Share Investor: Goodman Fielder

Showing posts with label Goodman Fielder. Show all posts

Thursday, October 6, 2011

Goodman Fielder Ltd: Cutting my losses

The capital raising of $258 million by Goodman Fielder Ltd [GFF.NZX] should, to be frank, piss the hell out of GFF shareholders. While the company has had some bad times over the last 3 years or so management knew what position they were in and failed to respond to a market for their goods that was waivering due to the dire condition of the economy and are only now addressing the problem of their debt levels and falling sales.

I of course failed to listen to myself and should have sold when the share price hit just over 2 bucks in 2010 after being well below that in 2009 but I am either an eternal optimist or a silly old git - I will let you decide which.

The previous CEO managed the company into this mess and I have little faith that the CEO of the last few months will do any better given his previous poor track record.

The company itself has stated that the next 3 years or so will be painful with lower profits and a "restructuring" where presumably non-core assets will be jettisoned and the proceeds put towards paying down that rather large debt mountain but this is a big ask for management considering their poor stewardship of the company since its listing on the NZX in 2006.

I am lucky that I only have a small holding of 2000 shares bought at $2.33 so my loss will not be as big as others but nobody likes losing money. I will lose just under $3000.00 if I sell the main shares at current prices.

There will be a small amount of money coming from selling the rights in the 5:12 rights issue.

GFF shareholders have 3 options.

1. keep the shares and don't participate in the rights issue and sell the rights thereby having their shareholding diluted by almost 50%

2. participate in the rights issue and invest more money into the company.

3. sell the shares now.

If GFF shareholders keep their shares they will have to cross their fingers that management will be able to break their historically bad leadership of the company and the share price recovers at some stage.

Putting more money into such a risky proposition seems, well, risky.

Goodman Fielder @ Share Investor

Capital raising offer document

Is Goodman Fielder Terminal?
Share Price Alert: Goodman Fielder Ltd 3
Share Price Alert: Goodman Fielder Ltd 2
Share Price Alert: Goodman Fielder Ltd
Long Term View: Goodman Fielder Ltd
Goodman Fielder turning on the DRIP
Goodman Fielder to improve bottom line in 2009
Why did you buy that stock? Goodman Fielder
Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger

Discuss GFF @ Share Investor Forum
Download GFF company Reports

Recommended Fishpond Reading

Buy The Intelligent Investor & more @ Fishpond.co.nz

c Share Investor 2011

Tuesday, August 23, 2011

Is Goodman Fielder Terminal?

6 year GFF Chart

Goodness me, a stock in the Share Investor Portfolio, Goodman Fielder Ltd [GFF.NZX], has stumbled its way down to penny dreadful status and finished down 12c or 11.7% to close at 91c yesterday. This the lowest share price ever for this company (see 6 year chart above) and there could be some more weakness in the stock yet.

The company has been hit by high commodity prices, an inability to claw margins back by raising prices, high company debt and slack management with a lack of foresight and planning that would make even Phil Goff look like the best priministerial material this country has ever seen by comparison.

To top this off, key staff (maybe the company will be better off without them on second thought) have been leaving the sinking ship and the new CEO appears to lean to the dipstick side of the business world rather than carrying a big stick.

So I really have little positive to say about this company anymore. Things will get better in terms of commodity prices and the economy but that may be a long road to climb yet but having said that current management are doing little to make the hard times run smoother.

Inept is a word I would use to describe management at Goodmans you but you may want to use another less offensive one (or maybe more offensive as the case maybe and you are a suffering shareholder - I am such a softie after all)but with the current share price as it is and with their big stable of household brands (yes that is one positive I always come back to with GFF - sorry regular readers to bore you again with that line) in their cupboard the company maybe a target for a takeover or perhaps anyone now interested may want to wait a year or two and get those brands cheaper if the company should fold in a heap of peanut butter smears, french loave crumbs and margarine stains.

Can you tell I am pissed off yet?

Anyway, I will rant on.

The share price may well suffer additionally, as the world financial climate waivers on the brink of something (who really knows what?) and management appear to stumble from one poor financial result to the next. The share price has dipped $1.10 or just over 55% since a November 2010 (see 1 year chart below) high of just over 2 bucks, an all-time low, but the share price hit close to these levels in early 2009 of around $1.20 and then managed to scrape itself off the floor 20 months latter.

1 year GFF Chart

If you think like me though that the value in the company remains in the brand portfolio they have you might want to put this stock on your watchlist and take the risk that either current management will do better (unlikely and they could do worse) or someone else will recognise that there is an impending bargain in the process in terms of capturing those household essentials and staples that the company sells to Kiwi and Aussie families.

Until then I will remain peed off at management that have wasted the value of those brands and have taken the company into such a negative direction that possible suitors deserve to manage the company more than the current ratbags.

This company is now a moderately risky investment but there is value to those willing to take that risk.

I will probably not be participating.

I will however still be buying their Ploughmans and Vogels bread.

Goodman Fielder @ Share Investor

Share Price Alert: Goodman Fielder Ltd 3
Share Price Alert: Goodman Fielder Ltd 2
Share Price Alert: Goodman Fielder Ltd
Long Term View: Goodman Fielder Ltd
Goodman Fielder turning on the DRIP
Goodman Fielder to improve bottom line in 2009
Why did you buy that stock? Goodman Fielder
Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger

Discuss GFF @ Share Investor Forum
Download GFF company Reports

Recommended Fishpond Reading

Buy The Intelligent Investor & more @ Fishpond.co.nz

c Share Investor 2011