Thursday, December 3, 2009

Warehouse strike opportunity to buy



News earlier this week that less than a third of The Warehouse Group [WHS.NZ] workers will go on strike because they see the company as the big bad Christmas Grinch is bad short term for the company because it comes at a time of year when the bulk of their sales and profit is made but it is nonetheless another opportunity for people like myself to load up on the Christmas bargain that Warehouse shares could become if the industrial dispute drags on.

"Project Invigorate" the Warehouse' initiative to streamline and save costs includes the ability for management to direct workers into more flexible hours and conditions. Approximately 7500 staff work at the big red sheds and the bulk of the staff, who are not unionised, agree with management and so don't have a problem.

As I said above the short term prognosis if a strike is called and it drags on means that sales and profit for the next reporting period will be down but in the long term savings from increased labour flexibility along with logistics changes and inventory tweaks will mean bigger profits and more dividends for owners like myself and clearly that aint a bad thing.

The company is getting bad press in the mainstream media and they are largely behind the union from what I have been reading but below is typical of some of the coverage:

"All the staff were happy in their job. The managers used to be more flexible with the hours, they understood our personal circumstances, they used to work around our lives instead of us trying to work around the company's life. NZ Herald

I mean hang on a sec, don't you realise your boss is employing you ! at a time when economic circumstances are tough.

While I am for treating workers well, one has to realise that the company is there to make money and while you are an important part of that the company deserves the right to do what it sees fit to run their business.

The majority of Warehouse employees agree with management and only a handful of workers whipped up by a socialist union are pissing in the wind.

Time for them to go elsewhere get another job and let us run the company how we see fit.

With every cloud though there is a silver lining. I will be poised to buy if the share price drops.

Thanks to the Union for that.

Warehouse shares dropped 10c yesterday on the news and my interest will be piqued at around the $3.75 mark.




The Warehous
e Group @ Share Investor

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Tuesday, December 1, 2009

Mike Pero and Air New Zealand: Capitalism vs Socialism

The fuss made by Air New Zealand [AIR.NZ] over Mike Pero's generous offer last week to provide a plane for families of victims of the 1979 Mt Erebus crash to visit the crash site has come to a head today when Air New Zealand seems to have relented because of embarrassment over a pitiful 6 individuals allowed to go to the site for the 30th anniversary of the crash last week.

The pilot of the fateful Air New Zealand DC10 that killed 257 people was blamed by Air New Zealand management at the time for the crash but evidence was clear that the fault lay first and foremost at Air NZ's feet and that management lied and covered up to rescue the company reputation.

It seems Rob Fyfe and his fellow board members have learned little over the years.

The company that he runs, which is majority owned and financially supported by Kiwi taxpayers has had a history under Fyfe's ownership of socialistic tendencies. That is, its CEO Fyfe has muttered that his company needs more taxpayer moola to run it, using fake science to attack competitors and making public comments that really shouldn't be made by a CEO in a publicly listed company.

Air New Zealand is to all intents a government department and it is run that way.

You can see that in its response to Mike Pero's offer to get a charter plane up to Erebus. Pero made the offer, Air NZ was "offended" by it, then changed its mind and now wants to do it itself, with taxpayer money - pure politics in operation and nothing else.

The failure by Fyfe at the top to be proactive and supply a plane for as many family members of victims who wanted to go is the real story.

Of course the fact that Jim Collins, the pilot of the 1979 flight, hasn't been publicly vindicated is the biggest shame of all and politics is again to blame for that.

As taxpayers, we are all Air NZ shareholders and we should all be angry about that. Those that have made a choice to buy Air NZ shares on the NZX should be seriously looking elsewhere to make money - this company aint going anywhere good in the long-term.

I salute you Mike for standing up to the mediocrity of socialism and using your fine capitalistic skills to try and make a difference for "victims" of the Erebus disaster.

Lets hope you go ahead with the flight. I know which flight I would rather be on.


AIR @ Share Investor

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c Share Investor 2009

Monday, November 30, 2009

Stock of the Week - Reprise: Contact Energy Ltd



Contact Energy Ltd [CEN.NZ] was a Stock of the Week pick back in June and I picked it then because the share price was heading below 6 bucks and there seems to be some resistance to the stock price falling too far past the $5.50 mark and that is why I have included it again.

The stock has retrenched below $6 4 times this year and has always retraced back above that mark. As high as just over $6.50 on one occasion.

A good stock for you short termers out there and a good opportunity for those of you looking for a good company on the cheap for a long-term proposition.

I must repeat though that management of this company is poor but even a monkey running this company can make money.

Could go lower than its current $5.84, with a low this year of $5.47.

Buy on further weakness if this stock has been on your watchlist.


Contact @ Share Investor Blog

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Follow the Monopoly Board

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Stock of the Week Series

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c Share Investor 2009

Friday, November 27, 2009

Kiwi Income Property debt levels should be a worry to investors

I only have 1000 Kiwi Income Property [KIP.NZ] shares so the outcome of decisions made by management has little material effect on me but it is well worth noting their recent plethora of capital raising attempts over the last few months.

Back in April they raised $50 million in an institutional and shareholder offer for additional shares and just recently I received a very glossy (and no doubt expensive) prospectus asking for an additional $125 million from shareholders.

Now I am not against companies raising capital from time to time, it is part of being a shareholder, but the dilution for shareholders if they don't take up the offer is something that cannot be ignored.

The high debt levels are a worry too in an economy that is yet to bottom.

The company has massive debt levels of almost NZ$1 billion which is just slightly half of the value of the assets on its books - assets that are worth $200 million less than last year and are likely to be worth even less next year as the commercial property sector comes under more pressure due to a business slowdown and less rental activity.

Management of various assets has also been a little lax to say the least with a building in Wellington, BP House, only being offered for sale to one interested party when there were others sniffing around - very strange.

The over-reliance on one property for income - Sylvia Park Shopping Centre - and the spending of shareholder capital to continually expand it could also be a concern if the retail sector continues to slide as it has over the last 18 months.

I am starting to backslide on my reasons for buying in the first place and regret my purchase - be it ever so small - I don't like losing money and fear I will with this one if their debt levels overwhelm their asset values, shareholders run out of money to prop it up and institutions lose interest.

KIP Shareholders please keep an eye out for your investment over the coming year.

As a footnote, and it really needs to be said even though it is probably obvious, I did not participate in the April capital raising and will not involve myself in the latest money grab.

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From
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Letters to Aston: Lessons Learned from a Lifetime of Investing

NEW! "Letters to Aston: Lessons Learned from a Lifetime of Investing" by Martin Hawes


c
Share Investor 2009