Long Term View: Fletcher Building Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO.

The calculation of returns includes dividends and tax credits.

Fletcher Building Ltd [FBU.NZ] has been very good to its shareholders in terms of returns since its forerunners NZX listing in the 1940s - we will only be looking at the last 9 years of available data since FBU became a fully separate company and listed in March 2001 at $2.25. With $NZ 3.17 cents in net dividends (see chart above) paid and another 33% of that figure gained for those eligible for associated tax credits, a slightly more than 550% return (see chart below for the share price percentage gain against the average of all NZX indexes) over the 9 year available data gives an approximate annual net return of just over 61%.

This is more than 6 times better than the return from the average of all NZX indexes.

Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Metlifecare Ltd
New Zealand Refining Ltd
Port Of Tauranga Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Telecom NZ Ltd
Telstra Corp Ltd
The Warehouse Group Ltd

Fletcher Building @ Share Investor

Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free

Download FBU Company Reports

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The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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Also from Fishpond.co.nz

The story of his family and their company is told in Fletchers: a Centennial History of Fletcher Building by Paul Goldsmith





c Share Investor 2010

The Lolly Scramble of Life

A brilliant post from Bruce Sheppard from the Stirring the Pot Blog just has to be commented on and included on my blog today:

If you want to understand human nature before the OSH, PC police, education and society in general have done with corrupting it, examine kids and a lolly scramble. Perhaps the real reason the OSH police don't like lolly scrambles is not because kids get hurt, but because it reminds kids what human nature is really about. Maybe they are the thought police from Orwell. And guess what? Real life resembles a lolly scramble. John, go to a kids lolly scramble and then look at the world as it is and you might find the flaw in your dream of a world of equals.

And parents, ignore the PC crap. Make sure every kid experiences a free for all lolly scramble at every opportunity. Tell the OSH people to go swim in an unfenced pool.

So imagine this: You are in a field with a whole lot of kids, keen and full of anticipation. On the four sides of the field there are the angels of opportunity the lolly throwers. And on the four corners of the field there are the watchers of activity, the policemen, the government, the regulators, call them what you will. Full article here.

Bruce's analogy of life being a lolly scramble is the perfect expression of how life actually is rather than how some would like it. It is hard, competitive "unfair" but it is life and it is the best way forward.

Any other constructed way of life - especially the current one pushed by the lefty interferers - is an inferior facsimile of life and eventually doomed to failure, with the consequent victims scattered like the dead ghosts of Stalin's wet dreams.

True Capitalism, the best way forward in business and something that I shout from the rooftops often is also the antidote to the lefts stealing from those that are hard working and resourceful.

Imagine the wealth we would all have if in the lolly scramble we didn't have half of the participants as government bureaucrats stealing 50% of all the lollies for themselves!

It aint sweet for some but a pure unadulterated calorie laded lolly scramble is what we need again to move us forward and take the bitterness of State sanctioned interference away.

That and a good rough game of bullrush.

Recent Share Investor Reading

• Long Term View: Fletcher Building Ltd
• Share Investor Short: Warehouse Group yield worth a look - A Second Look
  
• Share Investor Rant: Vodafone VS 2 Degrees
• The Warehouse Group: 2010 Interim Profit Review
• Long Term View: EBOS Group Ltd
• Long Term View: Delegats Group Ltd

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c Share Investor 2010

Share Investor Short: Warehouse Group yield worth a look - A second look

I wrote about this back in September 2009 just after the 2009 full year profit was announced and a 15.5c dividend was declared. The share price was NZ $4.25 at the time.

The WHS 2010 half year profit was released last Friday and a 17c dividend was declared. The current trading price of WHS shares is $3.90 so clearly the opportunity this time is even better than last year.

It is called dividend stripping.

Dividend stripping* is something worth doing. That is, getting in early when a good dividend is announced and riding the share price upwards before the dividend is paid or holding on to collect the dividend then ditching the stock, depending on how you think the market will treat the company post dividend.

I may or may not have done this over the years and if I did it certainly wasn't my intention to do so, yeah OK.

The Warehouse have been increasing dividends of late because of unused tax credits held by them and a better looking cash flow situation.

With cash flows up considerably this year the dividends are now rolling in again.

If you add the 30% imputation credits and are able to use them to offset taxes then you are in for a payout of :

17 c dividends + 5.11c tax credits = 22.1c , which equates to around a 5.5% gross return at the market share price on Monday 15 March of NZ$3.90 - the net return is obviously higher if you are able to fully use the tax credits.

An excellent short term payout for doing next to nothing and it is better than a term deposit because it does not take a full year to payback.

There is also the probability that those after the dividend will push up the stock price to enable you to get out with a good capital gain before the dividend is paid, if you wish to do so.

Of course, and I have to get this in before I wrap it up. If you are a long-term shareholder in the company your return for the year would have been a 32.5c per share net dividend and the possibility of more than 10c in tax credits - a plus 10% net return for the year based on my share purchase price.

Long term wins again but who says you cant have the best of both worlds!



* Of course as one reader pointed out in September 2009, the process of dividend stripping, if the intention is to do that, the capital gain that you make is taxable.


The Warehouse Group @ Share Investor

The Warehouse Group: 2010 Interim Profit Review
The Warehouse: Big Brands, Big Opportunities
Warehouse strike opportunity to buy
Long Term Play: The Warehouse Group
Share Investor Short: Warehouse Group yield worth a second look
Woolworths supermarket consolidation an indicator of a move on the Warehouse?
Stock of the Week: The Warehouse Group
Warehouse 2009 interim profit a key economic indicator
When will The Warehouse bidders make their move?
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

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c Share Investor 2010

Share Investor Rant: Vodafone VS 2 Degrees

"Push 0 to speak to an operator please...push 1 to confirm that you want to speak to an operator.

This is just one message one gets when one calls Vodafone New Zealand. That is, after waiting through minutes of press this button if you want to talk to Abdul from accounts or stand on a chair with your arms in the air to speak to Zagrib from the "help desk".

If you are lucky one might get an operator whose first language is English, if you get connected to the right person or don't get cut off first. If you get your problem sorted out you would be as lucky and happy as some sort of pig in high quality mud but rarely does this ever happen.

"Someone will call you back" is a typical answer to your problem but rarely do they call you back and if they do you usually end up speaking to the knuckle dragger you first spoke to 30 minutes before, when you were still a human being and not some crazed homicidal maniac pushed to despair by Ranjeet in a smelly call center in outer Delhi somewhere.

I don't know why I have been with Vodafone so long, they have treated me like a smelly turd since joining them (they were OK when I first went with them 5 long years ago) after I ditched the hapless Telecom NZ [TEL.NZ] Mobile.

A long list of crimes (some of them absolute clangers) against the customer over the years finally led me to the novel notion that I really should think about giving Vodafone the big middle finger (like they have to me) and look for another mobile provider.

The clincher was a few days ago when I wondered to my good self why I wasn't getting a paper account.

Apparently they decided that customers didn't need them and they were binned 4 months ago.

That is sort of OK but when I called them to ask for paper copies to check their billing they told me they would charge $5 a statement (funny I didn't get a discount of $5 per month for NOT getting a paper account) and I said (with eyebrows arched for emphasis) that wasn't acceptable to me.

At the same time I wanted to provide them with a new credit card number so I could pay my account regularly, after asking two weeks ago for the correct (paper) form so I could do so, only to be told by the knuckle dragger a few days ago that we don't provide paper versions, only electronic ones. Didn't get either one even though they said they sent them.

Last time I had to change my credit card number it took a year (I kid you not - and yes I stayed with them, so more fool me) to sort it out.

Going back to a few days ago I asked to speak to a "supervisor" and she was worse than the first line of attack and then I asked to speak to her boss.

"This is the end of the line for you Mr Rickard, I cant let you do that, my bosses do not accept calls from customers."

A little voice in my head repeated "This is the end of the line Mr Rickard..."

It was, I have signed up with 2 Degrees Mobile, it was easy, quick, funny (in a good way) and it is cheaper to boot.

"Please press 0 to speak to a real person...this call maybe recorded so we can make the next one even better..."

That message is from 2 Degrees and you don't even have to wait!

Customer service in this country is bad with a capital S for Shite and the worst part of it is that people like me don't do anything about it. We sit back like sheep and take it well and truly up the bottom.

I recommend if you are getting poor service to bloody do something about it.

You might feel much better, like I do.

You might think that Vodafone would learn from their own history. As the mobile minnow back in the 1990s to Telecom's service, everyone thought they didn't have a chance. With superior service (yes the dreaded "s" word) Vodafone managed to claw the number one place in mobile in New Zealand. Now their feeble attempts at service will have the opposite effect in time and good companies like 2 Degrees are going to be there to take up the slack.

Footnote: On Saturday I received a credit card form in the mail. Nice touch but I called Vodafone Saturday morning to officially say good-buy.

Footnote 2 : I have received an account every month from Vodafone since April and I am no longer a customer - I apparently owe them $14.59 but they wont discuss what it is for so I wont pay it!! I have spent less than $40 with 2 Degrees since switching vs $300 it would have with Vodafone. 20/7/2010


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c Share Investor 2010