Monday, October 8, 2007

Research, Research, Research

One of the easiest ways to lose money on the stock market and other investments is to take advice from others.

So listen carefully!!

The road to wealth is littered with the corpses of investors who have taken advice from friends, acquaintances, lift attendants, taxi drivers and probably worst of all stockbrokers and financial advisers.

Other people, especially financial advisers, mostly have their own agendas and interests at heart. That is just natural human behaviour.

The best way to keep your hard earned capital is to do your own research, that way if things do go pear shaped you have only yourself to blame.

Quite often though brokers and those in the industry have more information at their fingertips than the average investor. Those on the "inside" are privy to information from company management and get access to CEO's and directors thinking and business direction, all the things that are important when making an investment decision.

You think this info is going to be parleyed to you and me? Not on your nelly kimosab'e.

Any information the general investing public get from financial "insiders" is filtered and spun so much before it gets to us the stuff left over is almost as useless as Britney Spears as a spokesman for fruit of the loom knickers.

The garden variety stock market investor certainly has it better since the introduction of the internet and the various bits and pieces of information that can be found at the touch of a button on the Google search box but even then he must be aware that much of this must be taken with a grain of salt as well.

Get more than one independent source for your research on a particular company or investment.

You must also read company reports closely and if it is too hard to understand the language used or there is a tome the size of the bible that explains the financial data then move on.

If management have to explain their company reports then they just could be hiding something.

Some companies that might be on your investment radar will accept calls from investors wanting to ask questions. Give it a go, they can only say no.

If after you have done your research and you find an investment that fits your criteria, assuming you have one, then you are almost ready to plunk down some shekels.

Before that if you have any doubt at all, then don't push the buy button. Go back and start the process over again until the doubts are gone.

Remember, it was hard work earning the money to invest in the first place so don't make it easy to lose it.


Related Share Investor Reading

Stockmarket Education: How do you buy shares?
Stockmarket Education: What is a Share?
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Stick to what you know
Investors can learn from my stupidity

Stockmarket Education

Stockmarket Dictionary
Stockbrokers: What you should know before choosing one
10 Basic questions to ask before investing
How the Stockmarket works
Understanding Risk
Watch Your Risk Tolerance
Stockmarket Education: What is a Share?
What Moves the Stockmarket?
7 Signs of Shareholder Friendly Management
Financial Media For Investors
Dividends in detail

Related Links

NZX - How to Invest


Recommended Amazon Reading

How the Stock Market Works: A Beginner's Guide to Investment
How the Stock Market Works: A Beginner's Guide to Investment by Michael Ivan H. Becket
Buy new: $13.67 / Used from: $33.98
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The Intelligent Investor: The Definitive Book on Value Investing. A      Book of Practical Counsel (Revised Edition)
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: $6.99
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Fishpond



c Share Investor 2007

Saturday, October 6, 2007

Port of Tauranga: Port in a storm

In the wake of strikes this week at Ports of Auckland, POA, it seems owners of the now publicly owned port , Auckland Regional Holdings, ARH have refused to talk about the reasons why they put a buzz saw to the marriage between it and the Port of Tauranga Ltd [POT.NZ]

The Cameron Report, done by an investment banker, points to widespread efficiency gains from the tie up of the two ports. Efficiency gains would have resulted in more streamlined ports operations with bottom line benefits for customers.

Judith Bassett, ARH chair and ARC councilor has refused to release the report. Industry insiders say the possible gains were worth more than $50 million a year.

The Port of Tauranga is a much more efficient beast than POA and it seems jealousy over this and arguments that POT management wanted a bigger slice in the marriage because of their ports efficiencies may have sunk the merger.

As an outsider and ARC ratepayer myself one has to ask oneself what are ARC councilors hiding? It cant be good and clearly wont be released until after local elections in a week or so.

It probably wont be the end of port consolidation in the future between these two parties because it just makes financial sense to do so.

Ironically while POA's profit dived for 2007, POT's was up sharply.

Amazing what can happen to a company when it is abused by politicians.


POT @ Share Investor

Long Term View: Port Of Tauranga Ltd
Port in a storm
Ports of Auckland put a shot over competitor's bow

Discuss POT @ Share Investor Forum




c Share Investor 2007




Friday, October 5, 2007

Share Investor's Friday Free for all: Edition 6

Sign O' the Times

Image result for auckland airport logo 2007


Monday morning I get an expensive looking flash black annual report in my mailbox from Auckland International Airport(AIA) and it comes festooned with the artistic equivalent of the anarchy symbol used by the punk rockers in the 70s and still used today by the wanna bees.

The logo is part of an expensive "re branding" exercise where the use of politically correct jargon and references to Maaoori and global warming are used liberally to suck up to just about anyone who is anyone, except if you are a shareholder.

This might give you some sort of idea:

Chairman John Maasland said the company has adopted a new vision of "representing our country, and new core values of being outstanding, uniquely Kiwi and welcoming".Do shareholders really need to shell out hundreds of thousands of dollars so AIA management can tell us what they will be doing but should have been doing all along anyway?

I have canvassed this sort of managerial mumbo jumbo before and it is nothing more than MBA spin, an exercise to make management feel better about themselves and submit an image to the public that is all surface and little substance.

Really an excuse for mediocrity.


Port in a Storm


Image result for port of tauranga logo 2007

In the wake of strikes this week at Ports of Auckland, POA, it seems owners of the now publicly owned port , Auckland Regional Holdings, ARH have refused to talk about the reasons why they put a buzz saw to the marriage between it and the Port of Tauranga (POT)

The Cameron Report, done by an investment banker, points to widespread efficiency gains from the tie up of the two ports. Efficiency gains would have resulted in more streamlined ports operations with bottom line benefits for customers.

Judith Bassett, ARH chair and ARC councillor has refused to release the report. Industry insiders say the possible gains were worth more than $50 million a year.

The Port of Tauranga is a much more efficient beast than POA and it seems jealousy over this and arguments that POT management wanted a bigger slice in the marriage because of their ports efficiencies may have sunk the merger.

As an outsider and ARC ratepayer myself one has to ask oneself what are ARC councillors hiding? It cant be good and clearly wont be released until after local elections in a week or so.

It probably wont be the end of port consolidation in the future between these two parties because it just makes financial sense to do so.

Ironically while POA's profit dived for 2007, POT's was up sharply.

Amazing what can happen to a company when it is abused by politicians.


Dow High?

The Dow hit an all time high this Tuesday (US Time), with the index up strongly by 191.92 points to close at 14,087.55.

It seems the banking and finance sector has made a comeback after the sub prime meltdown and all has been forgiven and forgotten as investors flocked to the sector.

The S&P 500 Financial Index rose 2.1 per cent, the biggest gain among 10 sector groups. Merrill Lynch, the third-largest securities firm, leaped US$2.59 to US$73.87. JPMorgan Chase, the third-biggest US bank, rose US99c to US$46.81.

Doubts still remain over how the "credit crunch" will really impact this sector as the bulk of "sweetheart" mortgage deals in the sub prime area that caused the meltdown, where lenders have a lead-in low interest rate on their mortgages for 6 months or so , have yet to fully hit the market.

Keep watching, I will!


Its a Mans World, Baby

Much fuss made in mainstream media circles this week over the apparent dearth of women CEO's running companies in New Zealand.

This in the wake of Di Humphries' decision to leave the top job at Glassons, a division of the clothing retailer Hallensteins (HLG)

Names such as Vicki Salmon, former head of Restaurant Brands(RBD) and Teresa Gattung, former head girl at Telecom New Zealand (TEL) were bandied about as examples to be admired.

Sadly these two were both monumental failures at their respective positions.

Gee, how about company heads being picked because they are good at what they do, if they happen to be men or women it doesn't matter, as long as you have the best person for the job.

Call me simple but I am just a man.

Humphries' is off to look after her young family. A very important job, if I do say so.


Financial Impact

The fallout from the dodgy finance company industry rolls on again this week.

Hanover Finance, one of New Zealand's biggest finance companies is to cut its Australian staff from 44 to 32.

Hanover has been busy rebranding itself with an expensive advertising campaign as a warm , friendly, safe and solid industry player.

I'm still a little wary over this and other companies and their long term future in lending.

Even Hanover's size wont protect it from going under and there are rumours going around about its stability.

Even the State Kiwibank, the loss making division of NZ Post, has reportedly done 6 million taxpayer dollars in the Northern Rock collapse in the UK. One has to wonder why it was invested there.

Auckland-based investment firm Clegg & Co Finance has been placed in receivership this week. NZ $15 million of investors money is at risk.

On August 28 Brian Clegg, the director of Clegg and Co, wrote to investors written under a Classic Finance letterhead:


He writes about the publicity surrounding the collapse of finance companies, but believes his company is one of the "safe" ones, because it was "still operating profitably and successfully in accordance with our lending policy", and had kept out of high-risk lending.

In yet another collapse, investors in Five Star Consumer Finance heard today that they would expect to receive back 26c to 40c in the dollar on money invested but nothing forthcoming until December.


Ladies and Gents, please place your Bets

By Reuters | 05 Oct 2007 | 12:39 AM ET with comments by Share Investor

New Zealand casino operator Sky City Entertainment Group(SKC) sees the possibility of more than one bid, as a potential buyer looks at its books over a deal that could be worth around 1.9 billion.


Executive Director Elmar Toime told Reuters on Friday that the unnamed bidder's decision to conduct due diligence could spark other bids.

"The interest is there, whether the timing is right, or people have the wherewithal is the great unknown," Toime said.

Sky City, which has a virtual monopoly on casinos in New Zealand and also operates in Australia, has been actively seeking buyers since receiving the approach in late September.

Earlier on Friday, the Australian Financial Review newspaper said private equity group TPG was the favourite to take over Sky City after another private equity firm rumoured to be interested, New York-based Providence Equity Partners, did not make a bid.

Australian competitors of Sky include Tabcorp Holdings, Tattersalls and Publishing and Broadcasting Limited. Tabcorp and Tattersalls have said they are not interested.

Shares in Sky City last traded unchanged at NZ$5.36, having gained 9.2% so far this year, compared to a 5.5% gain for the benchmark top 50 index.

Toime would not give the identity of the unnamed bidder, but said it was due to complete its due diligence on Sky City by the end of October. He also declined to comment on the Australian 

Financial Review article

Private equity and Asian gambling operators have been touted as the most likely source of bids.
The sector in New Zealand is tightly regulated, and Toime said he was unsure if a bid by a foreign party to takeover Sky City would attract political or regulatory opposition.

Citigroup has said in a report that recent Australasian casino deals had an average enterprise value to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio of around 10 times.

That would indicate a private equity bidder paying about NZ$5.60 a share for Sky, valuing the company at $1.9 billion, said Citigroup analyst Andy Bowley.

In May, Sky City unveiled a programme to cut NZ$33 million in costs over 18 months, and said it might sell its Adelaide casino in Australia and one in Christchurch, as well as its cinema business.

Toime said indicative bids for the cinema business were expected by the end of October.

As I have said before, I wouldn't be willing to sell my SKC holding for anything like $NZ 5.60.

It is worth a substantial premium for control and an offer of $5.60 would be quickly rejected by shareholders.


NZX Market Wrap

New Zealand shares dipped today in light trading at the end of a quiet week.

The NZSX-50 index, which yesterday lost 0.6 per cent, was down 15.93 points or 0.4 per cent at 4284.05. Turnover was an unimpressive $NZ109.7 million, and falls outnumbered rises 53 to 35.

Top stock Telecom(TEL) which returned $1.1 billion to shareholders today and cancelled one share in nine, fell a cent to $4.56.

Sky City(SKC) rose 3c to 539. The Australian Financial Review said today that private equity group TPG was in the lead to buy the casino operator after Providence Equity Partners disclosed that they hadn't made a bid.

Fletcher Building(FBU) fell 31c to $12.20, continuing its pattern of large moves in either direction.

Contact Energy(CEN) was steady at $9.35 after dipping yesterday due to indirect regulatory scares, Fisher & Paykel Healthcare(FPH) was up 7c at $3.34, F&P Appliances(FPA)rose 2c to $3.55, and Auckland International Airport(AIA) dropped 3c to $3.09.


Among other stocks to go south today, The Warehouse(WHS) lost 7c to $5.37, Ebos (EBO)was down 11c at $5.04, Air New Zealand(AIR) lost 2c to $2.36, and Rakon(RAK) was down 4c at $4.80. Pumpkin Patch(PPL) fell 5c to $3.05 today and has continued to spiral downwards over the last few weeks due to US dollar weakness. Hallenstein Glasson(HLG) was down 6c at $4.50.

Guinness Peat Group(GPG) was up 2c to $1.95, Port of Tauranga(POT) gained a cent to $6.96.

Dual-listed stocks posted bigger gains, with ANZ up 40c at $35.90, Lion Nathan(LNN) up 20c at $10.95.

NZ Refining(NZR) was down 9c to $7.81 on lower oil prices and refining margins.

Disclosure  I own SKC and AIA shares






c Share Investor 2007





Thursday, October 4, 2007

Tortoise vs Hare: Missed opportunities of a short term view

It never ceases to amaze me how truly stupid some people are.

I'm talking about those investors who continue to bag long-term investors like me who don't have instant spectacular profits and have a view of investing longer than the space between their brain and their finger poised on the sell key on their computer.

True, money can be made short term, I have done it myself, but real long-term returns come after investing for years, certainly longer than 5 but hopefully much longer.

This is also true of property, bank deposits and direct business owning investments.

These profits come from dividend returns and buying more of good companies you already own should their market prices dip from day to day.

It is impossible to compare the long vs short-term investing because, hello, the short term profit is apparent very quickly and you have to wait for the long!

Those nervous Nellie's who sell because a company has a bad year or think they can beat every other sucker who is after a fast buck are fooling themselves if they don't fully know what they are doing.

Making your online broker rich by constantly trading isn't going to make you wealthy either.

In my current portfolio of 12 stocks 3 of them are currently under some sort of merger or takeover process.

I mention this because I was advised by a gaggle of short-termers to dump stock in the very 3 stocks that could be bought because the stock prices of these companies were going down!

One mental defective who has badgered me over holding Sky City Entertainment (SKC) for some time and so much of it, emailed me again about a month or so ago and told me I was "overweight" with this stock. Well na, na, na, na, SKC is now being looked over by buyers.

The Warehouse(WHS) is looking like it is going to be bought by one of 3 possible buyers after a Commerce Commission hearing this month.

I was told to sell up and run for the hills when they had problems some years back.

WHS is now doing much better and should get a good price when sold, thank you very much.

Auckland International Airport (AIA) is also under the sellers hammer.

Being short-termers though they cant appreciate or lack the knowledge that one day someone else is going to be interested in what you have(unless it is actually a turkey of course) and to hold like I do opens one up to the possibilities of a buyer for your share of the business.

Holding long-term of course opens up the inevitability that your company will do well and reward you with increased dividends and a higher share price.

It is unlikely that those who were poking the borax at me and long termers like me will now be patting us on the back but now that some years have passed the returns are apparent and will only get better with time.

Sorry but I just had to gloat.

c Share Investor 2007