Why did you buy that stock? [Michael Hill International]

I initially resisted buying shares in Michael Hill International, [MHI] the operator of approximately 200 Jewelry stores in New Zealand, Australia and Canada because the dividend wasn't big enough.

Buying Michael Hill shares would be contrary to my investing belief that an investment should pay good returns, right from the beginning, when you plunk down those hard earned sheckels.

Why did you buy that stock?

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]

I then watched over the years as MHI management continued to have a sustained success in their business and have 20 plus years of good revenue and profit growth behind them.

I then re thunk my position on dividends and returns and decided to look longer term, where I thought Michael Hill's main prospects lie.

Therefore the main reason I bought MHI shares was in the company and its good long-term prospects, 5 years and up. Granted, it is doing well currently but its big future lies in the long-term management and progress of the company for even better investor returns.

Its position in my high dividend portfolio as a "growth stock" marks it out only with Pumpkin Patch Ltd [PPL] in that respect. My portfolio was previously lacking in such growth stocks and it is probably prudent for investors to have one or two in their portfolios.

Good management marks this company out from many others listed on the NZX and as you might know, as a seasoned investor, good management of a company is the most crucial part of a business, save the product or service being sold. Management for me is another key reason for picking Michael Hill. This is embodied in Michael Hill, the man himself, and he has provided a culture where his other managers are able to run the company the way he would want and therefore the transition to another CEO in the future will be relatively easy-another good long-term indicator.

Once again, and it seems to be a recurrant theme that runs through the businesses that I pick to invest in, they are easy to understand. Like the other retailers in my portfolio, Pumpkin Patch Ltd [PPL] Postie Plus Group [PPG] and The Warehouse [WHS] they simply sell goods to the public. Easy peasy.

For me, having Michael Hill has part of my portfolio provides an opportunity for me to participate in a growing business in which the full benefits of that growth, in terms of larger profit , a bigger company and revenue are still many years down the track. Along with excellent management and and easy to understand business any significant dips in share price would be a good opportunity for me to acquire a much larger stake than my current 1000 share holding and I wouldn't hesitate to take that opportunity.


Essential Links

Investor Information


Related articles from Share Investor

MHI has defined growth strategy
MHI profit sparkles

Security Analysis: Sixth Edition, Foreword by Warren Buffett (Security Analysis Prior Editions) by Benjamin Graham Buy new: $41.77 / Used from: $32.40 Usually ships in 24 hours

c Share Investor 2008

Burger Fuel management cagey over company progress

Further to the story about Burger Fuel Worldwide[BFW] signing a master franchise deal with a business in Dubai, I mentioned I was going to ask Josef Roberts, Executive director of the company a couple of questions to flesh out the details of the deal to the market and his investors.

He was very accommodating before the July IPO, granting me an email interview about where the company was going, in some detail.


Here were the questions I put to him yesterday


Hi Josef, I hope you are well.

Interesting announcement today re the Dubai franchise deal. It took me by surprise.

On that note, I wonder if you could inform my readers as to some of the finer points of the deal and some of the reasons why you took the business across the other side of the planet.

Assuming you could answer some questions because the market is speculating.


1: why are you going to develop a new overseas market before establishing the current Australian one?

2: Did the Dubai company approach BF or you them?

3: Are the terms of the master franchise similar to that of individual franchisee agreements in New Zealand?

4: What number of outlets do you see in Dubai?

5: Are customers likely to be locals or expat kiwis/Aussies/Brits etc?

6: How will the BF menu be different in such a unique country?

7: What experience does the Dubai company have being a food franchisor?

8 How is Burger Fuel Worldwide going in terms of revenue created for the Franchise company as a whole and are you on track?

9: How has your experience of your company now differ from what you thought it would be when you initially planned this listed franchising model, have things changed considerably?

10: Is Australia proving difficult to crack, given the amount of competition in Sydney?

11: How has the current credit crises affected your business expansion, if at all, and is the associated economic slow down having any affect on store sales?

12: Finally, where do you see Burger Fuel being in 12 months?


I would appreciate your assistance in informing my readers. There is much google interest on our blog every time you guys have a press release and we have had a handful of Dubai hits today, just as a matter of interest.

Regards, Darren



Josef's answer to my questions

Hello Darren

To paraphrase your own comments about BurgerFuel and me – “Go Figure”.
All the best.

All I can say is it would have been nice to hear some detail about the Dubai deal and where his company might be heading and how it was doing.

My questions were really stimulated by the company and its big leap right across to the other side of the world before being properly established outside New Zealand, in their first overseas market, Australia.

I felt that his investors might like to know the finer points of this move.

As I said above, Josef was very accommodating before the Burger Fuel IPO and I was expecting the same sort of candidness as the company progressed.

I realise his curt response maybe motivated by some of my criticism but after all it is only my opinion and therefore his side of the story would at least balance things.

Nevertheless I still wish him and his company well and hope his lovely burgers(minus the bacon) take off in Dubai.



Burger Fuel @ Share Investor Blog

Burger Fuel cooks up Dubai deal
NZX share trades with strings attached
Don't buy Burger Fuel, yet
Burger Fuel: Inside info?
Burger Fool IPO: Burger Fool?
Exclusive Interview with Burger Fuel's Josef Roberts
Burger Fuel's Daytime drama
Burger Fuel share price out of gas
Beefing up store numbers
Director explains share price drop
Burger Fuel slims down in value
Burger Fuel and Coke
Marketing Burger Fuel's future
Pumpkin Patch VS Burger Fuel
Burger Fuel results and commentary



c Share Investor 2008

The Great Global Warming Swindle[UPDATE]

Prime TV which is part of the Sky TV stable, is going to show the documentary "The Great Global Warming Swindle", the antidote to Al Gore's fictional "The Inconvenient Truth".

The major networks have been bereft of any balls, having had the best part of a year to play TGGWS but news producers have let it slip. TV One played Al Gore's ode to Michael Moore though earlier this year.

Our own Helen Clark and David Parker, Minister of hot air, should clear their schedules to watch, so they can redefine their religious zealotry towards those of us who already know it is one of history's great cons.

The Documentary, from Britain was screened last year to much acclaim.

Prime will show "The Great Global Warming Swindle" Sunday June 1 at 8.30pm.





The great global warming swindle - Part 2
The great global warming swindle - Part 3
The great global warming swindle - Part 4


Related Political Animal reading

Unstoppable global warming
Global Warning: Tax Iceberg Ahead
Kyoto critic comes to town - Sunday Star Times
Carbon Credit trading puts Global markets at extreme risk
Of Tulip Bulbs and Tooth Fairies
Ponder the Maunder - 15 Yr old Kristin Byrne explodes the GW myth

c Political Animal 2008

Sign the anti smacking referendum(UPDATE)

The "anti smacking bill", or repeal of section 59 last year has lead to a petition for a referendum.The referendum has 280,000 signatures and needs 20000 more for a referendum to be held at this years election at the end of 2008. Give Sue Bradford, Helen Clark and her mates a slap in the face!!

Footnote: As of last week this petition fell short of the 280000 signatures by 15000.
There are another 7 weeks or so for those signatures to be collected.

Download and sign the petition here

C Political Animal 2008