Playboy Needs a New Owner

Playboy magazine has been struggling for almost 20 years, falling sales coupled with the introduction of the internet and all the free porn you can shake Shane Jones stick at mean this once great magazine has become a mere shadow of itself. Its heyday was the 1970s when circulation reached around 7 million. It now sells a paltry 2.5 million.

Like most males I have always had a deep respect for the articles in the magazine but have never actually bought a copy and never intend to do so in the future but as an investor is looks like the company behind the magazine, Playboy Enterprises Inc [PLA.NYSE] has finally reached some kind of fork (or staple if you will) in the road.

The magazine was established in 1953 with Marilyn Munroe on the cover and was an idea that came at the right time at the right place. Playboy Enterprises now has a diverse range of businesses based on the company "lifestyle" and the ubiquitous bunny logo but has been trying to catch its tail for many years in order to try and beat the hardcore opposition to remain relevant as its 60 year anniversary approaches.

It has failed in remain relevant and more than that it continues to bleed money. $US200 million in the last two years alone.

Enter the founder of Playboy Magazine, one 83 year old Hugh Hefner, who has just announced that the piece of the company he does not already own he wants to buy for a 40% premium to its previous market close and take the company private once again.

He sites "protecting the legacy of the brand" as one of the reasons for his bid.

The only problem for Hef though is that his main competition for the last 40 years, Penthouse Magazine, owned by FriendFinder Networks Inc, seems to be formulating a competing bid for Playboy which, if true, would start a bidding war and end up with someone paying too much for an asset that has probably seen the best of its days years ago.

Hef sees value in Playboy though at $5.50 pr share but the owners of Penthouse say his bid undervalues the brand.

Apart from the emotions of Hef being challenged by a rival, Hef seems to have forgotten how much hard currency the company has lost over the years and making a business decision this big based on emotion will always end in tears.

Playboy Magazine doesn't make money and if there is any value in the company it remains in the cache earned by the brand over the last 60 years. The problem with that though is Playboy's prospective new customers are surfing the internet for free content and this brand seems to have lost most of its lustre.

The wise thing for Hefner to do would be sell his current 69% holding in Playboy Enterprises to FriendFinder for a great price and enjoy the rest of his lifelong retirement with a couple of blonds on each arm.

Like that other high flying octogenarian, Warren Buffett, Hef's business interests have limited input, in years, due to age and the future lies in another owners hands where it least at last stands a chance of being turned around so that it can make some money for investors.

I hope you enjoyed the article.


Playboy Enterprises Inc @ Share Investor

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c Share Investor 2010

Long Term View: Nuplex Industries 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.

Nuplex Industries Ltd [NPX.NZ] has been one of the worst performing stocks listed on the NZX in terms of returns to shareholders since its listing in Feb 1967 (we will start at an adjusted $2.50c per share from available 1995 data to make our comparison) $2.95c in net dividends (excluding the period 1967-1994. No data can be easily found for dividends) and 30% more in tax credits (see chart above) a 3:2 share split in 1993 and a 7:1 rights issue in April 2009 gives NPX a slightly more than minus 600% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) over the nearly 17 year listing of NPX (the period between 1967 and 1992 is excluded because no shareprice or dividend details are available so the return will be higher than stated here), an approximate annual net return just over minus 35%.

This is approximately a 300% worse return when compared to 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
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Port Of Tauranga Ltd
Postie Plus Group Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
The Warehouse Group Ltd


Nuplex @ Share Investor

Reason to be cautious on Nuplex forecast
Nuplex rights decision a dilemna for shareholders

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c Share Investor 2010

Jan Cameron ready to move on Postie Plus Group?

Not totally sure what her end game is but Jan Cameron, ex Kathmandu Ltd [KMD.NZ] and retailer with several different brands selling goods to the public, along with nearly 10% of Pumpkin Patch Ltd [PPL.NZ] has just topped up her holding in Postie Plus Group Ltd [PPG.NZ].

On Monday 5 July she bought 600,000 shares to take her holding in PPG to 19.26% or 7,702,537 shares. She previously held 17.76%.

Under the Takeovers Code the owner of 20% or more of shares in a company must make a bid for 51% of that company.



With 32,297,463 shares held by family associated with PPG and various smaller shareholders like myself and larger holders like ACC, Jan would only have to purchase a further 12,697,463 shares to make a play for a 51% holding. Just over $3.8 million.

The market capitalisation of PPG is just $12 million.

What are Jan's intentions though?

Well, one can only do some fancy guesswork on this so lets have a go.

Jan has had a holding in PPG for many years and just two years ago snapped up their distressed manchester brand Arbuckles and used some of the 23 store sites to install her own businesses.

Postie Plus runs three brands. Baby City, Postie and Schoolltex. Baby City being the most successful of the three. Overall though the company hasn't turned a profit for the last 3 years and its recent result, the half year to 31 Jan 2010 is another significant loss. Management have performed poorly over the entire 7 year listing of the company and any redemption from PPG shareholders would surely lay in how much they could get if they sold the company to a better operator.

What I think Jan is doing is buying up and waiting until the company gets in such a state the remaining shareholders will be more than willing to sell.

Jan will have to pay more than the 30c per share she paid on Monday because none of the family interests will want to have a complete fire sale but lets just say that they would probably be open to offers.

The sites that PPG currently operate their brands in would be perfect for her new outdoor goods venture or another of her many retail interests in New Zealand.

Whatever she does do with her PPG holding you can be sure it will fit into her larger retailing empire.

Disc - I own PPG shares in the Share Investor Portfolio



Postie Plus Group @ Share Investor

Long Term View: Postie Plus Group Ltd
I'm Buying: Redux
What is Jan Cameron up to?
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Jan Cameron @ Share Investor

Kathmandu's 2011 Results Under Pressure from Jan Cameron
Kathmandu IPO: Jan Cameron lands a blow to IPO
What is Jan Cameron up to?

Discuss PPG @ Share Investor Forum

Download PPG Company Reports




c Share Investor 2010

Whatever happened to? Muriel Dunn

I used to be a listener to Radio Pacific in the mid 1990s and avidly tuned into little Dougy Sommers Edgar and Muriel Dunn, after him - I was as virginal as a wee white pup with a condom on in those days in terms of financial acumen (I would say I have still much to learn on the subject) and continued to tune in to listen to some of the hard sell from the lovable two. I just wanted to listen to stuff about investing on the wireless and these guys were just about the only thing going.

I never invested in anything they were selling, it all sounded too good to be true and as it turned out it was - most of what they advised clients to invest in no longer exist.

Most of use know the Dodgy Doug quickly divested his stake in the dodgy Money Managers that he ran (although there is some speculation as to remaining financial ties) but whatever happened to the hopeless Muriel Dunn?

Read on dear readers.

My memory of those shows and Muriel were piqued over the last few days when news of directors of Dominion Finance were being charged by the Securities Commission over fraud connection to their business.

Muriel used to advise her Radio listeners and clients, in her breathless excited way to put their money in Dominion because it was "safe" and provided investors with a return above the normal boring term investment. Most of Muriel's callers were trusting retired folk.

Muriel believed in diversified investing though!

Yep, along with Dominion Finance she also advised clients and listeners to put their money into other finance companies as well; Five Star, Bridgecorp, Bluechip and a whole host of other finance companies as well. Of course we know that they no longer exist, they all collapsed in a heap of inter-party lending, quintuple entry bookkeeping and misleading advice to investors.

Muriel Dunn clipped the ticket along the way and her clients were left penniless thanks to her incompetent advice.

Here is Muriel complaining to the Advertising Complaints Authority (ASA) about a comment made by Sommers Edgar re her ticket clipping (ironic I know but read it, it will make you laugh) on his Sunday show:

During the programme Mr Somers Edgar made the following remarks:

“Around New Zealand at the moment there are a lot of financial advisers saying exactly the same thing - take your money out of certain funds and reinvest into something else and obtain another fee for this.

The Financial Advisers industry in New Zealand is in dire straits. One of the best-known people in the industry said to me only last week - “there are so many financial planners in New Zealand who are doing it really tough. They expect two things to happen. A number of financial planners will leave the industry and there would be one, or two or three or more, exposed, stealing from clients, as they are so desperate and in financial difficulties, and the evidence of it is - they say, “move your money around and we will take a fee”.”

Ms Dunn Replied:

"As one of the longest standing financial planning practices in New Zealand and the senior woman certified financial planner, and a regular presenter on Radio Pacific (Monday afternoons after Mr Somers Edgar’s Sunday morning programme), I strongly object to Mr Somers Edgar’s statements re financial planners and the financial planning profession.

I dispute that anyone is entitled to make the statement made by Mr Somers-Edgar even if it was not an advertising/promotional, paid for programme.

As a long standing and well respected Certified Financial Planner, I personally feel defamed by the statement broadcast and I know many other financial planners feel the same.

We are all working hard to educate the public of the merits and additional security that they should benefit from by using members of a world wide well respected body such as the International Association of Financial Planners.

We comply to a strict code of conduct and ethics to maintain standards and protect and educate the public. To have someone broadcast a statement suggesting that we (financial planners) will, before long, be stealing from our clients/investors is completely abhorrent.

Mr Somers-Edgar has been in business and running his one hour broadcasts for a very long time. He is not an inexperienced, or naive youngster, who may inadvertently have uttered a few careless words.

I request that this complaint be vigorously pursued by the Board."

Impeccable traits in a financial adviser and so well defended.

The complaint was surprisingly upheld :

The Board ruled that the hyperbolic and exaggerated nature of the claims made in the Money Managers advertisement would be likely to confuse consumers and play on fear, and accordingly it was also in breach of Basic Principle 3.

Even after having taken into consideration the submission from the Advertiser, Money Managers, the Board was still of the view that the content in the advertisement was in breach of the Advertising Codes.

Doug was right! Muriel was misleading investors and clipping the ticket along the way (he of course was doing the same) but the ASA said that Doug couldn't say what he said because it would "confuse consumers" and "play on their fear".

Muriel is still around advising clients through her Murial Dunn Financial Services business no doubt continuing to be a fearless adviser to her loyal clients. Read the Full ASA Complaint

Avoid at all costs if you want to keep your money.


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c Share Investor 2010