Share Investor Friday Free for all: Edition 11

Fonterra front footing it

The announcement yesterday of a possible listing on the NZX by New Zealand's biggest company, Fonterra, is the best news the New Zealand economy has had in generations.

Fonterra, a global milk products producer, manufacturer and exporter is a huge contributor to NZ Inc and the company has become a dominant force in the Global Dairy products boom.

It has now got to the point though, that it needs some serious capital to allow it to grow larger and compete with the likes of Nestle, Danone and Kraft. Fonterra's cooperative structure doesn't allow the company to raise the capital needed to foot it with the other big boys as the dairy industry players grow in size, through acquisitions and mergers.

There has been much bleating by Unions and the NZ First Political Party that the proposal isn't a good idea but frankly as Unionists and pollies what the hell would they know about business.

This is great news for Fonterra and its long term future and excellent news for New Zealand investors as they will be able to participate in an industry that dominates our export revenues and economy and contribute to the investment of a great business.

The NZX is going to be more indicative of our economy by having Fonterra listed, possibly sometime in 2010, and the index will get the much needed boost that it has lacked all these years simply because of the impact the company has in our economy.

A cash cow indeed.

Sky City twiddling thumbs in the back row


Sky Tower, Auckland, NZ

News this week that Sky City Entertainment(SKC) is not likely to be able to tell the market anything about the 3 companies currently looking over SKC's books and what their intentions will be until "after Christmas" leaves this writer wondering how far management can stall shareholders any longer.

The timetable initially stood at an announcement at the end of October, then mid November and now after xmas. It makes me wonder how serious prospective bidders might be and doesn't inspire confidence in a good price for the company or a sale at all.

In other company news, contenders for SkyCity Cinemas - which could be worth as much as $116 million - are understood to include Australian firm Greater Union, US-based Reading Cinemas and Hoyts, previously a partnership between PBL and West Australian Newspapers, which was purchased by Australia's Pacific Equity Partners.

The vagaries of management speak are truly alive and well at Sky City, this from the company November 14:

SkyCity said yesterday it did not expect to progress with the cinema sale before the end of November.

What the hell does that mean, will they give a bloody deadline?

Sky City Management surely must be nominees for the worst board for 2007.


Morrison speaketh with forked tongue

I'm having trouble taking Lloyd Morrison seriously.

Morrison, the chief executive of Infratil, a director of Wellington Airport and a backer of a second airport for Auckland at Whenuapai has $300 million invested in Auckland Airport(AIA) on behalf of Infratil and the NZ Super Fund.

The trouble with this though is that Morrison's directorship of Wellington Airport and backing of a second port in Auckland put him in direct conflict with his large ownership of AIA shares and his ambition to get a seat on the AIA board.

Morrison says there is no conflict but it doesn't take a genius to figure out that he is staining credibility paper thin if he thinks that.

He was caught out today on National Radio Business today and last week when he said that the Canadian Pension bid was too low at $NZ3.65 and mentioned a price north of 4 bucks per share as being fair value for the company.

Interesting take when you consider than Infratil was involved in a bid, earlier this year, that was rejected by the board as too low, probably below the Canadian bid.

Morrison is a savvy investor and he is using subterfuge, doublespeak and attacking competitors in his bid to get some sort of control in the Auckland Airport deal/s.

While the AIA board hasn't been straightforward with shareholders over the last 8 months of this protracted bid for control of the port, Morrison's intentions are not clear and he cannot be trusted and shouldn't be elected to the AIA board on November 20.

In takeover news, Canadian Pension Plan Investment Board (CPPIB) has made a formal bid for AIA today.

The key terms of the offer are as follows:

Offer Price: The consideration offered for each Outstanding AIAL Shares taken
up under the offer is $3.6555 in cash.

Partial Offer: The Offer is for 39.53% of the AIAL Shares not already held or
controlled by the Offeror

Closing time: The Offer closes at 5.00pm on 13 March 2008
Partial Offer: The Offer is for 39.53% of the AIAL Shares not already held or
controlled by the Offeror

Closing time: The Offer closes at 5.00pm on 13 March 2008



Hollow words, hollow competition

The owner of Share Trader and many other financial based sites in New Zealand threatened to "take legal action" over this revelation published in the Share Investor Blog a month ago and insisted it be removed and an apology made but as yet has failed to serve me with a writ.

This individual also made a threat of "legal action" over my use of "Good Returns Bookstore" banners on my site back in July even though I was legitimately using them as a genuine affiliate.

Now I don't take kindly to threats and I am justly annoyed by this pest, but I guess threats ring pretty hollow when you use them as your modus operandi when doing business and don't follow through.

Good Returns Bookstore, owned by Tarawera Publishing, continues to spam me with emails to buy their books, even though I canceled my affiliate membership and Tarawera's Sharetrader continues to host my contributions on their site, even though I didn't sign up to their new draconian membership terms and conditions (see the fee for spamming!!) as part of Tarawera taking over the site.

*Incidently you can buy all types of finance books from my Share Investor Bookstore, the range is many hundreds of times larger and at least 30% cheaper than Good Returns Books.

Sort yourself out Phil!



Learning to love China



World markets have been nervous again over the last few weeks. The Dow has slipped from over the 13600 mark to just above 130000, oil has reached almost 100 bucks, gold is over US$800 and the US dollar is doing an impression of a tiger moth with one wing.

Shakiness over future sub prime losses for banks and financial institutions have been blamed and to be sure there is more to come once sweetheart mortgage deals end but like any market jitters the market tends to overreact.

I think what could be happening now and we wont really know it for sure until we look back, is that we are partially seeing the start of the transition of dominance from the US as the financial and economic powerhouse to China. To be fair it ain't there yet but early signs seem to be showing the genesis of something akin to an economic transition.

The low value of the Yuan and the Chinese economy powering ahead means their economy will only power ahead in the future, while the US, a massive importer of foreign made goods is struggling as their dollar sinks and imports cost more.

Also the US as a safe haven for foreign investment is being eroded as their interest rates plummet and the cost of repaying debt to China gets ever more expensive.

The transition of America from a manufacturer to their home market and huge importer to a bigger exporter must come and will be easier to do as their dollar drops against their main trading partners.

It is then China will be seen as an opportunity to US manufacturers instead of a threat and the whole cycle of economic change will start again.

Let us remember that China was an economic powerhouse once before.


NZX Market Wrap

The NZSX-50 index, closed up 1.1 points at 4114.2, on turnover valued at $138.5 million.

Auckland Airport fell 3c to 301, after Canada Pension Plan Investment Board (CPP) submitted its formal cash bid for 39.53 per cent at $3.6555 per share. The airport company has also asked its advisers to seek other offers.

AIA shares had earlier risen to 308 before profit takers moved in. Turnover was a heavy $46.8m.

Fisher & Paykel Appliances rose 4c to 364, having gained about 30c since its first half result last week. The company is also considering selling its finance company to focus on its whiteware manufacture and retailing businesses.

Market heavyweight Telecom gained 4c to 425, Fletcher Building was up 8c at 1166 after being caned for most of the last week or so, and Contact Energy lost 5c to 885.

F&P Healthcare was up 3c at 328, Sky City gained 5c to 537 after getting knocked about yesterday after a broker downgrade. Sky TV lost 8c to 562, and Vector recovered some of yesterday's 6c loss to close up 3c at 233.

Air NZ, which has had a rough ride recently due to rising fuel prices, rose 1c to 202.

Among other stocks to gain, NZX was up 5c at 961, Freightways rose 2c to 380, Infratil was up 2c at 293, Nuplex gained 5c to 725, and carpetmaker Cavalier was up 3c at 315.

Hellaby Holdings lost 2c to 271, despite news it was trading ahead of last year, when it posted its first loss since re listing in 1994.

Rakon fell 5c to 515, Tower was down 4c at 204, Hallenstein Glasson lost 3c to 445, Mainfreight was 5c lower at 710, and The Warehouse was down 2c at 522, marking time while waiting for a decision by the Commerce Commission as to whether Woolworths or Foodstuffs can make a bid to takeover the company.

On the NZAX , Burger Fuel International was down 2c to 60c.

NZ Dollar Wrap

Reuters currency rates
(5pm today - 5pm yesterday, NZ time)

NZ dlr/US dlr US75.43c - US76.47

NZ dlr/Aust dlr A85.28c - A84.97c

NZ dlr/euro 0.5162 - 0.5210

NZ dlr/yen 82.96 - 85.14

NZ dlr/stg 36.93p - 36.17p

NZ TWI 69.72 - 70.48

Australian dollar US88.46c - US89.99c

Euro/US dollar 1.4613 1.4679

US dollar/yen 110.00 111.29

Disclosure: I own Sky City and Auckland Airport shares

C Share Investor 2007

Bargaining through life to save a buck

I wonder how you manage your financial affairs?

How are your investments going and what approach do you have in your own personal financial situation?





Let me share with you some of the things that I do to make or save a buck. Most of them are elementary and you probably do them anyway but hey its my blog and Ill rant if I want to.

My employment gives me a very good income but that is no excuse to waste your valuable shekels because your make more money than others, a penny saved is a penny earned and all that.

I know people who earn way more than I but they seem to think that it is their mission in life to waste their money, simply because they can afford to. Either they have been wealthy all their lives or if self made, have forgotten how hard it was to get where they now are. Comfortable.

While I'm not stingy with what i earn I certainly haven't forgotten my humble beginnings.

That translates into menial stuff like not always buying the expensive brands at the supermarket, using all the peanut butter from the bottom of that Jar Mr and turning the lights off when one leaves a room. Boring I know but its money that you don't have to find elsewhere.

If you are in the market for a new car consider either buying a 1 year old version, where the depreciation has taken off a third of the cost and you still have a warranty and the vehicle has been run in or consider putting off the purchase altogether.

It is best buying an almost new vehicle but when you do you need to hold onto it for around 7 years to get the most economic value from it. After that it is better to ditch it because repairs could cost a mint, unless of course you bought a Ford , in which case you should replace the vehicle annually.

Of course when making major purchases like household goods, cars, boats and houses it doesn't hurt to bargain with the seller, with electronic goods especially, competition is cutthroat and the sticker price isn't the final one, they expect you to haggle, so do it, you might be surprised.

Of course it you are holding lovely folding stuff in your hand, you have an added advantage. Cash is king in most bargaining situations and discounts for green come on top of other bargaining tools.

When it comes to your bank, bargaining works as well. Try and negotiate term investment rates, mortgage rates and their other, often devious charges. It works for me , they can only say no.

Of course when investing in the stockmarket prudent investing there starts with your own research, the more you can do that the more likely you will insulate yourself from the sharks that swim in this pool.

Remember, your money is usually hard to earn in the first place and clearly prudent saving, through wise choices and bargaining your way through your financial life, will put you in good stead for a healthy financial future.

It will also allow you to spurge every once and a while, a natural antidote to my otherwise miserly approach to the art of living financially constrained!

C Share Investor 2007

March for Democracy , 10.00am, Sat Nov 17, 2007

March Planned in Support of Human Rights Commision

Sunday, 11 November 2007, 1:10 pm
Press Release: John Boscawen
PRESS RELEASE

Protest March Planned in Support of the Human Rights Commission

Saturday 17 November, Queen Street, Auckland. 10.30am.

9 November 2007

I am pleased to announce that I have today lodged an application with the Auckland City Council to lead a protest march down Queen Street, Auckland.

The council have confirmed it is my democratic right to do so, and the march will leave from Aotea Square at 10.30am and proceeding to Britomart Place.

I and others will be protesting about the combined effect of the Electoral Finance Bill and the recently introduced Appropriation (Continuation of Interim Meaning of Funding for Parliamentary Purposes) Bill.

The combined effect of these two bills is to massively increase the amount of taxpayer money available to existing members of parliament and political parties to fund their re-election campaigns, while severely restricting the ability of private citizens to oppose them. This is an affront to democracy in New Zealand.

The Human Rights Commission has described the Electoral Finance Bill as “inherently flawed” and has called on the government to withdraw the bill and redraft it from scratch based on the over 600 public submissions.

To date, the government has failed to act on that recommendation.

The Commission has also called on the government to allow a further round of public submissions on whatever bill comes from the select committee process. To date, the government has given no indication it will do this.

We will be marching in support of the Human Rights Commission.

Those wishing to participate should assemble in Aotea Square from 10.00am with the march to leave at 10.30am.

The march will be widely advertised in the media next week.

I will attempt to be there. My first ever political protest!!

Ends

New Zealand Herald gets nasty over Electoral Finance Bill

I have never seen the likes of this before in my life. The New Zealand Herald has used its entire front page today to rail against Helen Clark and the Sisterhood over their attempt to buy next years election by using their Electoral Finance Bill to make previous illegal spending of taxpayer money, to promote themselves, legal and to stop debate during an election year.

The Herald, usually left leaning, has come out strongly against the bill and should be congratulated for their strong stand.

This bill, if passed through in November, will put New Zealand in the position that many dictator states now find themselves in. A Government that will stop at almost nothing to get re-elected and a population that wont be able to have their democratic right to voice opposition and if they do so they could be imprisoned.

New Zealanders as a whole don't seem to be angry about this bill and what it means. They should be. Is it that we just don't care that our democracy will be no longer or are we just too stupid to see what is happening?

Lenin, Marx, Mao and Hitler would have be proud of this bill.

C Darren Rickard 2007




The Herald Editorial

Editorial: Democracy Under Attack

5:00AM Monday November 12, 2007

When is the Government going to get this message: democracy is not a device to keep the Labour Party in power.

Practically every other participant in New Zealand politics - not only parties but other interested organisations and especially guardians of political rights - has voiced concern at the implications of the Electoral Finance Bill introduced to Parliament more than three months ago.

The Human Rights Commission has described the restrictions on election activity as a "dramatic assault" on fundamental rights which "undermines the legitimacy of political processes".

The Law Society says the bill would "make participation in our parliamentary democracy an arduous and perhaps even legally dangerous undertaking for ordinary New Zealanders".

They say this because it would be illegal in election year for any organisation other than a registered political party to spend more than $60,000 (perhaps a couple of full-page advertisements) to publicise a cause that might be deemed political.

The restriction is opposed by some of Labour's closest allies, such as the Post Primary Teachers' Association, which fears for its ability to campaign for educational policies.

In the face of near-universal condemnation, the bill should have been withdrawn. Instead it will be tweaked to dilute some of its worst features. But the attempt to restrict non-party participation in election discussion will remain.

Labour seems determined to use the time it has left to skew electoral laws in its favour.

Not only does it mean to make election debate the preserve of political parties, it has introduced this month a second electoral outrage - a bill to extend the law legalising the use of public money for political purposes that were ruled improper by the Auditor General after the last election.

The Clark Government's refusal to bow to public opinion on this subject beggars belief. It was staggering enough last year that Helen Clark and her lieutenants could not understand why nobody else regarded their electoral pledge card as innocent information.

Now, having grudgingly repaid the public purse, they are hell-bent on giving themselves the right to raid it again.

If these bills become law, politics will be largely confined to registered parties, and they will have to be able to use parliamentary funds for election campaigns.

Both measures are designed to favour the party that has devised them. Labour fears independent campaigns by the likes of the Exclusive Brethren much more than National fears the efforts of the PPTA or the Council of Trade Unions. And Labour believes it needs public money to balance covert contributions to the National Party.

Parties have different advantages. If National has more well-heeled donors, Labour probably has the more committed and articulate foot soldiers.

National's supposed advantages were of less urgent concern to Labour when it was polling well. Now in desperation it wants to screw the scrum. It has succumbed to the old conceit of the Left that the interests of the people are identical with its own.

The interests of any healthy democracy lie in unrestricted debate, not laws that favour incumbents with public finance and suppression of free speech.

If these bills pass, they will be Labour's epitaph.

C NZ Herald 2007

Kyoto critic comes to town

The Sun is the Main reason for "climate change".

You are not going to hear much from the sniveling lefty media about this man except to critique and denigrate him for not jumping on the Global Warming bandwagon. Watch for snivellers with closed minds like Rod Oram from the New Zealand Business Herald whose sole obsession these days seems to be how to stop his carbon footprint from getting stuck in his mouth and using it to kick the more sensible among us that know that this whole GW nonsense is just that. I agree largely with Lawson except he is a bit lightweight on GW's proponents where as I wouldn't give them an inch.

They are NUTS!

Go here to View The Great Global Warming Swindle


C Darren Rickard 2007


Kyoto Critic Comes to Town

By JENNI McMANUS - Sunday Star Times | Sunday, 11 November 2007

Contentious climate change issues have been bumped to the top of the business agenda with the release of a consultant's negative report into the economic impact of the government's proposed emissions trading scheme.

Hard on the heels of the Castalia report and its view that the government is seriously underestimating the costs of Kyoto compliance, another strong Kyoto critic flies in to town this week.

Nigel Lawson, former chancellor of the exchequer in the Thatcher government between 1983 and 1989 and father of celebrity chef Nigella, is visiting New Zealand as a guest of the Business Roundtable. On Thursday in Auckland he will give the annual Sir Ron Trotter lecture, this year on the topic of economics and climate change.

Expect strong debate from an ex-politician not known for taking prisoners. Since leaving politics, Lawson has researched and lectured widely on climate change, his most recent contribution being work on a documentary called The Great Global Warming Swindle.

His message: the conventional response to global warming the bid to get global agreement among industrialised nations on reducing carbon dioxide emissions to a fixed, but arbitrary, level by 2012 is "absurd".

Even its strongest advocates concede the existing Kyoto agreement will do virtually nothing to reduce future rates of global warming, Lawson says. The US, the largest source of carbon dioxide emissions, has refused to ratify the treaty, largely because developing countries such as China, India and Brazil are effectively outside the process and determined to remain so.

What's being done with Kyoto simply isn't working, Lawson says. "There's a lot of talk and some things are in place in Europe, but while subsidies have been given to emitters (to help them adapt), they've done nothing to cut emissions. Politicians say greenhouse gases are the greatest threat facing the planet, but every year emissions get higher. I cannot see any other case where the difference between the rhetoric and the reality is greater."

Lawson argues adaptation to climate change is better than attempting to mitigate or reverse it.

Adaptation is cheaper, will more efficiently fix already existing problems (such as coastal flooding in low-lying areas) and will generally happen naturally, without government intervention, he says. Farmers, for instance, will show commonsense and change their crops, improve irrigation and cultivate areas once too cold to be economic if the climate gets warmer. Rich countries of the temperate world have an obligation to help the poor countries of the tropical world do whatever adaptation is needed, he says.

There is also the "just-in-time" solution of geo-engineering where pioneer work is being done at Stanford University to devise actions that could be taken quickly to cool the planet if necessary.

Lawson wants to see the debate shrunk to what he sees as its central focus: what has been the rise in global mean temperature in the past 100 years, why we believe this has happened and what the consequences are likely to be.

"The only honest answer is that we do not know," he says. "But it is very difficult to refine the issues because people feel so emotional. It is hard to get rational discussion going, but it is very important that we do.

"It's clear politicians think they're seen in a good light if they tell people they're saving the planet. It's wonderful grandstanding. But we simply don't know why climate change occurs and politicians can get very impatient with scientists who don't say anything definite, even when the science isn't certain." The difficulty is climatology is a relatively new and complex science "and neither scientists nor politicians serve either the truth or the people by pretending to know more than they do".

For example, many people probably aren't aware that at times during recent history the world has been warmer than at present. And while atmospheric concentrations of CO2 increased by 30% during the 20th century, global warming has occurred only in fits and starts. In fact, says Lawson, it ceased in 1998 and is not expected to resume until 2009.

Despite his views, he says he could live "up to a point" with cuts in CO2 emission levels. Even a carbon tax would be acceptable, providing the revenue was used to cut other forms of tax. But that's a different matter from putting the entire economy at risk with complex emissions trading schemes a point taken up by economist Alex Sundakov in the Castilia report. No scheme will be politically sustainable if the relative costs and benefits are not well understood and accepted by the electorate at large, Sundakov says.

Any major cuts in NZ emissions are expected to be very costly, despite government claims to the contrary, because of our high economic reliance on emissions-rich activities. Official estimates in the US and Canada put the cost between $5000 and $10,000 per household.

Nor does Lawson agree that we must do whatever it takes to avert the possibility of large-scale climate catastrophe. A number of other catastrophes are also possible, including another ice age, the prospect of nuclear war and the growth of terrorism "in an age where scientific and technological developments have brought the means of devastation within the reach of even modestly funded terrorist groups".

"Above all," he says, "in a world of inevitably finite resources, not only can we not possibly spend large sums of money on guarding against each and every possible eventuality in the future, but the more we do spend on this, the less there is available to deal with poverty and disease in the present."

C Sunday Star Times 2007

Friday Brief

Took a small holding of a new company to the portfolio, Micheal Hill International(MHI) the New Zealand Jewelry chain, with stores in NZ, Australia and Canada.

Having been watching this one for a while and it wasn't getting any cheaper so I thought I would take the plunge before a 10 for 1 share split on Nov19.

The company has aspirations to be a global player and it is very well run and has a great attitude to capital management and prudent expansion.

I would group it with my recent additional purchases of Pumpkin Patch(PPL) as giving exposure to a global market for the long term portfolio for good long term returns.

Just an update on Burger Fuel(BFW)

An indicator of how crowded the gourmet burger market is in Sydney where BFW has two stores. A link to a critique of the food served at Burger Fuel and five other competitors

Shares are still languishing and they finished the day at 65c today. I missed this one but they opened a new store in Napier, a small town on New Zealand's North Island East Coast.


Here's the story:

BurgerFuel Opens Napier Store

Wednesday, 31 October 2007, 1:29 pm
Press Release: BurgerFuel BurgerFuel Worldwide Press Release – For immediate release

30 October 2007

BurgerFuel Opens Napier Store

Only a few weeks after opening its second Australian store in King’s Cross, BurgerFuel has opened another new store in Napier. BurgerFuel on Carlyle Street marks the 24th store for the company, with 22 across the North Island and 2 in Sydney, Australia.

Since listing on the NZAX in August, the company has opened a mix of both company owned and franchised stores.

The local franchisee for Napier is Andrew Coombe. Andrew is formerly a fire chief, who is going from fighting fires to fuelling the flames at BurgerFuel. The Napier store is in the new complex on Carlyle Street, on the site of the old Shell station. Andrew and his wife Anne are providing a new fuel stop for the people of Hawke’s Bay with the gourmet burger experience they both became addicted to, whilst working in Auckland.

The opening of the Napier store is seen as strategically important to BurgerFuel says Chris Mason CEO “We want people to enjoy a visit to BurgerFuel – wherever they may be. Our commitment to the provinces is just as important as city locations. As BurgerFuel increases store numbers, so too does our customer base grow. Eventually everyone should have access to New Zealand’s best gourmet burger”.

No Friday Free for all column this week but it will be back next week.


C Share Investor 2007

Fear and Greed are Lovely things

ARRRRRRRRGGGGHHH!!!!!


The DOW doing its thing today



I don't know about you but I'm buying.

The current sell offs of some of my favourite stocks that I already hold I have added to and picked up some new ones.

I added to my Pumpkin Patch(PPL) Portfolio again yesterday and included additions to my portfolio of Kiwi Income Property(KIP) and Postie Plus Group(PPG)

I'm not going to the New Years day sales but I'm going to participate in this one.

If you are a long term investor you would be almost mad if you didn't...well on second thoughts each to his own but.

It just goes to show that the fear and greed labels apply the most when the markets are most volatile and that those that don't follow the herd are more likely to do better in the market long term.

Who knows if we are going to see a substantial sell off of stocks as the New Zealand economy tanks and the US is having a few flutters over high oil prices, all I know is that I like to buy when stock prices are going down.

C Share Investor 2007

Pumpkin Patch VS Burger Fuel

Sitting in the Takapuna KFC today eating my 3 piece quarter pack I got to thinking about brands again.

Putting the Colonel's badly run brands in this country aside I would like to discuss two up and coming brands that have their genesis in New Zealand and both with ambitions on a global scale.




Pumpkin Patch(PPL) the trendy kids wear manufacturer and retailer and Burger Fuel (BFW) the trendy Gourmet Burger maker share few traits with the well established KFC brand as operated in NZ.

Both PPL and BFW are in the infant stage as far as size and brand awareness go, although Pumpkin Patch seems to have a very high brand recognition even in areas where they don't have stores and one could assume on that fact alone it could become a true global brand.

BFW are well established in New Zealand, with two stores in Australia and the brand is seen as the place to buy quality fast food.

PPL are similarly ensconced in NZ and Australia and have a small presence in the US and UK. They are represented in other international markets via department stores and mail order.

PPL have a total of just over 200 stores and BFW just over 20 and both had their beginnings in the early 1990s.

Both companies have had their images carefully nurtured over the last 15 years or so and that attention to the brand has paid off and will continue to sustain growth as they look to go global.





While BFW only listed this year PPL got the jump in 2004 and has grown substantially since then, entering the US West Coast and now in Texas and New York.

The biggest risk for PPL is the cost factor, as they expand from a small base, likewise ,BFW will struggle as they enter new markets. This is likely to be ameliorated as economies of scale kick in and the brand gets additional awareness.

Strong branded companies like Starbucks have expanded this way. From their local area of Seattle they quickly spread their well managed brand across the US States and then globally.

Burger Fuel and Pumpkin Patch will attempt something similar in reverse. Probably harder to achieve than Starbucks but with their strong brands both these companies have a great shot.

The US market is arguably the most important market for both companies and the scale and exposure that will be available to them will either make or break them.

The cost of expansion will be high and must be done carefully and with much thought and planning. Getting it wrong in the US could well mean the death of either company. It is a very competitive market and there are giants there ready to match your product.

Thankfully, as management of Burger Fuel and Pumpkin Patch have been careful to keep their brands as strong as they are, as they have grown, this has given them an edge as they expand overseas and any company with an edge on the competition through strong brands and therefore brand recognition will have a better chance of surviving in a though market like the USA.

The possibilities for growth of these companies is truly mind boggling.

With around 100 Pumpkin Patch stores in Australia and a population of 20 million, it doesn't take much to extrapolate the figures in the US alone, with a population of 300 million.

The possibilities in India and China, while probably many years down the track, is enough to make ones eyes water.

Burger Fuel's future growth story isn't as easy to gauge as they have just started their foreign expansion although it will probably be tougher for them to expand than PPL as the fast food sector in which they operate in has a lot more competition. Their strong brand and differentiation to the competition will make this task easier however.

While not guaranteed global success and the associated riches that would surely follow, Pumpkin Patch and Burger Fuel have put their global expansion plans squarely in the hands of two very strong brands in the markets in which they currently operate.

Their success will hang largely on how new consumers respond to their carefully crafted brands and the backup management give them.


Disclosure I own PPL Shares



Burger Fuel Worldwide @ Share Investor


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Discuss BFW @ Share Investor Forum - Register free 




c Share Investor 2007

A Rare Breed

The bullshit that passes for accountability amongst our leaders; politicians and business leaders alike, makes a farce of the meaning of the word "leader".

What does a leader do Darren?

Well, it is quite simple really, even though some individuals in the positions that they find themselves in and in rarer and rarer cases those than actually achieve those positions, would like others to think that being a leader is a complex issue only understood by the likes of those with over sized craniums.

Being a leader as such is as straightforward as setting examples for those that you lead, for it is clear, even to a two year old, for those that observe a good leader doing good things are likely to model themselves on good behavior. Psych 101 really.

Conversely, bad behaviour by a leader will almost guarantee a negative culture: at the workplace or anywhere else for that matter.

Bad leadership flows down to individuals in a company. It can cause resentment among workers, gossip and it saps productivity, morale and effects the long term viability of the organisation or business.

The worst and most public example of leadership failure in New Zealand would have to be Teresa Gattung, the recent retiring CEO of Telecom New Zealand [TEL.NZ]

Her culture of blame, resentment, lies and underhanded competition at leadership level managed to pervade the company culture to such a core extent that any customer getting in touch with a customer services representative at Telecom would have been well aware that there was something going horribly wrong at head office.

Gattung was the head at that head office and she was fully responsible for the disastrous mess that she managed her way into while in tenure behind the big desk.

After leaving of course she was rewarded for her mismanagement with a bundle of cash and plaudits from other mediocre managers of other businesses and arse kissing mainstream "business media" who patted her on the back for "a job well done".

Excuse me!!

On the other hand, the quiet achievers like Don Braid, the CEO and Bruce Plested from Mainfreight Ltd [MFT.NZ]:


"As we grow to become a world player we must maintain our culture and style of business by keeping a strong grip on our policy of being anti-bureaucratic; continuing to allow branch managers to make bold decisions; being energetic and entrepreneurial; and so continue to grow our business.

Don Braid, GM 2007.


Braid and Plested lead from the front and as a result an excellent company culture has evolved. The workers love working there and most of all customers enjoy their contact with Mainfreight.

Without this strong, leader led, focused running of this business Mainfreight would no doubt be floundering in the extremely competitive business environment that they operate in.

Plested and Braid would be sorely missed if they ever left the company so hopefully they can pick a good replacement when that happens.

Given that company culture is so good, the likelihood is that other good leaders will emerge, thanks to the example set by Mainfreight's leaders.

The lack of accountability by leaders when things go wrong in an organisation or business is probably the biggest barrier to business excellence for the medium and long term in this country.

Corporate history in NZ is littered with the corpses of businesses mismanaged to the point of surrender and over the last 8 years the level of managerial incompetence has continued.

The difference over the last 8 or so years though is that management and specifically leaders of that management haven't been accountable or been made accountable by fellow board members, shareholders and customers.

We have had a litany of cases of unaccountable leaders recently. Tim Saunders, former director at failed Feltex Carpets has recently been voted back in as a director of Contact Energy Ltd [CEN.NZ] after being found by an independent body as being partly culpable for Feltex's demise.

Is it any wonder why those working at the coal face at Contact are suffering from low morale. Its CEO or its board should have summarily dumped Saunders. Totally the wrong message sent to the troops and not good for the long term health of the company, global warming fuzzies or not.

Countless heads at the restaurant operator, Restaurant Brands Ltd [RBD.NZ] have failed miserably at the helm, none of them were held responsible in any way, other than they were forced to leave, long after the rot of their management had set in. RBD continue to suffer this vacuum of leadership all the way down to store level and it is obvious in almost every aspect of the business, from the non responsive middle managers all the way down to the surly staff serving customers.

There is a more successful culture in low fat yogurt than at RBD head office.

Sky City Entertainment Group Ltd [SKC.NZ] CEO Evan Davies made a series of mistakes that ended in his being pushed out the door earlier this year but not before he resided over dramatically falling fortunes in gaming profits, a couple of bad asset purchases and a conflict of interest case when his wife was promoted to a position of significant importance in the company.

Davies was allowed to stay at the helm despite his failures because his fellow board members and Sky City shareholders failed to make him responsible and he himself failed to realize that he wasn't managing the company the way it should have been and to fall on his own gilt edged sword.

Management under him at the time are still there at head office and continue to run around like headless chooks wondering what to do, while bargain hunters are hanging around, presumably with better management skills, waiting to pounce on the mismanaged beast that is Sky City.

When is it that leaders will take responsibility for company success and its failures?

It will happen when others make them responsible for those failures. In the case of company leaders; shareholders, employees and customers fail to make them accountable and need desperately to do so.

It shouldn't be up to others to make individual leaders responsible though. Being taught to be a leader from an early age is the antidote to the sickness that we as a society are suffering in terms of leadership.

The New Zealand Prime Minister, Helen Clark, should be a leader to look up to but her copybook is unfortunately blotted with so much irresponsibility and lack of accountability the ink is turning into a sickly red and spilling over the whole corpse.

With good role models in New Zealand being as rare as 15 year old virgins it looks like the problem is going to get worse before it gets better.

Our socialist education system where it is taught that it is OK to lose and that the word"failure" has been erased from the school vocab to be replaced by the phrase "did not achieve" is certainly only going to make the problem of future good leadership a goal that is "not achieved".


Disclosure: I own SKC & MFT shares in the Share Investor Portfolio

Share Investor Reading from 2010

• Ryman Healthcare Ltd: Australian Expansion Needs C...
• Official Cash Rate: Bollard Gets it Wrong, Again
• Long Term View: Wakefield Health Ltd
• Chart of the Day: Rakon Ltd
• Long Term View: Mowbray Collectables Ltd
• Stock of the Week - Reprise 3: Contact Energy Ltd
• Queenstown Airport: Loud Voices & Loyalty
• Long Term View: Skellerup Ltd

From Fishpond.co.nz



Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz




c Share Investor 2007

Share Investor Friday Free for all: Edition 10

Ian gets a Bargain



The Warehouse in Hamilton


Ian Morrice , the head of The Warehouse(WHS) has received good news recently. It was reported in mainstream media today that he is to receive a total remuneration of $3.908 million for the 2007 financial year to June 29.

Nothing wrong with that, Morrice has done well to turn around company fortunes by selling the losing Australian arm and reinvigorating the shop floor by selling more consumer friendly brands in his stores.

Speculation by media in the case of The Warehouse is that one of those targets was an increased share price. Like Auckland Airport(AIA) a few months back managers were given incentives if certain performance targets were met and the link to share price performance was cited by that company.

Both AIA and WHS were/are under takeover speculation so the increase in share price is totally unrelated to the performance by management or the CEO and the incentives paid to those at AIA and Morrice at WHS are clearly undeserved.

If share price increases can be pinpointed to management's achievements then and only then incentives should be paid.

In a closely covered case by business media, the appeal by Foodstuffs, Woolworths and The Warehouse has finished today but a decision is not expected for several weeks.


Playing the game of Monopoly



A Waste Management Trash Unit

Proving that the Commerce Commission can make a ruling in favour of a virtual monopoly business in New Zealand they have cleared Transpacific Industries to buy some businesses off Envirowaste Services.

The company have been trying to buy parts of Envirowaste for some years after being turned down by the CC to buy the whole company a few years ago. That decision followed the purchase of Waste Management by the Australian trash giant and the approval of that purchase by the commission.

Transpacific was yesterday cleared to buy EnviroWaste's solid waste collection businesses in four centres and solid waste businesses in two others.

That decision could shed some light on a decision pending before the commission on whether The Warehouse could be purchased by two dominant retail industry players.

Oils Well?

The recent climb in the price of oil from the low of $US70 per Bbl to over $96 today and the worry over the price is a complex tale of inflation and increases in productivity and technology.

While the price is clearly just below the inflation adjusted April 1980 record price of US$101.70 there are reasons why we shouldn't worry too much, yet.

Since those heady days individuals and companies have increased productivity manifold times and the technology that we now use, for industry and personal use, allows the consumption of far less of the black stuff.

Our cars get more millage to the gallon/litre for a start and vehicles are one of the biggest users of oil, especially you Americans!!

As a footnote to this story, no the world isn't running out of oil. The "Peak Oil" theory is as mythical as global warming and the tooth fairy The left are mining P.O. to advantage their nonsense and collect more taxes.


Acres of Shopping


The new 210 million dollar Westfield at Albany, New Zealand


The expansion of retailing in New Zealand looks set to continue for the foreseeable future if the plans of the mall giant Westfield (WDC) are anything to go by.

Westfield has just opened a giant mall, a former apple orchard from where the "Albany Beauty" apple gets its name, in Albany, just a stones throw from where I live.

That new mall has 5.2ha of indoor floor space and although it was opened yesterday, the 1800-seat Sky City(SKC) Cinemas, will not open until next year.

The company have 12 malls in New Zealand and look set to continue expansion of not only Albany, where there are acres of land to do so, but malls in Newmarket, Auckland and Christchurch as well.

Construction of other shopping precincts unrelated to Westfield, in the Albany area, are going ahead stridently as the population in the area expands rapidly.

Westfield look to have a great future in this country as its covered mall shopping areas don't have the same dominance as they do in such regions as its home market, Australia and the home of the mall, the USA.



NZX Market Wrap

New Zealand shares dropped more than 1 per cent today following significant declines on Wall Street, but the local market's fall was smaller than for those around the region.

The benchmark NZSX-50 index closed down 53.8 points at a one-and-a-half month low of 4154.13. Turnover totalled $113.4 million, with 24 rises and 80 falls.

Telecom shed 2.6 per cent, or 11c, to a more than two-month low of 417 after its quarterly result today. The company said net profit for the three months to the end of September were $225 million, unchanged from a year earlier. But profits from continuing operations were up 29 per cent.

The mobile outlook wasn't good, some of the ways they got some profit seemed to be from lower tax and one-off things like the Southern Cross dividend. Obviously the combination of a bad day and a poor result.

Air New Zealand was one of few leaders to post a rise, up 3c at 215 despite ongoing oil price rises.

Fletcher Building fell 32c to 1168 and continued its dramatic fall over the last week, Contact Energy was down 4c at 900, Fisher & Paykel Appliances lost 8c to 348, F&P Healthcare was 6c lower at 317, and Auckland Airport lost a cent to 287.

Sky City was down 6c at 539, while Sky TV rose a cent to 570.

Smaller stocks to rise were Methven, up 6c at 246, NZX, up 8c at 948, Nuplex, up a cent at 756, and carpet maker Cavalier, 2c higher at 310.

Pumpkin Patch was down 6c at 293 after I bought some earlier this week at 309, Michael Hill lost 20c to 1025, Ebos fell 8c to 537, Freightways was down 7c at 383, and Mainfreight fell 3c to 732.

C Share Investor & NZPA 2007

NZ Dollar Wrap


Reuters currency rates

4.45 today 5pm yesterday

NZ dlr/US dlr US76.25c US77.11c
NZ dlr/Aust dlr A82.99c A82.91c
NZ dlr/euro 0.5277 0.5335
NZ dlr/yen 87.60 88.99
NZ dlr/stg 36.65p 37.13p
NZ TWI 70.61 71.32
Australian dollar US91.90c US93.08c
Euro/US dollar 1.4444 1.4462
US dollar/yen 114.90 115.37

Disclosure: I own WHS Shares

C Share Investor 2007

Trevor Mallard's Anti Violence Advertisement

Trevor Mallard has made a new advertisement in the war against violence in New Zealand and I would like to be the first to unveil it to give readers the full impact.









“ IT ’S NOT OK TO LOOK THE
OTHER WAY AND SAY, IT’S NOT
OUR PROBLEM...”


“OUR CAREERS MAYBE OVER BUT THERE IS
NO EXCUSE FOR VIOLENCE...EVER”.




“ ...BECAUSE IT IS OUR PROBLEM, AND IT’S NOT OK."





“ IT ’S NOT OK TO
BLAME THE DRINK
OR THE FACT THAT I'M
A LOSER".




“ IT ’S NOT OK TO SAY HE
WAS ASKING FOR IT.”




“ IT IS OK TO PUNCH A COLLEAGUE
IF YOU ARE A VIOLENT KNUCKLE
DRAGGING LEFT LIBERAL SUCH
AS MYSELF.”


“ ...BECAUSE IT IS OUR PROBLEM.
AND IT’S NOT OK – EVER.”










C NZ Govt 2007


C Darren Rickard 2007

Wednesday Political Soup: Edition 4

Mallard's Fisticuffs rewarded in Cabinet Reshuffle



Trevor Mallard and the new Labour Cabinet - He's now The Speaker of the House 2017


While Helen Clark has been rearranging the deck chairs on the Titanic today, her cabinet reshuffle excluded boffer boy Trevor Mallard from being demoted and therefore he has managed to walk away from the violence that he inflicted on Tau Henare last week.

No surprises that Clarke has let yet another Cabinet Minister off their responsibilities when they f up because that has been par for the course over the last 8 years. Almost a dozen ministers have been let off for their various crimes and not so mis-demeanor's.

Drunken driving, fraud, assault, dishonesty and corruption have been among the list of misadventures by ministers.

The driving force behind these lapses has of course been our own fearless leader.

Aunt Helen has stolen taxpayer money to fund an election, lied about passing the anti smacking bill, fraudulently applying her signature to a document, sped at 170km through a small town in her car and a multitude of other crimes that escape my memory at present.

She hasn't taken responsibility for any of these things

No wonder Duckman was let off the hook.


Playing snap has never been this much fun


News last week that Pita Sharples used the race card to get political exposure was rounded upon by Labour lap dog Winston Peters who agreed that yes Pita was using the race card and what was he doing using the card that he was accustomed to using leading up to an election year.

The race card was pulled out by political racist Sharples when he called the raids against terror suspects in the Uraweras racist against Maori, even though the suspects were training with illegal weapons, napalm and god knows what else-possibly army surplus swiss army knives.

Peters called snap on Pitas race card when he said Pita was using the race card by calling the raids racist and he was only doing it for political gain.

Pita subsequently snapped back that Peters was using the whole situation for political gain and criticism that he was doing the same was condemned as racist.

The game has continued but given that Peters is dressed much more immaculately than Pita, Peters is bound to win this game of snap.

Christ the race card is Peters game!

No news yet that Sharples isn't playing with a full deck.


Tizard the Joker in reshuffled Deck



News today that the Auckland issues portfolio is going to be ditched can't be much of a surprise to the Minister Judith Tizard.

She has struggled to make any headway in the big smoke and the negative legacy of her mother as the Mayor of Auckland in the 1980s lingers in the Junior Tizard's failure to get Auckland traffic moving in a forward direction.

Perhaps the single biggest loser by her was her failure to get another habour crossing anywhere close to being built.

The aging bridge is in danger of collapsing but don't worry Judith has faith that it will stay upright.

Lets cross our fingers.




Cartoon: Emmerson







c Darren Rickard 2007