Share Investor Portfolio: 22 July 2009

The Share Investor Portfolio now contains 17 stocks listed on the NZSX. The bulk of the portfolio started back in 2002 and I have added to the bulk of it by using dividends and cash.

Since the 10 July 22 update approx NZ $35000 was added due to two stock purchases made today, 1875 shares in Mainfreight Ltd [MFT.NZ] and 7000 shares in The Warehouse Group [WHS.NZ].


The Share Investor Portfolio as at 22 July 2009

• Auckland International Airport [AIA] 5000
  
• ASB Capital NO. 2 Ltd [ASBPB] 10000
• Briscoe Group Ltd [BGR] 3000
• Fletcher Building Ltd [FBU] 1114
• Fisher & Paykel Healthcare Corp Ltd [FPH] 5000
• Freightways Ltd [FRE] 8631
• Goodman Fielder Ltd [GFF] 2000
  
• Halleinstein Glasson Ltd [HLG] 1000
• Kiwi Income Property Trust [KIP] 1000
• Mainfreight Ltd [MFT] 5000
  
• Michael Hill International Ltd [MHI] 10000
• Postie Plus Ltd [PPG] 2535
  
• Pumpkin Patch Ltd [PPL] 5000
• Ryman Healthcare Ltd [RYM] 5000
• Sky City Entertainment [SKC] 36915
• Steel & Tube Holdings Ltd [STU] 400
• The Warehouse Group Ltd [WHS] 15000

Previous Portfolio Updates

Share Investor Portfolio: July 10 2009
Share Investor Portfolio: June 15 2009
Share Investor Portfolio: May 22 2009

Related Share Investor Reading: Why did you buy that stock?

Why did you buy that stock? [Fletcher Building Ltd]
Why did you buy that stock? [Freightways Ltd]
Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight Ltd]
Why did you buy that stock? [The Warehouse Group]
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]


Discuss this topic @ Share Investor Forum

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c Share Investor 2002-2009

Insider Trading on Sky City shares

Most people who watch the New Zealand Stockmarket closely know that there is frequent trading of shares based on insider information, the New Zealand Stockmarket is just like a small town, everyone knows everybody else's business.

I am not a share price follower, more of a company watcher but I have been looking at movements in Sky City Entertainment Group [SKC.NZ] share price pretty closely over the last 9 years or so.

I have come to the conclusion that Sky City is one of the biggest insider traded stocks.

Every reporting period you can always get a good idea about the profit result before it comes out, based on whether the insiders have traded on good or bad company news.

Yesterday's announcement of an upgrade in Sky City profit is a case in point in insider plays.

A very large volume of almost 8 million shares valued at nearly NZ$ 24 million was traded and the share price ended up 19c or just over 6.5%.

Over the last few days Sky City share price has taken a marked rise (see chart above and data below) and big volumes have gone through over the last 3 trading days.

Date	Open	High	Low	Close	Value	Volume
21 Jul 2009	2.880	3.100	2.880	3.050	23923490.3	7798468
20 Jul 2009	2.790	2.860	2.780	2.860	6702303.15	2373190
17 Jul 2009	2.660	2.780	2.660	2.780	18663101.84	6845077
16 Jul 2009	2.730	2.730	2.670	2.680	5240196.25	1942297
15 Jul 2009	2.660	2.690	2.630	2.690	2766984.42	1041257
14 Jul 2009	2.630	2.650	2.620	2.650	3258738.82	1240619
13 Jul 2009	2.660	2.660	2.620	2.620	1262989.85	480511
10 Jul 2009	2.680	2.690	2.650	2.650	1367532.26	514690
09 Jul 2009	2.640	2.680	2.640	2.680	1810909.48	676984
08 Jul 2009	2.630	2.650	2.620	2.650	5499837.7	2087514

Data From NZX

As I mentioned in a column on Monday there was big volume going through on Friday the 17 July when over $18 million of stock was traded and the stock was up 10c. Insiders have known for a while about the profit upgrade because the stock price has risen from a recent low of $2.58 to finish nearly 30c higher at close of market Monday 20 July, before the profit upgrade was made public yesterday morning.

The bulk of insider trading was done on Friday the 17 July, bought by institutions/brokers for a quick buck and a large part of that was sold back to the mum and dad investor today.

It isn't necessarily wrong for insiders to know about profit upgrades like this one because they get briefed and updated by company management before the great unwashed, but it is illegal for them to trade shares in the company based on that knowledge.

Unfortunately nothing will be done by Mr Mark Weldon, CEO of the NZX , because it is his colleagues (the brokers) that are making money, and his NZX is clipping the ticket along the way as large volumes of shares are traded.

Who needs a monkey with a dart when you can trade on insider info?

Disclosure I own SKC shares in the Share Investor Portfolio

Recent Share Investor Reading

• Sky City Profit Upgrade: Always on the Cards
• Transpacific Industrie's Capital Raising is Trash
• Stock of the Week: Fisher & Paykel Healthcare
• August - October reporting season should sort out fact from market fiction
  
• Long VS Short: Ryman Healthcare Ltd
• List of Bruce Sheppard's top NZX listed company debt worries

Discuss this topic @ Share Investor Forum


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c Share Investor 2009

Sky City Profit Upgrade: Always on the Cards

If you have been reading this blog for the last two years you will know that I have a large shareholding in Sky City Entertainment Group [SKC.NZ]. You will also know that I have banged on about owning this stock until my fingers have bled, and you will then know the reasons why I like owning shares in this company.

Well, news out today that Sky City management have upgraded Fully Year profit in the 12 months to June 30 2009 from a $99-106 million range to a range of $113 - $116 million, reinforce my obsession. Just two weeks ago I gave a nod and a wink and picked the company as my Stock of the Week. That was when the stock price was at $2.58.

At the time of writing the stock is up 21 cents to $3.07 on exceptional volume.

Just yesterday I wrote that trading in Sky City shares last Friday were quite large (around NZ $18 million) and the movement in share price by 10c that same day was an indicator that insiders knew about material information, Thursday night at the latest -the share price had steadily moved upwards last week after being in the doldrums for weeks.

More insider trading? Yes but lets leave that to another day.

I have also indicated many times in the last year that this company will do well during a recession and one simply shouldn't sell because the share price is tanking, in fact you should really have been buying if this stock suits your investment profile.

The signs have been there of a turnaround in the company, Nigel Morrison has been savage at cutting costs, including paying down debt with a slightly dodgy capital raising a few months ago and his experience and history at casino turnarounds has provided a renewed revenue bounce at the company's Adelaide casino.

The Auckland casino has finally been freed of construction and revamps, with more revenue coming from gaming machines and food and beverage sales and even the lackluster cinema business is providing more income, even though I am dubious of the sustainability of that.

As I have also mentioned before the Darwin Casino continues to be a star in the Sky City crown, with good revenue increases likely to be revealed in the profit announcement to be made Wednesday August 26 and future development there will pull in more gaming income.

In recessions, casinos that Sky City operate do well. They differ from their big flashy and unprofitable Las Vegas brothers who rely much more on overseas customers for gaming income, where the vast bulk of profit for Sky City's money spinners comes from the local population, well over 70% I believe.

With more Kiwis staying home, especially at its Auckland complex, where a large number of its customers are recent immigrants from Asia, revenue there is bound to be well up.

I look forward to congradulations from my readers for indicating to them how much I have liked this stock over the years with a wink and a nod as subtle as a sledgehammer in the head.

Tell me you bought while the stock was low.


Sky City Entertainment Group @ Share Investor

Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Sky City share offer confusing and unfair for smaller shareholders
Sky City CEO doubles down
Sky City Entertainment 2009 Interim Profit Review
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

Discuss this stock @ Share Investor Forum

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c Share Investor 2009

Transpacific Industrie's Capital Raising is Trash

I feel for Transpacific Industries [TPI] NZ | AU shareholders. I say this because shareholders like myself benefited from their Executive Director and Chairman, Terry Peabody's generosity when he shelled out over NZ $800 million to buy Waste Management NZ in 2006.

Some say he overpaid, I say the asset was a stunner and I got shafted long-term but nevertheless I got a 50% return on my investment for a year and the money came from debt Peabody was able to raise from idiotic investment bankers who took a percentage cut for arranging such loans for Peabody to go mad with.

I really have TPI shareholder money in my back pocket, thanks for that, but the borrowing of the last few years had its wrap up of sorts today where the company is trying to ironically raise about $AU800 million to fend off bankers (ahh there they are again to collect) and eventual liquidation.

They have managed to raise around AU $620 million so far from institutions and a cornerstone shareholder, Warburg Pincus (another investment banker/private equity player) and will ask for the remaining balance from those poor old suffering shareholders at the princely sum of AU$1.20 per share.

If the institutional capital raising is anything to go by the interest in pouring more money into this company is low. It only just reached its minimum target.

My message to those shareholders is, don't do it!

The architect of the company failure is still there at the head of the business, it is unbelievable that he hasnt been pushed out or had the decency to walk the plank, but Terry Peabody is an arrogant man and he will not admit that he has done much wrong. He has destroyed around AU$ 3 billion in capital in the business that he manages and an arrogant man doesn't change his ways easily.

The cornerstone shareholder should reign him in though.

It seems to me though that the cornerstone shareholder,Warburg Pinkus, who will hold 20% of the company or more once the capital restructure is finalised, and that should be in early September, might want to extract as much value from their investment at the expense of minority shareholders and Peabody, who will also have a large stake, will want to continue with the staus quo.

Cut your losses TPI Holders, it ain't worth it chasing good money after bad.

There is of course short money to be made here.

Just a heads up for New Zealand investors. It seems to me that Transpacific's best assets still lay in its New Zealand operations. Waste Management and parts of Envirowaste and other companies that TPI run here are virtual monopolies, making good money and the fact that an investment banking organisation/private equity company has a large stake in TPI could mean a sell off of some of those assets in the future.

Slightly more than a stab in the dark from me, but nevertheless we could get it back on our NZX one day.

Just though a good rumour was warranted.

Recent Share Investor Reading

• Stock of the Week: Fisher & Paykel Healthcare
• August - October reporting season should sort out fact from market fiction
  
• Long VS Short: Ryman Healthcare Ltd
• List of Bruce Sheppard's top NZX listed company debt worries
  
• Share Investor's NZX Market Diary: 20 -27 July 2009
• Stock of the Week: Xero Ltd

Discuss Transpacific @ Share Investor Forum

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c Share Investor 2009