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Sunday, January 31, 2010

VIDEO - Simon Moutter on Australian Airport Purchase

Source: ONE News, Thursday January 28, 2010.

Auckland International Airport [AIA.NZ] CEO Simon Moutter discusses the airport's strategy following its $166 million purchase of a stake in two Australian airports and its $126 million share offer announced on Wednesday.

Please keep in mind that Simon was the chief operating officer at Telecom New Zealand [TEL.NZ] for 12 years before becoming AIA CEO, so he and his cohorts at Telecom have a track record of a massive failure in Australia already with Telecom's ill fated purchase of AAPT, which continues to have negative financial ramifications for the Telco and its shareholders to this day.

He keeps talking about the Australian Airport as a "step out" from the ports main asset, their Auckland Airport asset.

As an AIA shareholder I don't feel as positive as Simon about our purchase and feel a little nervous considering all the business jargon he is using to explain his reasons for the buy.

Just a footnote, the new share issue at NZ $ 1.65 could provide the opportunity for new AIA investors to get in cheaper than the closing price last Tuesday of $1.92 as the share price finds a new level post capital raising.

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c Share Investor 2010

Wednesday, January 27, 2010

Auckland Airport Capital Raising a fair call

The announcement today that Auckland International Airport [AIA.NZ] is going to raise NZ$126.4 million from shareholders to pay for two hick town airports in the middle of nowhere in Australia should be no surprise to AIA shareholders.

AIA defends its Australian airport purchase

The airport borrowed heavily to fund the purchase and now shareholders must take the brunt of what I see as a poor decision and bail out AIA directors who apparently have money to burn or risk having their share holding diluted - boy I am going to have to eat dirt if this buy is a success.

Anyway, bad business decisions aside, the structure of the capital raising doesn't look half bad.

Allocations of new shares will be attributed on the basis of one new share for every 16 shares held and no extra shares will be given to institutions or any medium sized shareholder will be scaled down their allocation. Every shareholder big or small will be treated in the same manner and for that management should be handed a bunch of fresh pansies. This approach contrasts the many capital raisings of 2009 which favoured smaller and very large shareholders but largely ignored medium sized players like myself who had no choice but to have their shareholdings diluted because of an inability to get a proportional allocation of new shares.

Incidentally AIA is a small shareholding in the Share Investor Portfolio and at 5000 shares my entitlement will come to 312 shares, of which I will take up in full. At NZ$1.65 per share the cost to me will be just over 500 bucks.

The only gripe that I have (I am only happy when I am moaning) is at $1.65 it is a pretty hefty discount to Tuesday's closing price of $1.92.

The capital raising will be fully subscribed.

Related links

Download the AIA offer prospectus and associated documents here.

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Tuesday, January 26, 2010

Economy 2010: Taking the long way

Further to a post I made yesterday about opportunities to buy cheaper stocks, I touched briefly on the state of the economy.

Let me expand on that if I may today and we will forget it again for another 6 months, because I know it is easy to bitch and moan about this stuff as I have done on a number of occasions.

In my opinion the current economic downturn is going to take years to recover from. We have seen a relaxing of the fervour that started in September 2008, following the collapse of big financial institutions the world over and since then we have had an apparent lift in confidence due to trillions of dollars of borrowed and the printing of currencies (cheers China!) and a subsequent lift in various financial indicators; slow down in jobless growth, small GDP growth, global trade improving, etc, etc.

As I said above though, this move towards the positive is based on borrowed money and it has to be paid for, eventually.

As many of you will know, including myself, a mortgage like that can be hard to pay back when your income might now be less than it once was and while you are paying that back other forms of spending will be cut back and clearly that impacts on the economy. This huge unprecedented debt is going to constrain the economy in New Zealand and in every other country deep in debt. Even China, who is the lender, will be impacted because we wont be buying as much of their quality produce - only a hint of sarcasm there.

Most of us, but not all, will need to be prudent to survive the next 5 years. Cut back where we can and pay down debt if and when we get the chance. More debt taken on during this time will merely postpone the inevitable hounds at the door. It aint hard, it just takes some discipline.

While we are not in a 1930s depression era economic downturn, we are going to suffer, I think, economically for as long as those folk in the 30s did, in our own way. Constraint, low or no growth and inconsistent and unsustainable upturns will be the order of the day, until that debt is discharged.

There are also other shocks to come from the heady days of economic growth during the 20 years pre 2008. Complex derivatives failures and commercial property shocks look set to come and spoil what confidence we may have gotten back.

This is all part of the economic cycle however and is nothing new and there will be opportunities to buy as others must sell cheaply to pay down debt levels.

On that last positive note, for me anyway, I will bring an end to my gloomy outlook - see you back in 6 months for an update.

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Sunday, January 24, 2010

Market Correction: Excitement Building!

Once again global stockmarkets are rightly nervous about the so-called economic recovery in the United States, with Obama acting like Robin Hood without an arrow and rumblings of credit clampdowns in China, the DOW has lost almost 5% in one week as a result.

It is bloody exciting!

I was getting sick of the disconnect between the reality of a debt led "recovery" and the fantasy of investors in stockmarkets like the DOW, who have pushed that particular market up by over 40% in less than a year -incidentally that is the largest bull run since the 1929 Wall Street crash and we know what happened after that particular market "recovery".

Yep 40%, does anyone think we are doing that much better now than we were this time last year?

Not this fellow.

I last bought stocks in July and haven't felt tempted yet until The Warehouse Group [WHS.NZ] shares took a dive recently, simply because some companies are overvalued compared to 12 months ago.

The excitement is building now for me as there looks like reality could have dawned on some and they could be rushing for the exits as I am happily ready to enter the market again at a better price.

One the economic outlook, there is anecdotal evidence on my part - I tend to trust that more accurately than what economic soothsayers are being paid to say - that the economy in New Zealand, while not completely buggered, is still hanging on a knife edge between growth and recession and it appears that any growth is going to be sporadic and a long time coming.

There just isn't any money out there.

A good time to buy assets if you do have some moola and the NZX is likely to take its lead from the US market where it dropped by over 200 points last Friday.

Happy buying.

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Sunday, January 31, 2010

VIDEO - Simon Moutter on Australian Airport Purchase

Wednesday, January 27, 2010

Auckland Airport Capital Raising a fair call

Tuesday, January 26, 2010

Economy 2010: Taking the long way

Sunday, January 24, 2010

Market Correction: Excitement Building!

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