock, any investor will tell you but I cant pass up a distressed good company.

Sure, Briscoe Group has just announced a profit downgrade, one of a number over the last few years, but all retailers are suffering at the moment and the retailing scene in New Zealand will recover. Now really is the time to be buying these marked down retail companies.

The management of BGR have done well to position Bricoes and Rebel Sport in an area of the retail sector in New Zealand where they are clearly the leaders in what the sell. This is a tough ask in a crowded and highly competitive retail environment.

Every time one thinks of buying a towel, cheap frying pan or cheap Chinese wine goblet they usually think of Briscoes first-it is hard to miss their saturation advertising and continuous "sales". The same can be said of quality sports gear from Rebel Sport. They are both well known "category killers".

Rod Duke, CEO and majority owner of the company, has done well to run BGR successfully in such a small market. Given that, the size of the company cant get alot bigger.

Future profit increases will come from cost cutting and an improving economy and Duke has his brands well positioned for profit improvement, with the exception of the struggling Urban Loft, as the macro environment becomes more positive.

One other main attraction for me to buy this stock is the company's low debt and very high cash in the bank. As we all know this allows business to cope when the rain comes and boy is it coming down in cats and dogs now.

Even though I just bought my 3000 BGR shares last week, I would answer the question I always ask in this column in the positive, about whether I would buy more given the opportunity-with a rider in this case.

Given the current whacked out nature of the retail sector, any new purchase of this stock would have to be at a share price of 75c or less. The closing price this last Friday was 91c.


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c Share Investor 2008