Saturday, May 17, 2008

STUFF: Fairfax poll & Political Animal commentary


The latest fairfax political poll continues the trend from last year where National started to show a wide gap. This gap has not only continued but has got wider as time goes on.

It is clear to voters, Labour or National, that voters want their money back, in the form of personal tax cuts. Not State sanctioned welfare like working for families or one off dollops from those that earn the money to those that haven't. They simply want their own cash back in the hand on a weekly basis, without state apron strings involved or mixed up in loony taxpayer subsidised "savings" schemes like Kiwi saver.


The billion dollar plus price tag for a train set and not dividends in their pockets, seems to be yet another motivator for long suffering middleclass taxpayers to get on track to get back what they deserve.


Their own moola!



Political Animal Reading



Michael Cullen speaks with forked tongue
Pointing fingers in the playground
At least Robin Hood was honest
The black economy makes sense
Labour's State Control out of control




Stuff poll and commentary


National is on track for a landslide election win with a 27-point poll lead over Labour.


On today's Fairfax Media poll, Labour faces an election night rout that would oust 14 sitting MPs and deliver National a 13-seat majority.


Finance Minister Michael Cullen is now under huge pressure to deliver an election-winning Budget next week or face the backlash from voters seeking relief from rising pressure on household budgets.


But on today's result, voters have already written Labour off and it may take more than the modest tax cuts signaled by Dr Cullen to turn that around.


The Nielsen poll for Fairfax newspapers suggests that not just the size but the timing of any tax cuts could be critical, with voters saying they want relief now, even if that puts pressure on interest rates.


Just over half of those questioned - 51 per cent - don't want to wait for tax cuts, even if that means interest and mortgage rates stay higher for longer.


It suggests that Dr Cullen's argument that early and sizeable tax cuts will only push up interest rates and delay relief for heavily mortgaged households does not wash with voters.


Kiwibank cut its two-year fixed-term home loan rate to 8.99 per cent yesterday and other banks are expected to follow in anticipation of a cut in interest rates by the Reserve Bank.


Today's poll will send panic through Labour ranks. National's lead is a turnaround from polls which had Labour closing the gap - the previous Fairfax poll had National and Labour 18 points apart.


National Party leader John Key said yesterday that voters were sick of Labour.

"They're tired of the fact that they're so out of touch with issues that concern them in their daily life."


National would fight the election on tax cuts, which would be a defining difference between the two parties.


"All the messages that Labour has given off in the last two months is that tax cuts will be relatively small."


Prime Minister Helen Clark, who is in South Korea, could not be contacted for comment.


The poll put the Greens on 6 per cent - safely above the 5 per cent threshold, where they were joined by NZ First on 5 per cent.


That could put NZ First leader Winston Peters back at centre-stage in any post-election deals, though on current numbers National could easily govern alone.


The poll questioned 1091 voters between Wednesday May 7 and Tuesday this week and has a margin of error of 3 per cent.



Discuss Politics

New Zealand Budget






c Political Animal 2008



Friday, May 16, 2008

Something in the State of New Zealand is rotten

Just when you thought things couldn't get worse for the New Zealand Labour Party, along comes the scandal to beat all scandals, one of Helen Clark's ex employees, Maryanne Thompson, is tarred with the corruption brush and Ministers knowing this chose not to disclose and are now not talking to the media.

Lets go back a bit though.

In the last few weeks we have had a major u turn on the nonsense "climate change" policy, Michael Cullen's failed 9 year fiscal policy continuing to have a dire economic fallout, Phillip Field's corruption trial finally given the go ahead after a prior 2005 election cover up by the Labour Party, the massive hypocrisy of Auckland Airport being bared from a sale but Vector assets sold to our new friends in China, revelations that Alexandra school children were being taught in shipping containers, Michael Cullen caught out lying about the cost of "kiwi rail", the worst economic figures in generations; 29000 less people working and fatal retail sales and a list as long as your arm of ministerial gaffs and malfeasant behavior.

The latest scandal is fraught with much speculation but this is clear. Ministers from the Labour cabinet are involved and knew what was going on with Maryanne Thompson.

Thompson fudged her credentials, gave relatives quick shift through our immigration department to illegally obtain New Zealand residence and favoured friends and family in rewarding large contracts, as the taxpayer money slipped through her fingers like so much confetti .

Trevor Mallard was the Minister responsible at the time and there are rumours that he was aware of the shady business of Thompson and her co-workers. He was aware of Phillip Field and his pre 2005 Election corruption and kept it mum, so why would this case be any different.

Labour voters really cant have alot of confidence in their political masters, the Labour Party.

Their modus operandi is secretive and corrupt. A party that has had secret donations made from Owen Glen, a wealthy billionaire, has stolen taxpayer money to buy the 2005 election, has done their best to stop opposition to the 2008 election by passing the fascist Electoral Finance Act and has had their leader, Helen Clark been caught out lying several times and simply cannot be trusted.

The latest polls reflect that Labour is set for one of the biggest losses in their party history but is only going to be tempered by the large amount of working New Zealander's taxes that are going to be handed out to buy the votes of those too selfish to think of others or simply ignorant of the real state of the nation and how much Helen Clark and her merry bunch of socialist misfits have contributed to it.

We the voter shouldn't forget the Watergate scandal from the 1970s, that brought down the Nixon Government. It was predicated by a break in and a cover up of that break in. Much worse has happened during the 9 years of labour.

Where are our Woodward and Bernstein when we need them?

Discuss Politics
New Zealand Budget

c Political Animal 2008

Wednesday, May 14, 2008

Stick to what you know

One thing alot of people do in life,especially when they get bored, are particularly ambitious(or turn 40!) is to go outside one's comfort zone to challenge their personal or professional skills, this can be quite rewarding in many ways, a sense of achievement comes from trying new things and the risk of failure can often be forgotten in the heat of excitement.

While this approach to life in general is much to be admired, this sort of approach to investing is probably one of the easiest ways to lose your hard earned bucks.

When deciding to buy a business or part of a business, as stocks are, one of the most important aspects you must consider is if you understand what it is the company does and how it does it.

Look for either a good business that you yourself may have industry experience in or is simple enough to understand with a minimum of interpretation of company reports.

Food companies, retailing, steel making and strong brands like, Coca Cola and McDonald's are easily understood even by the most green of investors.

This basic investment tenant can also be applied to the management of any business or enterprise. Watch closely at management of any company who also want to go out of their comfort zone or level of experience and therefore competence.

A successful toilet paper company that suddenly decides to use their excellent profits to expand into the new car business is one that you don't want to invest in and if you are already invested you should roll yourself right out of there.

Coca Cola tried to mess with the formula to their main product in 1985, they didn't need to, they were still number one, but the CEO decided to go outside his level of expertise and change their simple successful 100 year old product. It would have meant the end of the company had the decision to recall the old formula not been made.

The formula of sticking to what you know clearly goes across all asset classes as well.

Be it bonds, of either the Sub-prime or "prime" variety, stocks, real estate, gold, oil, pork bellies or carbon trading, you must stick to what you know first. If you want to get into something you don't know, either you don't, or you do your homework and become as competent as you can.

It is very easy to look at glowing company reports, prospectus' or advisor recommendations of companies but when those businesses are more complex than a real estate agent's patter on explaining why the view in the advertising looks nothing like the view from the house itself, don't go along with the hype.

K.I.S.S. keep it simple stupid!

Who in their right mind would get into a company like Blue Chip New Zealand, their company was structured like a pyramid within a maze, but people looked past the complexity and "invested" anyway.

While of course good management, good company history and growing revenue and profit are also essential ingredients in the investing cake, removing complexity from the mix is going to make one's decision a more profitable one in the long run.

Understanding a business or investment is a really good start along the road of success and the new challenges will lie in continuing to keep the business/investment simple. Keep the challenges for the weekend and bungee jumping in Queenstown.


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c Share Investor 2008

Monday, May 12, 2008

History of Warehouse takeover players indicates a long winding road

With The Warehouse Group [WHS.NZX] shares taking a dive over the last week or so because of their weak sales data and grim outlook in the medium term, the attractiveness to speculators wanting to get an even better slice of the company and flog it off to Woolworths Australia [WOW:ASX]-I don't think Foodstuffs are in the game because of their shallow pockets-is an opportunity going begging for.

Given that the Overseas Investment Office has already given its approval for Woolworths OZ to acquire the owner of the Red Sheds the only stumbling block for the big W will be for them to lose their defence of an appeal by the seriously malfeasant Commerce Commission(CC), who want to put the brakes on any possible deal to stitch up The Warehouse with Foodstuffs or Woolworths OZ.




The Warehouse Group @ Share Investor

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

Share Investor Forum-Discuss this topic


Much of the Commission's case relies on the potential of The Warehouse Extra to provide competition to the current "duopoly", stunningly a duopoly that the Commerce Commission itself voted for when it initially allowed Progressive to merge Foodtown's brands with Woolworths NZ in 2002. Woolworths Australia then bought that merged entity in 2005.


Dr Farmer said the High Court at Wellington was wrong in fact when it concluded it was unlikely the Extra store concept would be expanded and even if it did succeed it was unlikely to exert competitive pressure.

"It would be ironic that the firm, which has the potential to expand and which is already exerting pressure on the incumbents, should be able to be the subject of acquisition by one or other of those incumbents, thereby subjecting consumers once again to the duopoly," Dr Farmer said.

James Farmer QC April 30 2008.


Ironic indeed Dr Farmer, have you read your client's former cases that initially advocated a duopoly in 2002?

The Warehouse itself has stated that the Extra format hasn't achieved the potential that they thought it would and it seems unlikely that they will expand the current 3 stores to the 15 planned ones.

Farmer then spent much time grasping at straws by arguing over what the term"likely"might mean.

There is fierce competition for market share in the supermarket sector though and if you look at the trail of litigation over the Progressive/NZ Woolworths merger of 2002, where an appeal was taken all the way to the Privy Council by Foodstuffs, lost, and then writs and a judicial review taken regarding the Overseas Investment Commission and their decision to allow the merger. The whole process began in May 2001 and was only rectified towards the end of 2002.

As I have indicated in earlier columns, even if the appeal to the High Court is lost by the CC, and I think they will lose-they lost their 2002 case after changing their initial positive stance to allow a merger, due to a small change in competition law- they can still put their tail between their legs and run off to the Supreme Court in Wellington and start yet another appeal. The history of these supermarket players and the Commerce Commission would indicate that the Supreme court is the most likely scenario. In which case any decision, either way, will be closer to the end of 2008.

The Warehouse shares were down 2.8% to NZ$5.20 or 15c on over 1 million shares traded today and any further weakness in share price is an opportunity for a good short to medium term play.


Related Reading

Warehouse takeover battle in court TVNZ
NZ retail duopoly court case begins The Australian
Woolworths still keen on NZ's Warehouse - report Reuters


Related Links

The Warehouse Financial Data


Related Amazon reading


The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy

The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy by Charles Fishman
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