Good Morningstar

News out in New Zealand's Business media today about Morningstar's (incidentally a Berkshire Hathaway, Warren Buffett owned vehicle) ranking of our mutual funds sector and I would argue as a spin-off the NZ financial sector as a whole, should be of surprise to those who only read the sports pages and gossip and perhaps the hapless Mark Weldon, CEO of the NZX.

New Zealand ranked a D minus rating.

As far as my major sphere of interest goes, the stockmarket, I have been banging on about how "wild west" our stockmarket regulation and oversight have been in this respect for 10 years.

The guts from Morningstar for me:

Morningstar researchers evaluated and scored countries in six categories—investor protection, prospectuses and shareholders’ reports, transparency in sales practices and the media, fees and expenses, taxation, and distribution practices. Read full article PDF format

"Investor protection" and "transparency" are two major planks of my rantings and Morningstars.

Recent capital raisings on the NZX have been the latest outrage to be foisted on New Zealand stockmarket investors, with protection for large shareholders managed by the NZX and Securities Commission laws at the centre of capital issues but at the same time leaving smaller investors like my good self drowning in a pool of bile filled anger over being shafted once again.

Mark and his directors down in windy Wellington in that flash building on the waterfront and those not far from him at the Securities Commission should take note.

This time, these are your contemporaries saying this about you, not the investors that keep getting the blunt end of your regulatory axe and perhaps you might listen now that it is your buddies saying this?

One can only hope.

Until then the swirling bile will keep me critical.

The Rankings by Morningstar

United States: A
China: B+

Italy: B
Japan: B
Netherlands: B

Taiwan: B
Canada: B-
France: C+
Switzerland: C+
United Kingdom: C+
Australia: C

Singapore: C
Germany: C-
Hong Kong: C-
Spain: D
New Zealand: D-

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Like a Kid in a Candy Store

I still have Auckland International Airport [AIA.NZ] on my mind from a month or so ago when I bought a few thousand more to add to my original 1000.

This has certainly been the case for me today with my new purchase but lets not get carried away. I have bought at a good price for me, my original foray into AIA being at $2.15 in November 2006. With dividends and tax credits included in that initial AIA purchase my cost price comes in at $1.88 per share. Today's purchase then is 18c per share lower than it was more than 2 years ago.

The main reason the stock is on my mind is that the share price on market closing today is below the $1.70 share price I paid back in April and I'm kinda getting excited again - as Warren Buffett famously likes to puts it, like a kind in a candy store - because it looks like the share price might fall even further!

At $1.66 closing and a $1.65 low today on $1.5 million of turnover it looks like the share price could go lower on a negative day on the DOW overnight.

The 52 week low for this stock is $1.56 and I will be paying close attention to the share price if market sentiment if negative this week for an opportunity to buy more.

How many?

Well, I'm looking for another 7000 shares to add to the Share Investor Portfolio to take it up to an even 10000.

I will stop there, because I do have a self imposed limit when it comes to buying anything.

Now I must add that I am average to useless at picking the market but I was happy to buy my initial 1000 shares at $2.15 and more than happy to buy at any price below that.

You can see why I am so exited huh?

Bring on those Mars Bars and M & Ms.



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Labour racks up a $7500 per minute outrage

I remember John Banks on talkback radio in the 1990s discussing this and that and one thing he continually stressed and I cant remember why, was the cost of running Parliament.

He actually had it down to the cost per minute which for some reason has stuck firmly in my mind.

The price per minute was NZ$7500.00 and at the time I remember thinking that is *$%&%* expensive!

Funny that but my elephant like memory has come in useful for this piece.

Some of you may know that Parliament is debating changes to Auckland local body council legislation (even as I write this on a Saturday they are - listen here) and in those debates the discussion is often passionate, reasoned and related to the legislation at hand.

Opposition is allowed to what is called filibuster, basically waste time trying to add amendments to the legislation under debate.

What is different this time though is that the time wasting has reached historically lengthy proportions.

Labour have filibustered to the point where thousands of joke amendments have been put to the vote and to slow those joke votes down even further they have been cast in Maori by Labour Party members. These votes then have to be translated.

The New Zealand public are used to Labour wasting money, over the last 9 years billions of our dollars have evaporated into thin air.

This is different though, it is the working of parliament, the very centre of our democracy and it is being abused and slowed down by individuals who have no countenance to its cost to you and me.

The total waste by Labour just yesterday at $7500 a minute was $6.7 million and this is just one day of cost!

It would be nice to see this sort of detail in mainstream media lest the hoards are misled by braindead headlines but there you go, you are welcome.

Footnote: Labour's 4 day delay cost taxpayers a minimum of $26 million.

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Bruce Sheppard: Explanation Received

Capital raising, company creditworthiness and business viability during these highly unsure and volatile economic times is very important for investors with NZX listed companies in their portfolios and that is why I am following the stoush between Bruce Sheppard and Mark Weldon at the NZX with much interest.


In a post I made this morning I pointed out that I thought Bruce was being irresponsible in blanket accusations over NZX companies defaulting on bank credit terms and the NZX wanted him to explain himself and name names.

I thought he should too.

He has in a general way this morning with a letter addressed to Mark Weldon, NZX CEO:

Mark,

I have thought about this long and hard, read all my blogs. They explain the background to the issue, and they explain the simple matrixes that I have applied and they have explained how I have analyzed the financial statements with this in mind. Either analysts are blind stupid or inefficient, the simple numbers that you need to check reasonable compliance are these and they don't require a detailed breakout of financial statements:

They are these:

1) How much interest are they paying, a bit hard to find sometimes but not hours of work.

2) Continuing EBITDA (earnings before interest, tax, depreciation and amortisation), not hard to find either but you do have to make some assumptions about what is recurring and what is not, this is explained in my blog.

3) Interest bearing debt, and where it is parked, parent subsidiary, its composition between capital notes, and those notes' terms, bank debt and so on. Currency risk is an exposure, and hedging polices come into play. I have not analyzed hedging as disclosure on this is such a tangled web of crap that it is almost impossible to work out how they have hedged their interest and debt exposures and the issues that go with that. Many have foreign currency debts with no natural hedge.

4) Book Equity... that is easy.

5) Net tangible assets is a bit harder but not to hard.

Read the full article

Bruce gives his reasons and goes into some detail as to why he made his sweeping accusation without further elucidation and it seems generally correct, to the point, accurate and honest and we need to know that detail.

Having said that, I still maintain all the research and detail that he says is coming on particular companies should have been released coinciding with his general release.

Us investors need to know but need to know in full before he slanders the good NZX listed companies among the obvious bad.

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c Share Investor 2009