New Zealand Stockmarket gurus needed, please

Warren Buffett is one of the most Googgled names on the internet when it comes to financial related web searches, but even more so when the economic crap hits the fan, and for good reason.

Buffett is one of the worlds preeminent long term investors with a penchant for big deals and eccentric behavior-crazy if you earn less than $1,000,000.00 PA-and at the moment he is involved, through a major stake in Anheuser Busch, the US maker of Budweiser Beer, in that company's possible marriage to Inbev, the large European Brewer.

Buffett was also at the centre of the merger of Mars and Wrigley's and has bought larger stakes in many of his current portfolio positions.

This spending has also led the Sage of Omaha on a recent tour of Europe to look for businesses to buy.

All this interest in buying assets, on the backdrop of a credit crunch and its associated fallout, when everyone else seems to be selling.

If one follows Buffett's investing style, one will know why he is buying at this time. Turbulent times can make for good bargain buying opportunities.

If we relate this back to New Zealand and our investment and economic background, local investors would have to ask themselves, where is our Warren Buffett?

New Zealand has its fair share of wealthy individuals, comparatively speaking of course, but if we look at listed stocks on our NZX bourse, the amount of buying currently by high net worth individuals is quite scarce.

The only bargain seeking done recently by my recollection is from Rod Duke, the major shareholder in the Bricoes Group [BGR] who just last month added to another purchase of Pumpkin Patch [PPL] made a few months before. This takes his holding in the children's clothing retailer and manufacturer to just under 10%. Duke's reasons for buying was that it was a cheap buy and that the company had "good long-term prospects". Something that Warren Buffett would probably agree with, if he knew that New Zealand had a stockmarket!

Savvy family investment vehicle Masthead, run by the Stewart family, are busy snapping up listed hospital provider Wakefield Health[WFD] and their move right now will turn out to be a timely one in years to come.

We have also seen the like of Graig Norgate, from PPG Wrightsons [PGW] farm group who has been buying assets recently, but his buying has been done overseas in Uruguay.

Mainfreight [MFT] and Freightways [FRE] have also recently bought assets in Australia.

Now I'm not suggesting at all that investors should blindly follow these large investors when they make a purchase, do your own research, but you have to ask yourself, they didn't get wealthy in the first place by being stupid with their money.

Perhaps the reason most of our wealthy kiwi investors are shunning the local stockmarket is that there are not enough quality companies to choose from. Probably an element of truth there, but we do have some well run and managed listed vehicles that truly represent value at the moment.

The likes of Mainfreight, Pumpkin Patch and Hallensteins Glassons[HLG] today represent good value for the investor buck.

Low trading volumes over the last few months, and especially the last week, might suggest that mum and dad investors are running for the hills and that bigger foreign investors are standing on the sidelines because they know things could get alot worse, in regards to the local and global economies.

What Warren Buffett does through his recent investing activity, is signal to other less savvy investors, like yours truly, that now is a good time to be buying. In other words, be greedy when others are fearful and fearful when others are greedy.

The confidence that Buffett's buying brings to the US market is lacking in New Zealand and that lack of confidence would be somewhat eschewed if we had our own guru like pied piper to follow.

This lack of confidence is reflected in the lack of depth of IPOs so far this year, with the notable exception of Pike River Coal[PRC] and without interest from those seeking capital to expand, it is doubtful we investors will be interested as well. Good start up companies however will always do well.

While having wealthy net worth New Zealanders investing in the New Zealand stockmarket isn't necessarily crucial, it is nonetheless desirable for that to be the case, especially during hard economic times.

It gives a positive direction for other investors to follow, instead of following brokers to the next "hot thing", that is bound to blow up in the investor's face.

Warren Buffett does that for millions of American investors, can we have a candidate for us down here please?

Disclosure: I own MFT, PPL, and Freightways shares

c Share Investor 2008

STUFF: Fairfax media Neilson poll

Labour voters still believe Prime Minister Helen Clark is the best person to lead them into this year's election, despite the party's continuing poor performance in the polls.

The latest Fairfax Media-Nielsen poll shows Labour has closed National's lead by three points but is still well behind. Labour is up one point to 30 per cent in the June poll, while National has fallen two points to 54 per cent.

The Greens continue their rise, up one point to 7 per cent, while New Zealand First has slipped back two to 3 per cent.

The Maori Party is on 2 per cent and ACT and United Future 1 per cent.

The Government has also had a slight lift in the preferred-prime minister stakes, with Clark up two points to 30 per cent and National leader John Key down by the same amount to 43 per cent.

The Nielsen poll is the first to show any lift in Labour's fortunes since the May Budget and might provide hope to the Government that it has begun a recovery from the rock-bottom 29 per cent Labour scored in last month's Nielsen poll.

Labour may also take comfort from Nielsen's findings that voters do not see any alternative to Clark to lead the party into the election, with 52 per cent of all voters opting for Clark over her closest rival, Mount Roskill MP Phil Goff, who scored 12 per cent.

Leadership rumblings have surfaced several times in recent months, but Labour voters were emphatic, with 85 per cent plumping for Clark.

Only 5 per cent of Labour voters preferred Goff, while 18 per cent of National voters thought Goff a better leader for Labour.

Other leadership hopefuls barely rated a mention, with Shane Jones and David Cunliffe scoring 2 per cent and 1 per cent respectively.

The Press also asked voters whether they felt it would help Labour's chances at the election if Clark stood aside.

Thirty-seven per cent said it would be either harmful or very harmful to change now, but 22 per cent thought it would be helpful or very helpful, including 18 per cent of Labour voters.

A third of all voters thought it would make no difference to Labour's chances whether Clark stayed, including 31 per cent of Labour voters.

In another sign sentiment may be hardening, 75 per cent of voters say they are either unlikely or very unlikely to change their minds between now and the election, while 18 per cent say they are likely or very likely to switch allegiances.

Labour hopes to capitalise on undecided or swinging voters during the election campaign, but the poll shows Labour voters are more likely to change their minds than National's, with 20 per cent of Labour voters considering a switch compared with 14 per cent of National voters.

Those most likely to change their mind before polling day are Aucklanders, young people and those on low incomes.

In a glimmer of good news for the Government, Labour has retaken the lead over National in Wellington and has made inroads into National's lead among young people and low to middle-income earners. Clark's popularity in the capital and in Christchurch has also increased.

Labour is slipping further behind in the key battleground of Auckland, with National opening up a lead of 60 per cent compared with Labour on 27 per cent.

For the first time in the Nielsen poll, National has captured the larger share of the Maori vote, with 39 per cent of Maori planning to give their party vote to National and 22 per cent to Labour.

A further 22 per cent said they were planning to vote for the Maori Party.

That leaves Pacific Islanders as the only ethnic group now favouring Labour over National.

The poll surveyed 1101 people between June 11 and June 17 and has a margin of error of plus or minus 3 per cent.

Of those polled, 4 per cent were excluded for being under 18 or ineligible to vote. A further 13 per cent were undecided or said they would not vote for any party.

They were excluded from the base for this question.

Restaurant Brands consider slicing off Pizza Hut

With a certain sense of satisfaction, the fact that Restaurant Brands [RBD] would consider putting up their loss making Pizza Hut Franchise up for sale is great news for shareholders.

I have been banging on for years about management cutting their ties because of the clear implications of what keeping the brand means for the company as a whole-certain death.

The only mystery to me is that is took Ted Van Arkel, the chairman of RBD so long to even consider making this announcement to the market.

While they are at it they might also like to consider ditching the loss making Starbucks as well. It isn't as bad as Pizza Hut but is doesn't make money!

KFC is the relative star of the show and that is where management and their energies should be concentrated on because I think they lack the management depth to successfully run two major fast food brands.


RBD prepared to quit Pizza Hut

1:30PM Thursday June 19, 2008, NZPA

The Pizza Hut New Zealand chain could be put up for sale if owner Restaurant Brands is unable to turn it around.

Describing Pizza Hut as his company's "Achilles' heel", Restaurant Brands chairman Ted van Arkel today said the board would consider any actions that might end the drain by Pizza Hut on company profits.

That would include its sale if a turnaround was not forthcoming. In the meantime, the company was redoubling its marketing efforts to hold the line in the current economic climate, Mr van Arkel told Restaurant Brands' annual meeting.

He also said Pizza Hut was in a better position than its competitors.

"The pizza market is crowded and price sensitive. Our competitors, all single-brand operators, are also hurting," he said.

"We are increasingly seeing our competitors' pizza franchises on the market, desperately looking for buyers. Several have already gone to the wall."

Pizza Hut, on the other hand, had the backing of Restaurant Brands, which had demonstrated that it could manage brands successfully over the longer term, Mr van Arkel said.

Restaurant Brands, which also has brands KFC and Starbucks Coffee, was in a strong position to weather an economic shakeout and continue to build its brand presence, but many individual operators of single-brand franchises were not.

"With lower levels of disposable income among consumers, all three of our brands remain very competitive and offer good value for money to the increasingly selective consumer dollar," he said.

"We see the economy in the next 12 months as being challenging but not dire."

Restaurant Brands' flatter first quarter for 2008/09 was evidence of the more difficult trading conditions all retailers were facing and second quarter sales to date looked to be slightly behind last year.

"However, we do expect our reliable earners, KFC and Starbucks, to buck the national trend, even if sales do ease."

The next 12 months would be critical for the national pizza market. At any one time as many as 40 rival franchises were up for sale and Restaurant Brands expected that number to rise as the economy slowed, Mr van Arkel said.

In the chicken market, three competitor stores had already closed in the past six months.

Restaurant Brands' total first quarter sales across its three brands, for the 12 weeks to May 19, were $69.8 million, a decrease of 0.9 per cent on the equivalent period last year, although same-store sales were up 0.4 per cent.

Restaurant Brands shares closed yesterday at 85c, and today Mr van Arkel said the company's directors did not consider that price to reflect intrinsic value.

Broker analysts considered the stock worth buying up to around $1.25.

He also advised shareholders that directors were proposing to ask for an increase in their fees at next year's annual meeting, subject to a satisfactory result for the year.

Directors' fees have not been increased since 1998 and no longer rewarded board members adequately for their input, he said.

Related Share Investor reading

RBD gives KFC a push
McDonalds playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

c Share Investor 2008

Sue Bradford strikes out (Again)

The comely Ms Bradford, in her element.

Given that the repeal of section 59 has been voted down by over 350,000 voters(almost 3 times more people that voted for Bradford's Green Party) in the petition for a referendum to allow good parents to discipline their children, in an appropriate way, and it will be held during the 2008 Election ,it is time for the latest Stan Blanch cartoon.

Stan can be quite a vicious bastard, at times extremely pithy, but he is often on the money and at at times much more, than mainstream political cartoonists.

c Political Animal 2008