Electoral Finance Act protest Sunday 2.00pm, Mar 9, Auckland

If you don't know already, there is a silent march against the anti democratic Electoral Finance Act to be led by John Boscowan, up Auckland's Queen Street today, March 9 2008.

Meet at 2.00pm outside the Town Hall and the march kicks off at 2.30pm and continues to Britomart.

I was questioning my participation earlier this week but speaking to Winston Peters on Thursday made up my mind.

He asked himself if anyone's free speech had been affected by this Act and answered himself in the negative-a typical Winston "conversation".

Id like to remind readers that 21 year old Andrew Moore's website was shut down by the Electoral Commission because of it and even the Labour party were hoisted by their own petard this week when a DVD they produced and released recently breached the Act.

Please get out there and show you care about democracy. My wife and I will be there and are willing to be branded "obscure" and "extreme" by the great dictator on Monday morning.

I was excited on my first march in November but now I'm just pissed off.

Pictures and story to follow here latter.


Related Political Animal reading

Electoral Finance Act March Mar 9, 2008
Electoral Finance Bill Vote
NZ losses democratic freedom
Mike Moore turns the knife
List of MPs who voted for Act
Cartoon and comment
Auckland Protest against EFB
The purpose of the Bill is clear


C Political Animal 2008

Michael Cullen speaks with forked tongue

c Emmerson 2008



Some days it is hard to take Dr Cullen seriously. Today is one of those days.

While commenting about his tax cuts this year, engineered to buy the 2008 general election he let a sly one past.

I had a loud chortle to myself when listening to a Newstalk ZB audio clip live from the exciting port metropolis of Napier, that the main reason for New Zealand's record high interest rates was the current "credit crunch" that the world was facing and we would also be facing higher food and energy prices.

It slipped his mind(who's slippery now Mike), perhaps after a chardonnay or three, that the reasons for high interest rates and other rising prices was the fault of himself only.

Let me dispel the myths Dr Cullen!

Record high government spending by Labour on wasteful social engineering schemes has pushed up our official interest rates to 8.5% up from half that before Labour began its sentence on its citizens back in 1999.

A plethora of extra taxes including : employment, ACC, fiscal drag, electricity and gas taxes has led to higher inflation and therefore increased food prices.

What is really scary though is that Cullen is set to add even more taxes onto our already burdened and beaten economy in the form of a whole host of nonsense global warming taxes.

Up to 20c a litre of petrol will be added by local and state government this year and carbon credit trading will add additional cost to everything we buy, be it a service or product. In effect it is like another GST, except we don't know how much that extra cost will be.

Allan Bollard mentioned the added inflationary costs of these GW taxes but our mainstream media seemed to have collective ignorance over these basic economics.

Cullen has strangled the economy so hard with his overburdened taxes and spending, last month taxes actually dropped by over $700 million.

Don't be fooled, Dr Cullen is a bright man, regardless of his mis management of the economy over the last 9 years.

He has a philosophically socialist agenda though, with all its attendant consequences(and expenses) and he is clearly sticking to it come hell or high water.

More than ever now we need tax cuts, they stimulate economies, especially during dark times like these.

Dr Cullen's track record is poor, his handling of the economy during economic conditions the best we have had in generations borders on the slippery. He has crowed for the last 9 years about his results, given these conditions, which he had no influence on, but now abdicates that responsibility now that the brown stuff has hit the you know what.

Hang on, if you are a socialist you can take the plaudits for something you didn't do and abdicate responsibility for your failures, all at the same time keeping a straight face.

You cant have it both ways Dr Cullen.


Related Political Animal reading

Cullen's history on tax cuts comes back to haunt him
Global Warning: Tax iceberg ahead
Carbon credit trading puts global markets at extreme risk
Global Warming: Power to the people
Wednesday Political Soup: Edition 3 2nd story down - Let them eat cake



c Political Animal 2008

Restaurant Brand's want their sales back

In the absence of any decent analysis of Restaurant Brands Ltd [RBD.NZX] sales figures by our lazy mainstream financial journos, which were released yesterday, I will have another go for this last quarter.



Changing the image at KFC has only added cost to the
business and seriously eroded margins.


RBD management seem to trumpet their KFC brand so much that is deserves yet another serving of criticism by my good self:

For the full year, total KFC sales reached a new high of $199.1million, an increase of 9.0% over the prior year and 7.7% up on a same store basis. This same store sales performance is up on the 7.1% same store growth achieved in the previous year and is the fourth consecutive year of solid same store sales growth for the brand" 2008 sales release

Lets compare current yearly KFC sales figures with the "new high" of $177 million, as stated in the 2002 annual report. In reality if you included inflation(which prudent businesses must) in the $199.1 million "new high", then current sales are still approximately $4.5 million short of the 2002 figure. I calculated inflation over the last 5 years at conservatively 3% annually.

So the trumpeting by management yesterday of KFC's performance hides the truth that less chicken is being sold at a higher revenues for the business and now lower margins because of higher business costs.

In fact, things are so bad for KFC they would actually have to increase sales to approximately $235 million dollars annually, just to show 3% annual sales growth since that last "record" was reached in 2002.

Deception seems to have reached an art form amongst RBD management.




Pizza Hut seems a lost cause in New Zealand, sales are flagging with competitors taking their market share and business costs spiraling.

Once again Pizza Hut delivered a cold and soggy mess(just like their pizzas)in the form of annual sales. $71.4 million in sales in the last year was "disappointing" to management. That has to be the understatement of the year. That sales figure was down more than 10% from last year on a 97 store count.

Meanwhile Pizza Huts competition in this market, both Hell Pizza, a division of Burger King NZ/OZ and dominant Dominoes are growing sales strongly. With even more competition due from them over the coming year.

If we do the 2002 sales comparison, Pizza hut had just over $69 million(in 2002 dollars) on a 86 store count and now sales are just 2 million more with 11 more stores in the chain. Can you see a pattern forming here?


Starbucks isn't the star RBD management
say it is. With real growth of only 3% for
the last 5 years, the brand is clearly suffering.


Surely Starbucks must be the star that management say it is?

Well, unsurprisingly, no.

With $33 million in sales this last year and a 5.6% increase on the previous year surely shareholders should be fit to leap over a KFC store in single bound on the news?

Lets time warp back to 2002 again. With annual sales of $18 million, on a store count of 29, one might assume that the $33 million latest annual sales looks excellent but you would be slightly wrong again colonel.

With same store sales of $620,689.00 per store back in 2002 vs $733,333.00 for the latest annual period and factoring in the same conservative 3% annual inflation that I applied to the KFC scenario, that gives a figure in 2008 dollars of $713,792.00 per same store sales. The difference, being a $19,541.00 per store increase after factoring in 5 years of inflation.

This is a growth rate in same store sales for Starbucks of less than 3%, over the whole 5 years.
Again, with increased business costs factored in, margins are as thin as Pizza Hut toppings and with more stores since 2002, costs are manifold times bigger. So Starbuck's margins, like RBD's other brands, are now less than they were 5 years ago.

I have previously canvased the poor service and bad management at RBD and that clearly still applies, and I'm not about to repeat myself again but things really need to change if the company is going to survive.

The sales might be increasing at RBD's brands but that doesn't equate into more food being sold, better margins and therefore increased profit.

Shareholders must look to the long term and decide whether a company that is earning considerably less than it did 10 years ago, and trumpets current sales figures that lack intellectual and financial rigour, is capable of achieving different results over the next ten years, in whatever guise it takes.


Restaurant Brands @ Share Investor


Most Outstanding Stock of 2010: Restaurant Brands Ltd
Restaurant Brands Ltd: KFC has finally cracked it
Restaurant Brands: KFC Sales Figures Explained - Part 2
Finger Lick'n Good Management
Chart of the Week: Restaurant Brands Ltd
Long Term View: Restaurant Brands Ltd
Stock of Week: Restaurant Brands Ltd
Restaurant Brands: Buy or Sell ?
Pizza Hut sell-off provide opportunities all-round
Danny Diab & Restaurant Brands
2008-2009 KFC sales figures mislead investors
KFC Finally Flying
Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

Discuss RBD @ Share Investor Forum



c Share Investor 2008

Warren Buffett is number one with a bullet

I have been obsessed with Warren Buffett and Auckland Airport this last week and it appears readers of this blog have been as well. Record numbers have visited.

Welcome to my many new readers and I hope you stay awhile.

In the wake of Buffett's letter being released last Friday, the biggest financial subject googled has been "Warren Buffett's letter to stockholders".


Warren Buffett makes it to the number one spot as the world's
wealthiest man and the most googled financial subject, all in the
same week.


The momentum continues as the Forbes Rich List came out today and news that Buffett hit the top of the list for the first time.

The indication for me about the frenzy over what the Sage of Omaha has to say during the last week is that people are looking to him for reassurance over where the economy and markets may be heading over the short to medium term.

Answer?

I'm not sure even he knows but the uncertainty is certainly taking its toll on investors.

In the wake of all this interest, I have started a new website Everything Warren Buffett, where you can check out his portfolio, look at all his letters, view video and audio and get some great investment tips from the great man.

NZ Herald-The Battle for the Airport

There has also been a great deal of interest from overseas about the Auckland Airport Saga. Brokers and those in the financial industry are watching what is happening closely, and I'm sure, given the recent government interventions, they are not liking what they are reading.

It seems that particular story isn't over yet, with murmurs of legal action against the Labour government.

Related Share Investor reading

Buffett dines out on a good result: So can you
Warren Buffett's 2008 letter to Berkshire Hathaway highly anticipated - Includes Buffett letter in PDF
Warren Buffett 2008 Letter in Blog Format
Global market meltdown: What is Warren Buffett doing?
The Intelligent Investor: Book review

Subscribe to Everything Warren Buffett in a reader

c Share Investor 2008

Electoral Finance Act Protest: Auckland, 9 March, 2.00 pm, 2008

Email sent to Political Animal 4.00pm today

Silent Protest March against the Electoral Finance Act - This Sunday 9 March, meet outside the Auckland Town Hall from 2.00pm.

To my friends, family, business colleagues and supporters

In a democracy one of our most precious rights should be our right to speak out, criticize and campaign against the government – any government.

In passing the Electoral Finance Act parliament severely restricted our freedom to do so. This sets a dangerous precedent. The Human Rights Commissioner spoke out on behalf of all New Zealanders and called on the Government to withdraw the bill and start again. She was ignored.

We now have a law restricting what we can spend campaigning against the government that is less than half of what the Human Rights Commission and the Electoral Commission thought was fair.

What is worse, this new law will apply for over three times longer than the Human Rights Commissioner thought was reasonable.

For many decades New Zealanders have gone to war to protect our precious freedoms. We should not give them up lightly.

You now have a choice, you can simply accept that your freedoms have been restricted or you can stand up and protest and let the parliamentarians know that this is not on.

I am not prepared to sit back and do nothing. I am organising a SILENT protest march against the Electoral Finance Act this Sunday 9 March and I invite you to join me.

I would be very grateful if you could help me promote this march by bringing it to the attention of your family, friends and colleagues. I have attached a copy of the ad that appeared in The New Zealand Herald yesterday.

If we don’t stand up for our rights now we do not know what freedoms we may lose next.

Regards

John Boscawen, Trustee, Freedom of Speech Trust.

Box 42-267, Orakei, Auckland.

john@boscawen.co.nz


Related Political Animal Reading

Historical day as New Zealand loses democratic freedom
Auckland EFB protest lures 5000
Day of protest: Auckland NZ, Nov 2007
Electoral Finance Bill: The Purpose is clear
Cartoon & Comment, Emmerson: Winston Churchill Clark
List of MP's who voted for EFB
Extending middle finger in 2008

Links c Political Animal 2008

Bruce Sheppard: Another Asset Theft

Bruce Sheppard is a non-politically correct agent
provocateur and founder of the New Zealand
Shareholders' Association. An accountant by
profession, he is passionate about New Zealand
but has no hesitation in exposing its shortcomings.
He is regularly sighted tackling Auckland's traffic
armed only with a bicycle.



Bruce Sheppard in Stirring the Pot from Stuff.co.nz| 1:26 pm 4 March 2008

This government thinks it is OK to interfere in the private property rights of its citizens, and dresses this up as the protection of the national interest. Last year Telecom got dealt to, this year it is Auckland Airport, next year who will it be?

While I had little empathy with the Canadian bid and was not going to vote in favour of it with my shares, I will now support a yes vote and an acceptance. Then I will let the Government tell 10’s of thousands of New Zealanders that they can’t have their money.

As far as the NZ control/ ownership issue is concerned the horse bolted years ago. Auckland International Airport is already over 40 per cent foreign owned. Who cares if it is a selection of hedge funds or a Canadian pension fund if it is just about ownership? Frankly a pension fund is better as at least they will take a long-term view , hedge funds just look for the next quick profit fix.

If it is control, then not much changes. The Canadians have guaranteed that the board will have enough independent directors to remain an independently governed company still listed in NZ.

What is more important here is the crown interference. What this does is undermine the effectiveness of our capital markets and it also increases the risk of investing in NZ if you are a foreigner. Obviously the repricing of risk internationally is having an effect on our sharemarket and this sort of short sighted nonsense from our politicians will simply make matters worse.

If you want to fix foreign ownership of NZ Inc, you have to encourage Kiwis to own NZ instead. To do this our people have to stop spending $1.14 for every dollar they earn. It is not rocket science, the 14c is funded with debt or asset sales. Now why would a New Zealander who is saving, invest in NZ when the Government appropriates economic advantages on one ill-conceived whim or another? Much easier to invest offshore out of Michael Cullen’s sticky, thieving hands.

Related Share Investor reading

Cullen's move on Airport has far reaching effects
Fran O'Sullivan: Cullen's shock move hinders Airport bid
Cullen's move on AIA tax plan Anti-Business
NZ Herald: Airport Deal not so sweet after tax break blocked
NZX Press Release: AIA directors recommend shareholders sell
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Links c Share Investor 2008

Cullen's move on Auckland Airport has far reaching effects

A cynical move by Michael Cullen to gain votes in the 2008 Election by
blocking an Auckland Airport sale will have far reaching effects.

The Battle for the Airport-NZ Herald

Latest Airport News:

• Key accused of being 'slippery' over Auckland Airport
• Cullen's shock move hinders airport bid
• Canadian's push on regardless of Cullen move
  

Michael Cullen's move today to put a stop to a partial sale of Auckland International Airport(AIA) to the Canadian Pension Plan Investment Board(CPPIB) has more far reaching effects than putting the brakes on this deal.

Below is the piece of legislation that has been changed, in relation to the airport merger, and it is sufficiently vague enough to cause major uncertainty, for investors, domestic and international, and business in New Zealand.

"Whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land."

Who decides what is "strategically important" and on what basis do they apply the new legislation?

Is the Warehouse(WHS) a strategic asset?

Business and investors need certainty, you only have to look at current market conditions to figure that out, and the new legislation leaves everyone guessing.

This uncertainty, apart from the retrospective legislation passed today, and mooted tax changes, means that foreign investors will be thinking twice before looking at putting their capital in a country that treats foreign investors like Putin's communist Russia treated foreign oil companies over the last few years.

It also means that private property rights don't mean anything in this country anymore(just like in Putin's Russia) and with the stroke of a retrospective pen your property isn't really yours anymore.

I own Auckland Airport shares, they belong to me and nobody else and in a free country I should be able to do what the hell I want to do with them.

Contrary to Labour party spin the Airport isn't a state asset, it is privately owned, by many individual Kiwis and and some bigger institutions and the playing of the "we cant sell such a "strategic asset to a foreign buyer" card makes no sense because it is already owned by 40% of off shore investors.

It seems to me that Labour playing this card in election year will be appealing to the paranoia of those people who think the National party are going to sell "strategic assets" and Labour will try to get votes from it.

Cullen mentioned that other countries have similar laws to prevent strategic assets from "going overseas"-although you would have to have pretty big container to fit the Airport into it and ship it off- they may well do or not but their laws were in in place before any important deals were being negotiated and to change conditions of a deal as it is being done is like playing the shell game with a blindfold while on crack.

The immediate affects of Cullen's finger in your pie has been enormous. Billions of dollars have been lost from the capital value of Auckland Airport and therefore shareholder's pockets. The NZX's other companies plunged in value today because of the uncertainty that Cullen's pen stroke brought to the market.

Other companies who may be deemed "strategic" by Cullen and his communist misfits will be wringing their hands in the hope they wont be next. The listed power companies, ports and others will clearly be affected.

The interest still in the wings by Australia's Origin Energy for its sister company Contact Energy(CEN) would seriously be in doubt under the new criteria. Similarly other foreign companies will consider our country's barriers too hard to negotiate. Takeovers and mergers, an essential part of successful capitalism, will prove too cumbersome to consider.

As I have canvassed before in previous articles, Cullen's move now appears to be arrogant in the extreme. His party and lapdogs in crime, Winston "Baubles" Peter's NZ First, made their feelings clear when takeover talks were mooted with Dubai Aerospace Enterprise almost 9 months ago and they were staunchly against any sale.

To move now is unlawful(it was but they will change that law) immoral and is a clumsy attempt at gaining votes from voters who think capitalism is a dangerous thing.

The cost to CPPIB and Auckland Airport shareholders has been many millions-on top of the couple of billion in lost capital for Auckland Airport shareholders.

I have been a very impassioned advocate for not selling my shares over the last 9 months, because I could see the investment as a good long term one.

I was tempted, when news first broke of a sale all those months ago, to sell at the market price that day of around NZ$3.65 but decided not to. Now I think those people who sold were wise beyond any education one could buy.

Given the interference over the last few weeks I am now going to give two ticks for the deal, it may send a message to Labour what the real owners of this asset want to do with their property but I doubt whether Cullen will listen or care.

I know this deal isn't going to happen and have said so for many months now but the interference by politicians in private property issues has me questioning my holding in such a company mired in political dead weight and sticky fingers.

I sold my Port of Tauranga shares a few years back because I couldn't contend with local Auckland politicians and Winston Peters(again) interfering in merger proposals with Ports of Auckland. That deal was ended after months of expense for Port of Tauranga.

Business needs certainty in New Zealand, especially now as the proverbial is hitting the fan hard.

That means overseas investment is needed. Today's approach by by the extreme left wing business haters in Labour and NZ First has been another nail in the coffin for NZ INC because that much needed capital is going to dry up.

The move today is reminiscent of a much troubled National Government, led by Robert Muldoon, who in its final months, regulated and nationalised the life out of our economy and then went on to lose an election in 1984 in spectacular fashion.

Ironically it was Labour who then swept into power and with the wise direction from Roger Douglas transformed the economy into a far more sustainable one.

Sadly Douglas was stopped before he was finished, by the very same people who have foisted the current heavy burden on our economy today.

Only fools don't learn from history and surely Cullen, a Dr of History himself(not in business or economics) shouldn't be as foolish as he has been over the last few weeks.

We surely cant afford a repeat.

Related Share Investor reading

Fran O'Sullivan: Cullen's shock move hinders Airport bid
Cullen's move on AIA tax plan Anti-Business
NZ Herald: Airport Deal not so sweet after tax break blocked
NZX Press Release: AIA directors recommend shareholders sell
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

c Share Investor & Political Animal 2008

Cullen's move on Auckland Airport has far reaching effects

A cynical move by Michael Cullen to gain votes in the 2008 Election by
blocking an Auckland Airport sale will have far reaching effects.

The Battle for the Airport-NZ Herald

Latest Airport News:

• Key accused of being 'slippery' over Auckland Airport
• Cullen's shock move hinders airport bid
• Canadian's push on regardless of Cullen move
  

Michael Cullen's move today to put a stop to a partial sale of Auckland International Airport(AIA) to the Canadian Pension Plan Investment Board(CPPIB) has more far reaching effects than putting the brakes on this deal.

Below is the piece of legislation that has been changed, in relation to the airport merger, and it is sufficiently vague enough to cause major uncertainty, for investors, domestic and international, and business in New Zealand.

"Whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land."

Who decides what is "strategically important" and on what basis do they apply the new legislation?

Is the Warehouse(WHS) a strategic asset?

Business and investors need certainty, you only have to look at current market conditions to figure that out, and the new legislation leaves everyone guessing.

This uncertainty, apart from the retrospective legislation passed today, and mooted tax changes, means that foreign investors will be thinking twice before looking at putting their capital in a country that treats foreign investors like Putin's communist Russia treated foreign oil companies over the last few years.

It also means that private property rights don't mean anything in this country anymore(just like in Putin's Russia) and with the stroke of a retrospective pen your property isn't really yours anymore.

I own Auckland Airport shares, they belong to me and nobody else and in a free country I should be able to do what the hell I want to do with them.

Contrary to Labour party spin the Airport isn't a state asset, it is privately owned, by many individual Kiwis and and some bigger institutions and the playing of the "we cant sell such a "strategic asset to a foreign buyer" card makes no sense because it is already owned by 40% of off shore investors.

It seems to me that Labour playing this card in election year will be appealing to the paranoia of those people who think the National party are going to sell "strategic assets" and Labour will try to get votes from it.

Cullen mentioned that other countries have similar laws to prevent strategic assets from "going overseas"-although you would have to have pretty big container to fit the Airport into it and ship it off- they may well do or not but their laws were in in place before any important deals were being negotiated and to change conditions of a deal as it is being done is like playing the shell game with a blindfold while on crack.

The immediate affects of Cullen's finger in your pie has been enormous. Billions of dollars have been lost from the capital value of Auckland Airport and therefore shareholder's pockets. The NZX's other companies plunged in value today because of the uncertainty that Cullen's pen stroke brought to the market.

Other companies who may be deemed "strategic" by Cullen and his communist misfits will be wringing their hands in the hope they wont be next. The listed power companies, ports and others will clearly be affected.

The interest still in the wings by Australia's Origin Energy for its sister company Contact Energy(CEN) would seriously be in doubt under the new criteria. Similarly other foreign companies will consider our country's barriers too hard to negotiate. Takeovers and mergers, an essential part of successful capitalism, will prove too cumbersome to consider.

As I have canvassed before in previous articles, Cullen's move now appears to be arrogant in the extreme. His party and lapdogs in crime, Winston "Baubles" Peter's NZ First, made their feelings clear when takeover talks were mooted with Dubai Aerospace Enterprise almost 9 months ago and they were staunchly against any sale.

To move now is unlawful(it was but they will change that law) immoral and is a clumsy attempt at gaining votes from voters who think capitalism is a dangerous thing.

The cost to CPPIB and Auckland Airport shareholders has been many millions-on top of the couple of billion in lost capital for Auckland Airport shareholders.

I have been a very impassioned advocate for not selling my shares over the last 9 months, because I could see the investment as a good long term one.

I was tempted, when news first broke of a sale all those months ago, to sell at the market price that day of around NZ$3.65 but decided not to. Now I think those people who sold were wise beyond any education one could buy.

Given the interference over the last few weeks I am now going to give two ticks for the deal, it may send a message to Labour what the real owners of this asset want to do with their property but I doubt whether Cullen will listen or care.

I know this deal isn't going to happen and have said so for many months now but the interference by politicians in private property issues has me questioning my holding in such a company mired in political dead weight and sticky fingers.

I sold my Port of Tauranga shares a few years back because I couldn't contend with local Auckland politicians and Winston Peters(again) interfering in merger proposals with Ports of Auckland. That deal was ended after months of expense for Port of Tauranga.

Business needs certainty in New Zealand, especially now as the proverbial is hitting the fan hard.

That means overseas investment is needed. Today's approach by by the extreme left wing business haters in Labour and NZ First has been another nail in the coffin for NZ INC because that much needed capital is going to dry up.

The move today is reminiscent of a much troubled National Government, led by Robert Muldoon, who in its final months, regulated and nationalised the life out of our economy and then went on to lose an election in 1984 in spectacular fashion.

Ironically it was Labour who then swept into power and with the wise direction from Roger Douglas transformed the economy into a far more sustainable one.

Sadly Douglas was stopped before he was finished, by the very same people who have foisted the current heavy burden on our economy today.

Only fools don't learn from history and surely Cullen, a Dr of History himself(not in business or economics) shouldn't be as foolish as he has been over the last few weeks.

We surely cant afford a repeat.

Related Share Investor reading

Fran O'Sullivan: Cullen's shock move hinders Airport bid
Cullen's move on AIA tax plan Anti-Business
NZ Herald: Airport Deal not so sweet after tax break blocked
NZX Press Release: AIA directors recommend shareholders sell
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Share Investor 2008

Fran O' Sullivan: Cullen's shock move hinders airport bid

5:00AM Tuesday March 04, 2008
By Fran O'Sullivan

Finance Minister Michael Cullen

*Commentary from Share Investor to come-Why I'm going to sell.

NZ Herald-The Battle for the Airport

The Government has urgently toughened New Zealand's overseas investment rules, putting a new hurdle in the way of the controversial Canadian pension fund's bid for a 40 per cent stake in Auckland Airport.

The unexpected move comes just one week after the Government announced it would legislate against a multimillion-dollar tax break that the Canadian Pension Plan Investment Board planned to use to extract greater returns from the airport.

Finance Minister Michael Cullen said greater protection for New Zealand's major strategic assets will be delivered under an order-in-council requiring Cabinet ministers to take into account New Zealand control factors when considering overseas investment applications affecting a very narrow range of strategically important assets.

Dr Cullen said yesterday's changes had been made in response to the uncertainty and debate that had emerged surrounding the Canadian offer to Auckland Airport shareholders.

"There has been a high degree of public debate about handing over control of New Zealand's main gateway to the world to foreign interests.

"The Canadian Pension Plan bid was always going to require consideration under the Overseas Investment Act and there has been speculation that ministers would use existing conditions under the act to reject the offer. The Government's move today is to be clear about the fact that New Zealand control factors will be taken into account as part of the national interest tests to be applied under the act."

The Auckland Airport board has been strongly opposed to the Canadian bid, taking the view the strategic asset should stay under New Zealand control. Chairman Tony Frankham has personally briefed Prime Minister Helen Clark on critical board decisions ahead of shareholders.

The Canadian fund has to achieve acceptances from 40 per cent of shareholders for its offer of $3.655 a share by the March 13 closing date.

Fifty per cent of shareholders who take part in a separate vote must give their approval for the bid to proceed.

The Overseas Investment Office must then approve the Canadians' application by April 30, or it will lapse.

The Government's unexpected move yesterday came as a shock to the Canadian fund's lawyers last night.

Dr Cullen said the change would allow greater protection for New Zealand's strategic assets and would bring the country into line with the likes of Australia, which restricts the ownership of airports.

An order-in-council was passed to insert a new clause in the regulations requiring ministers to consider "whether the overseas investment will, or is likely to, maintain New Zealand control of strategically important infrastructure on sensitive land".

Dr Cullen emphasised the ministers considering the bid - Associate Finance Minister Clayton Cosgrove and Land Information Minister David Parker - had not played any part in discussions over the new regulation.

He also said nothing about an acceptance of any Overseas Investment application.

"New Zealand already has foreign ownership restrictions on Telecom and Air New Zealand. This process has moved quickly to provide maximum certainty to markets regarding the Government's intentions."

EXTRA HURDLE
The Overseas Investment Office must now consider:

"Whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land."

Related Share Investor reading

Cullen's move on AIA tax plan Anti-Business
NZ Herald: Airport Deal not so sweet after tax break blocked
NZX Press Release: AIA directors recommend shareholders sell
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Share Investor 2008

Monday Gossip: Carmel Fisher lands a big one

In the wake of the very successful Fisher Funds(MLN) Investment management company's well telegraphed losses from holdings in credit company, Credit Corp and an investment in the crumbling ABC learning centres and consequent share price drops for the company's investment vehicles. Carmel and Hugh Fisher have splashed out on this NZ$8 million plus cliff top house in an exclusive street in Takapuna, so it ain't all that bad.

Investors in Fisher Funds had done well up until recently but credit crunches and stifled lending has had a big impact on Fishers growth funds especially.

Pumpkin Patch Ltd(PPL) in which Fisher has a sizable stake in, is worth way less than half it was just several months ago, similarly Rakon(RAK), the chip manufacturer, and many of the company's holdings have a horrible story to tell.

In what could be a sign of the pear shaped nature of the investment business at the moment chief investment officer Warren Couillault left the company last week and quit his shareholding at the same time.

The final announcement of his departure was made after weeks of speculation as to why he was leaving and came after were told by Fisher management not to accept deals on Fisher Fund's behalf.

Now I don't want to poke the boney finger just for the hell of it but Couillault should take some of the blame for getting into some of the risky investments that he did.

"The currency is pretty hard to tread water against,'' Couillault said about results from Rakon a few weeks back. Investors have been aware of this for some time but Fisher's ploughed more money into the stock as it got "cheaper".

At head office though, just around the corner from their new house, management are playing a blame game of their own. Blaming everyone else but themselves for the poor performance from their investment picks. Pointing the finger at the currency and "market conditions" for their investment woes.

Now I previously picked this company as one of the best in the business, in terms of results by comparison to other fund managers, and the professional way the company was run. Laying the blame at anyone but yourself is a recipe for long term disaster when it comes to business and investing.

We are all subject to the current "market conditions" but Fisher Funds and their managers were instructed to invest allot of clients funds in "high growth" and smaller cap companies. Having said that, things will work themselves out in the long run but management need to take the short term flak.

These companies are riskier even in good times but the economic slowdown we are facing makes investing in them a far bigger risk. With that sort of strategy when the shite does hit the fan one can only blame oneself for making that choice.

Bad managers blame everyone but themselves, good managers take the rap and move on.

Carmel should well remember that when she looks out at Rangitoto tonight.


Share Investor Friday Free for all: Edition 8 - Scroll down to end for related story






c Share Investor 2008

Herald Poll and Political Animal commentary

c Stan Blanch 2008



While in her own mind and those of her Labour party colleagues, Helen Clark is still the preferred Prime Minister , the all important voters are thinking something else entirely.

This morning on Newstalk ZB Aunt Helen blamed "volatility" in the polls, when talking about the loony Greens support wavering wildly since the Heralds last poll and by implication the idea was that the poll was not to be trusted. She had another go at the paper for its poll accuracy.

This and the polls of the last 10 weeks cannot be ignored by the former high flying minister.

A definite trend has emerged and the outcome looks like a hiding for the Labour party not seen in generations.

Voters could be forgiven for forgetting about party allegiance's and voting for a winning party, National, least they waste their vote on the big loser.

Hitch your train to the wagon Abner, cause its on a non stop trip to Wellington to take out the trash.


Key Joins his party at No 1 position

5:00AM Monday March 03, 2008
By Audrey Young, NZ Herald

John Key (right) has overtaken Helen Clark as New Zealand's preferred Prime Minister.

National leader John Key has overtaken Prime Minister Helen Clark in popularity in the latest Herald-DigiPoll survey, and his party has extended its lead over Labour to 18 points.

It is the first time since May last year that Mr Key has been ahead of Helen Clark as preferred prime minister, although his lead is only two points.

National has been ahead of Labour since Mr Key became National leader in December 2006 but apart from a surge in his popularity in May because of his role in the anti-smacking-bill compromise, Helen Clark has convincingly led the preferred prime minister polling. That has reinforced the view that despite poor party polling, she is Labour's strongest asset.

But in the past month, Mr Key and the National Party have both gone up 7 points in the survey.

Mr Key is preferred by 46.3 per cent of decided voters and Helen Clark by 44.3 per cent in the poll, conducted between February 11 and 28.

In January, Helen Clark was ahead of Mr Key by 10.5 points.

New Zealand First leader Winston Peters polled 3.3 per cent. Trade Minister Phil Goff, often tipped as the next Labour leader, scored no support as preferred prime minister.

The gap between the two main parties is so wide and coalition partners so limited for Labour - the Greens are below 5 per cent - that National could easily govern alone if the poll's figures translated to votes.

National is on 54.5 per cent (up 7 points), 18 points ahead of Labour on 36.5 per cent (down 2.2).

In the January survey, the gap between the parties was only 8.8 points.

Gender bias between the two leaders persists - men disproportionately favour Mr Key and women disproportionately support Helen Clark as prime minister.

The poll shows that voters aged over 60 have a strong bias towards National and New Zealand First.

It also shows that New Zealand First supporters have a strong preference for a coalition with National over Labour (90 per cent v 9.1 per cent) and that Maori Party supporters are not overwhelmingly disposed to a Labour deal - 57.1 per cent of Maori Party supporters would favour a deal with Labour, but 42.9 per cent would favour a deal with National.

The poll was conducted after an intense political start to the year in which both leaders made "state of the
nation" speeches and announced policies on youth crime, education and training.

Polling began after both leaders visited Waitangi, where Mr Key's meeting with Tame Iti received top billing, as did Helen Clark's aversion to Te Tii Marae.

Helen Clark hinted at media bias, saying last night through a spokesman: "Obviously the Leader of the Opposition has had a lot of publicity since the beginning of the year." She believed Labour polling was holding up and was reasonably close to the 1999 result - 38.74 per cent - when Labour took office.

"The important issue now is who has the best plan for the future," she said.

Mr Key did not believe he'd had more publicity than Helen Clark at the start of the year "and in fact she got enormous coverage from the [Sir Edmund] Hillary funeral ... not that that was political."

He believed they both received extensive, though contrasting, coverage at Waitangi.

He said he never thought his hongi with Tame Iti would damage him in the eyes of the voting public.

"I thought the mood of the nation has moved on and they started looking at Helen Clark fighting the battle that has been and gone and I think they responded positively to me wanting to engage and make a day of national celebration rather than harbouring some sort of historic dispute."

Support for the Greens is showing some volatility, falling to 4.4 per cent from 9.1 in the previous poll and 3.5 in the one before that.

New Zealand First is down 0.7 points on 2.1 per cent.

Falling below the 5 per cent threshold means neither party would win seats in Parliament unless they won an electorate.

Mr Peters has not yet confirmed that he will try to regain his former Tauranga seat, won last election by National's Bob Clarkson.

The Maori Party polled 1.5 per cent (up 0.5), United Future 0.4 (up 0.4), Act 0.4 (down 0.3) and the Progressives were unchanged on zero.

Tax cuts remain the issue most likely to influence votes, 20.7 per cent of those polled listing it top.

* The poll was of 734 respondents, and results presented are from decided voters only. The margin of error is 3.6 per cent.

Related Political Animal reading

Helen Shoots herself in both feet
Colmar Brunton Poll and comment

c Political Animal 2008

Buffett dines out on a good result: You can too!

The enduring brand "Coca Cola" is one of the companies that
has made Warren Buffett's investment portfolio such a rip
roaring success.


*Get the latest Warren Buffett letter to shareholders here- Direct PDF 464 KB
*In blog format

*letters going back to 1977 also available here


Let me pick out some of my favourite parts from warren Buffett's latest letter to Berkshire Hathaway(BRK-A) shareholders. Gems of investment gold for readers to take on board:


"Insurance float – money we temporarily hold in our insurance operations that does not belong to
us – funds $59 billion of our investments. This float is “free” as long as insurance underwriting breaks even, meaning that the premiums we receive equal the losses and expenses we incur. Of course, insurance underwriting is volatile, swinging erratically between profits and losses. Over our entire history, however, we’ve been profitable, and I expect we will average break even results or better in the future. If we do that, our investments can be viewed as an unencumbered source of value for Berkshire shareholders".

That 59 billion that Berkshire Hathaway has isn't profit or retained earnings it is cash flow that has come in directly through the company's many insurance business.

That shows the importance in business that cash flow has and what you can do with it. In Buffett's case he has spun-off proceeds from the big money earner to use to buy other businesses. This is something I do with my share portfolio. The big dividend payer(around 15% net annual div) Sky City Entertainment(SKC) I have used consistently to buy share holdings in other companies I like, the NZ$20000.00 I receive in annual dividends from SKC and my other portfolio holdings have helped build my holdings consistently.

Nowhere as big as the Big Buffett Boy's portfolio but who knows, I could get there in the end.

Buffett and his business partner Charlie Munger have strict criteria when picking businesses to buy:


'Charlie and I look for companies that have a) a business we understand; b) favorable long-term
economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases.

It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.
A truly great business must have an enduring “moat” that protects excellent returns on invested
capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns.

Therefore a formidable barrier such as a company’s being the low cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies
whose moats proved illusory and were soon crossed".

I simply love the idea of what Buffett calls a "moat" business and the importance he places on that moat being retained as long as possible so as to achieve spectacular returns.

It is hard to pick a moat business in New Zealand but one that I think fits his criteria somewhat is Goodman Fielder(GFF), the Australasian food giant, that I have a small holding in. While not as moat worthy as Buffett's large shareholding in Coca Cola(KO) or Gillette, GFF is more like Buffett's shareholding in the company, Kraft Foods(KFT).

Plenty of brand strength, easily understood companies and steady, if not solid cash flows.

People have to eat!

While Buffett commented on the sad state of Americas trade imbalance with the rest of the world, especially China, pointing the finger at overspending US citizens on credit, he also looked for the long-term in his country's economy:


"At Berkshire, we will attempt to further increase our stream of direct and indirect foreign earnings. Even if we are successful, however, our assets and earnings will always be concentrated in the U.S.

Despite our country’s many imperfections and unrelenting problems of one sort or another, America’s rule of law, market-responsive(capitalistic) economic system, and belief in meritocracy are almost certain to produce ever growing prosperity for its citizens".

Very true, but longer term China is going to finish first, if it doesn't return to that other "ism", communism.

The United States must turn its hand at being a much larger exporter, its goods are in high demand overseas and its lower dollar makes China a very big opportunity for them indeed. Their protectionism when it comes to trade must be lowered dramatically.

Now while Buffett's politics are more to the left of centre and mine are more truly capitalist, I would give Buffett more benefit to himself for his success in life rather than his "start in life":

"At 84 and 77, Charlie and I remain lucky beyond our dreams. We were born in America; had
terrific parents who saw that we got good educations; have enjoyed wonderful families and great health; and came equipped with a “business” gene that allows us to prosper in a manner hugely disproportionate to that experienced by many people who contribute as much or more to our society’s well-being.

Moreover,we have long had jobs that we love, in which we are helped in countless ways by talented and cheerful associates. Every day is exciting to us; no wonder we tap-dance to work. But nothing is more fun for us than getting together with our shareholder-partners at Berkshire’s annual meeting. So join us on May 3rd at the Qwest for our annual Woodstock for Capitalists. We’ll see you there".

Buffett is wrong, the "business gene" that he talks about is inside everyone. While Warren may have been lucky in business and investing a few times, it is what he learn't for himself that made him the success he is today.

He studied, worked hard and had the stick ability and long-term goals to be able to achieve what he did.

Most of us are capable of the same.


Related Share Investor reading

Warren Buffett's 2007 letter to Berkshire Hathaway highly anticipated
Warren Buffett 2007 Letter in Blog Format
Global market meltdown: What is Warren Buffett doing?
The Intelligent Investor: Book review


Related Amazon Reading



The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $10.74
Usually ships in 24 hours


c Share Investor 2008

Warren Buffett's 2007 letter to Berkshire Hathaway shareholders highly anticipated

Warren Buffett's Legendary letters to Berkshire Hathaway shareholders
will be even more poignant in 2008. Investors around the world will be
looking for words of wisdom from "The Sage of Omaha" given the current
market and economic turmoil.


Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter; out 28.02.09.

Berkshire Hathaway Annual Letter to Shareholders 2007



*letters going back to 1977 also available here


Warren Buffett's letters to Berkshire Hathaway shareholders(BRK-A) are legendary long winded things.

The release of today's letter in a few hours will be perhaps more anticipated than most. Market turmoil, credit crunches and the like will see investors flock to read what he might be doing at this time and where he might be heading and indeed where he sees the world economy going in the short to medium term.

These opus' of Buffetts generally run on for 20 pages or more but they usually contain more than their fair share of sage advice from the worlds most successful investor the world has ever seen.

I anticipate that he will see opportunity rather than negativity, as assets retreat in value and he can see these assets fall into his mantra of businesses as "value investments".

Berkshire had an investment gain of over US$12 billion dollars in 2007 and the share price over the last year increased from just over $100,000.00 to just over $140,000.00.

You can read the whole Warren Buffett letter here but I would just like to quote a very illuminating piece from its 21 very interesting pages:

" I made an even worse mistake when I said “yes” to Dexter, a shoe business I bought in
1993 for $433 million in Berkshire stock (25,203 shares of A). What I had assessed as durable competitive
advantage vanished within a few years. But that’s just the beginning: By using Berkshire stock, I
compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but
rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion
– to buy a worthless business.

To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future – you
can bet on that. A line from Bobby Bare’s country song explains what too often happens with acquisitions:
“I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”

You wont find many CEO's detailing their mistakes in company reports, especially with such, candour, humour and a willingness to take responsibility for them.


Related Share Investor reading

Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter
Berkshire Hathaway Annual Letter to Shareholders 2007
Warren Buffett 2007 Letter in Blog Format
Global market meltdown: What is Warren Buffett doing?
The Intelligent Investor: Book review

Related Amazon Reading



The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $10.74
Usually ships in 24 hours


c Share Investor 2008