Metlifecare: Its Assets could be worth more under better management

It is interesting what you might find when trawling through company reports for some reason other than the one you eventually find more interesting. This is the case with Metlifecare Ltd [MET.NZ] as I was looking through their 2009 Annual Report.

As you digest the fruitless 2009 they have had, along with incentives still paid to directors who managed significant losses in 2009 and 2008 one comes across one of the most interesting things in their bloated 80 page advertisement for their directors (most NZX companies are guilty of using ten words when one would do and including unnecessary things like director bios and what they might do in the weekends in absence of hard easily understood data), the net tangible asset (NTA) backing per share - incidentally it can be found on page 75.

The NTA is roughly speaking what shareholders would get if the company were wound up and sold. With Metlifecare their assets, which are mostly in property, are difficult to assess in todays uncertain property market but NTA can be one good indication of what a company is worth if sold in part of outright.

Metlifecare's NTA was a staggering NZ$3.54 as at June 2009 while its shares traded at around $1.80 per share!

At close of trading last Thursday Metlifecare shares were trading at $2.30. Still a significant discount to its asset backing.

This tells us a number of things. Firstly the company is worth more either in part or whole being sold outright and it also tells us that management are not extracting full value for shareholders because they are running the shareholders business in a very poor manner.

It could also indicate that management and or their accountants Price Waterhouse Coopers and their valuers have grossly overvalued their properties in today's repressed property market, so beware before you jump on board the MET bus.

Ryman Healthcare [RYM.NZ] which is Metlifecare's listed successfully run rival, has an NTA of 86c per share with a $2.08 share price by comparison but has managed a record half year profit for 2009.

If asset valuations can be trusted, this company should be on anyone's watchlist as a pure play in the hope that someone decides to sniff around and pick up all or some of the company and salvage it from its mediocre management.


Disclosure : I own RYM shares in the Share Investor Portfolio.


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c Share Investor 2010

MARKETWATCH: Low holiday volumes a good opportunity to buy

If you haven't been buying stocks this year already, and you probably should have been because there were some relative bargains to be had, and you haven't spent all your moola before Christmas or in what are euphemistically and laughingly called in New Zealand the Boxing Day "sales" then heads up young shoppers!

The stockmarket is still here and is open today and some of us born capitalists are still interested in trading/investing.

A word to the wise, some good buys can be had on a day like today and over the coming stockmarket trading hours during the holidays.

This is because of the distortion of prices through low volumes offered and sold.

Some stocks are selling at prices way above pre-Christmas market closing and the inverse of this is true also.

Time to get off the couch, away from the pool or that woman in the bikini on the beach sitting next to you and get in front of the computer screen to have a look.

By the way and a small step away from this subject, Warren Buffett isn't going to retire in 2010. Doug Kass just has recognition hunger.


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Allied Farmers: What's it Worth?

I didn't mean to write something else before Christmas but couldn't help myself over the plunging fortunes of ex Hanover investors and their allotment of 1.9 billion shares (yes that is billion with a capital "B") issued last week in lieu of a wind-up of Hanover Finance.

Allied Farmers Ltd [ALF.NZ] shares were always going to significantly drop in value as the new investors in the company headed for the hills and dumped their stock but existing investors in Allied sold shares last Friday after a trading halt was lifted dropping shares from 20c to 14.8c. Yesterday a small number of Hanover investors bailing took the share price down to 10c a share.

There will be a further drop today and further drops as Hanover investors get firm allocations confirmed and they are able to employ a broker to do the business -many Hanover investors would not have easy access to a sharebroker.

What is the company worth though?

Well, that is part of the problem, the market doesn't really know its true value because the "assets" folded into Allied from Hanover are of suspect and therefore unknown value and the prospects for the new Allied Farmers is uncertain at best.

Markets hate uncertainty with a passion.

Those former Hanover investors would have been advised to dump stock ASAP if they wanted some sort of immediate return because I don't think this company is going to stick around for any good length of time but if they think that there is hope for the company that it will survive then the best thing investors could do would be to hold what they have and wait for some concrete results to give the market an indication of true value -the share price will recover if the results are good.

At close of market yesterday Allied Farmers share price valued Hanover assets at around 35c in the dollar, so according to those commentators who eschewed a wind-up of Hanover in favour of a takeover by Allied a 35% return of your money is better than returns from a bankruptcy and they are probably right but the share prices aint going stay above 10c for much longer.





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