Hallenstein Glasson Holdings Ltd [HLG.NZX] makes a third appearance in this series of posts for 2011.
The first inclusion discussed the share price falling due to a profit downgrade in January and included the rider that this fall in share price would go further and to buy on "inevitable weakness." The second post was included for much the same reason but at a lower share price than the first.
This came after a peak in share price back in September 2010 that led me to ask if I should sell.
Since the second post in March the share price rose from $3.63 to finish at $4.17 just last week.
Today the share price has taken a 20c hit to be trading intra-day at $3.95 as this piece comes to press on news of a weak trading update to the market.
Most retail stocks have suffered over the last few months, notably PPL - with the exception of BGR & MHI & WHS - and I expect HLG to fall further on negative sentiment related to the economy as a whole.
I will be taking more interest in this stock myself sub 3 bucks.
It is a great company with its crucial value indicators looking more and more attractive as the share price weakens:
Telecom New Zealand Ltd [TEL.NZX] has been in the news for the past week because the government has announced that they are going to be the company that will roll out the majority of the taxpayer subsidisedFast Fibre Network (FFN) that will apparently provide far greater speeds for our internet services than we currently have.
This means that Telecom NZ must split into two separate companies in order to satisfy the rules and regulations that government have set down for the implementation of the FFN.
This will mean that Chorus, the part of Telecom whose business it is to build and maintain telecommunications infrastructure for themselves and other players and its retail arm, Telecom Retail - the part of the company that most customers of Telecom deal directly with and where they buy their mobile, internet or fixed line products - must be split into two completely separate companies. This means separate listings on the stockmarket for both companies and a duplication of a whole host of management from the floor sweeper middle manager right up to the CEO.
Of course this means cost to separate and will be bourne by TEL shareholders in the first instance and customers through higher prices as a secondary affect of this.
Investors will of course be wondering to themselves, well which company of the two should I invest in and if I am already a TEL shareholder which stock should I ditch, if any?
In my humble and not so humble opinion I would put my money of the Chorus part of the business. It is the part of Telecom that has a huge monopoly through the domination of their telecommunications infrastructure - copper and fibre cable criss-crossing the country - and as I really love monopolies this part of the companies business will do well, especially as they appear to have a unregulated first 10 years where they can set prices and the only arbiter of consumer fairness will be the usually intemperate Commerce Commission.
While Telecom's retail division has a few million customers that the new Chorus will probably look after, competition in the telecoms retail area should eventually keep all important margins down from present levels and that will impact on the profitability of the new separate retail division of Telecom.
The split coming at the end of 2011 will mean investors in Telecom will receive stakes in the two new separate Telecom entities and will probably do well if they bought the companies shares at the right price.
It might be wise though for them to consider selling shares in the retail company and stock up on Chorus shares.
My pick is that Telecom will take this opportunity to ditch the Telecom name altogether, a name wrapped up in so much negative history that their retail business would do better to leave that all behind.
Judging by their recent logo shoosh-up it is bound to be something silly.
The Share Investor Portfolio was down in the forth week of May, the first time in months. The portfolio was down by 1.13% or $3338.86 on the May 20 update . For the first 20 weeks of 2011 the portfolio has increased by 15.01 % or $38507.67 . This weeks drop was due, primarily, to a 4c drop in SKC, a 8c fall in WHS and a 22c plunge in FRE. There were a number of smaller falls in other stocks but if not for a huge rally of 42c for MFT the portfolio would have been down almost double this weeks fall.
The total of unspent dividends and interest in the bank as at 26 May from the 2010 - 2011 earnings years is $25382.95 at close of reporting season for 2010 and at the end of the 2011 1st half reporting year. There are also approx $55000.00 in tax credits earned from the portfolio since it began in late 2002.
