Pumpkin Patch's North American Downsizing a Prudent, Overdue Move

News out today that Pumpkin Patch [PPL.NZ] are going to ditch 20 of their 35 United States stores is good news for the company and investors.

It means investors will have less pain in the short term and that there is also still a base in North America from which it can expand again when economic conditions are far more rosy. The uncertainty of retailing conditions in the US and just how long things are going to be dire cannot be ignored.

As a shareholder am pleased about management's move but given that the retail sector in the US has been behaving like a WW2 Zero pilot on a suicide mission for an extended period, one could be a little critical that this move wasn't made 6 months ago. Having said that the exit seems to have been well planned.

Of course the US and New Zealand is littered with collapsing retailers, so Pumpkin has done well to survive, let alone make a profit.

Trading in New Zealand and Australia has been surprisingly resilient and my hunch and anecdotal evidence is that very high birth rates in both countries stimulated by welfare targeted at families having kids (a story for another day on another blog) means that demand in this region has been artificially raised - Thank's Aunty Helen!

There will be costs to exit the 20 stores and this will clearly make the bottom line look awful next reporting period in October but in amongst that bad news is one key piece of good news, 11 of the remaining 15 stores in the US have had their leases re-negotiated in a southerly direction. This is one of any retailers biggest sustained costs.

On a personal note, much of my reason to buy this company was its expansion plans in America and I am pleased the company is still going to pursue that market some time in the future. Without that avenue for growth I would have exited the company when the share price recovered.

The share price moved strongly upward on this news mainly because losses in the US will be far lower than previously pegged by analysts.

Look for an opportunity to buy on lower share prices when the forthcoming book entry loss is announced in October.


Pumpkin Patch @ Share Investor

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Long vs Short: Pumpkin Patch Ltd
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PPL Financial Data


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c Share Investor 2009

Smacking/Anti Smacking Referendum

I must just put a plug in for voting in the Anti Smacking/Smacking Referendum that kicks off July 31.

Everyone should vote if they have an opinion on this subject, regardless of what that opinion might be, it is your democratic right to have a say even if the arrogant John Key says he will ignore the outcome of the referendum.

The referendum question is very clear, ” Should a smack as part of good parental correction be a criminal offence in New Zealand?” if you think a smack is OK you vote No, if you think a smack is not OK you vote yes.

Most people agree that the question is simple even though there has been much malarkey raised to try and confuse the issue.

This blog and myself support a no vote because I don't like the way good parents are being undermined and bad parents are getting away with beating and killing their kids.

Vote wisely.

Additional Info : From the Referendum site

How to vote

A Citizens Initiated Referendum on the question” Should a smack as part of good parental correction be a criminal offence in New Zealand?” runs from Friday 31 July until Friday 21 August.  Read more »

When to vote

Voting in the referendum runs from Friday 31 July until Friday 21 August.  Read more »

Going to be overseas?

If you have provided an overseas postal address with your enrolment details your voting paper will be sent to you directly. If you are overseas or your voting paper is sent to your New Zealand address you will need to arrange for your voting papers to be forwarded on to you.  Read more »

Help for voters with a disability

Read more »

The result

The preliminary result of the referendum will be announced after 7.00pm on Friday 21 August.  Read more »

What is a citizens initiated referendum?

A Citizens Initiated Referendum gives everyone who is enrolled the opportunity to vote on a specific question.  Read more »

Frequently asked questions

Questions and answers about the referendum on the question "Should a smack as part of good parental correction be a criminal offence in New Zealand?"  Read more »

2009 Referendum

A Citizens Initiated Referendum on the question” Should a smack as part of good parental correction be a criminal offence in New Zealand?” runs from Friday 31 July until Friday 21 August.  Read more »

c Political Animal 2009

Aaron Bhatnagar Nuts off, Again

Further to the personal attack from local politician directed towards me over my mild criticism of his distasteful attack on a dead person, Michael Jackson in this particular case, Aaron Bhatnagar has another go on his blog, this time during office hours, on ratepayer time .

He makes a reference to a website put up by someone with distasteful, slanderous stuff written about me, putting my family in danger because he asks people to look at it, because it contains information that shouldn't be on the net and simply isn't true.

Is this the sort of individual that should be representing you, causing trouble for a fellow Aucklander?

In my opinion we need higher standards for our Pollies and Aaron just doesn't fit that bill.

I will let you be the judge of that dear reader.

This will be the end of the matter, as I dont want to give Aaron the attention he so clearly lacks.

c Political Animal 2009

Aaron Bhatnagar Nuts Off

It is hard to get good, upstanding representation from our politicians these days.

National, and especially local, and from all political colours, we seem to be dragging the bottom of the barrel when it comes to governance.

If it isn't Andrew Williams, Mayor of the North Shore, spending ratepayer money like a drunken sailor, with his own ratepayer funded wine, we have Mayor Banks across the bridge trying to outdo him by digging up perfectly good footpaths in the CBD again and spending 80 million bucks "turning sidewalks into roads", while he has well and truly broken his 2007 election promises by promising to use truckloads of ratepayer moola on the 2011 Rugby World Cup.

One of John Banks disciples, Auckland City Councillor Aaron Bhatnagar, appears to be fitting the mold (or should that be mould) when it comes to the stereotypical machinations of local politics.

Aaron is one of those councillors behind the push to build a multimillion dollar shed shaped like a shoebox on the Wynyard Wharf for the wealthy cruise ship set, instead of a world class public space or building, on one of the best harbour sites in the world- don't we just love the Sydney Opera House and its public surrounds.

Anyway Aaron has adventurous activities online, he nutted off yesterday:

This email exchange yesterday between yours truly and Aaron after he made tasteless jokes about Michael Jackson's death on his facebook page.

Only his replies are quoted because he has removed me from his Facebook friends after I told him to bugger off and my comments have been removed.

I basically started off saying he was being tasteless joking about the death of someone and joking about anyone's death is a pretty low thing to do. I wasn't abusive at all.

Here were his replies:

1."Grow up Darren, it was a very mild tongue in cheek comment based on one of his more famous songs. I've seen some pretty repulsive jokes about MJ, usually involving allegations of sex abuse by Jackson, so what on earth is your problem?"

When I suggested that his comments about someone dying were inappropriate for anyone in politics:

2."Any besides, what's my political career got to do with this? If politics somehow distorts my moral compass, what do we make of you, whose blog is called "The Political Animal - Politics with balls".

Are we to take it that your political interests generate an unhealthy fetish with genitalia?"

When I suggested what his mother might think about him joking about someone dying.

3."I get it now. You are Church of Michael Jackson. No criticising MJ by anyone.

I suggest you put a damp cloth on your forehead, have a nice cup of tea, and a take yourself off for a nice nap. You need it.

What a humourless scold."

4."What a tantrum!

I'm frankly astonished at your comments. Of all the things I could have said, it's almost unreal that my rather mild turn of phrase has set you off. If that's a standard you hold dear, then I don't want any of it."

When I told him to bugger off (this is when I DID get a little testicularly challenged) spend some more ratepayer and his daddy's money and make his jokes about dying somewhere else:

5. "LOL - now I know you are a nasty piece of work!"

Now I am used to getting abused by all sorts of people because I have strong opinions and put them out there and fair enough, I LOVE good debate, but a local politician having a laugh at a person dying (even a misunderstood individual like Jackson, there is perhaps a time for jokes but long after the person has been buried) so soon after they have died, surely shows the mentality and arrogance of an individual that really isn't suitable to represent people - what the hell is he saying behind his constituents backs!

Does he joke and carry on in a similar vein? Who knows.

For goodness sake, if you have a political career and have dopey things to say, keep them to yourself Aaron, it aint a good look.

It isn't that bright and it reveals a somewhat foul taste in the mouth.

We clearly need much better representation than this.

c Political Animal 2009

Michael Hill: Interview with Ian Fraser

You may have missed an interview with Michael Hill yesterday with Ian Fraser. I only caught it by accident while turning the dial.

Michael is currently on a media blitz to sell his book and this is another but more interesting leg.

The interview covers off his personal background and motivation to get him where he has.

It is very interesting to hear that up until the infamous house fire when he was 43 he wanted to "do more" in life but, like most of us, was fearful of making that step out of the comfort zone we place ourselves in. After that incident he reacted in a way that most wouldn't - he calmly decided that there was more to life than what he had experienced thus far and he was going to "go for it".

The fire somehow was the impetus that removed that block and allowed Hill to face new things without fear and that we all face that moment when a choice can be made that will change our lives but we don't always take it. -he did.

There was also an interesting admission, he mentioned that he has made a mistake by buying Whitehall Jewelers Holdings-based in the Chicago out of bankruptcy last year - not usually something that CEO's would readily admit to and he says he has learnt from it, the struggling US business has taught the company as a whole how to respond to the current tough economic times, he said.

I would recommend a listen, the interview is 46 minutes long, 16 MB and can be downloaded at Share Investor Forum here. You have to be a member to download, its free and quick - register, it takes less than a minute.


Disclosure I own Michael Hill International shares.


Michael Hill International @ Share Investor Blog

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Buy Toughen Up: What I've Learned About Surviving Tough Times



$NZ 33.82 -15% off - from Fishpond.co.nz


c Share Investor 2009

A Note to Prospective Restaurant Brand's Shareholders

There has been market talk in the past and more out today about how positive things look for Restaurant Brands [RBD.NZ] profit next year.

Yes, profit will be up marginally from last year and substantially from the last few years but this company really has had a dreadful past, so any increase in profit will look good.

I am not sure whether anyone follows this company closely in the broker/choker set but if they do they were either in nappies when the company listed back in 1997, too lazy to analyze the company's history properly, or ignoring the bleeding obvious simply because the stock will be back in the NZX 50 next week and brokers will have to add the stock to their index funds - read pump and dump.

While South African CEO Russel Creedy has done a much better job than any leader the company has had, he has gotten the company out of the fast food graveyard by focusing on cutting costs, speeding up service times and levels of service (my experience from gorging at KFC for the last 15 years and being a large RBD shareholder in the past) the industry that his company operates in is notoriously cyclical.

Fast food is currently undergoing a renaissance of sorts because of dire economic circumstances and people are looking for cheaper places to eat. RBD is now in the upper part of the fast food cycle, in fact I mentioned about ten years ago that its business cycle is up and down more than a cheap Krd hooker, anyway, that aside, my bet is that the stock may even race up to one and a half dollars or more from its current 1.02.




It has moved over the last couple of months ago from a low of 57c a stock price it last reached in the late 90s.

My point is if you are interested in buying into this stock, be warned that you should be there for the long-term because its stock price will come down again when it moves back off the peak of its economic cycle and once again struggles to maintain profit.

You have been warned dear readers but as always, do your own research.

Restaurant Brands @ Share Investor

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c Share Investor 2009

Long VS Short : Auckland International Airport

In this eight installment of the Long vs Short series I am once again going to take look at the chart comparisons for a stock from the Share Investor Portfolio and compare the 10 year return (chart above) to the turmoil of the last year with a 1 year return chart (large chart at bottom of post).

In this series I want to show the merits of investing, using charts, for the long-term vs short term gains or losses. I will use the longest available data to me for the long-term view (10 years )and will make a comparison against the NZX50.

In this segment of Long vs Short I will take a look at Auckland International Airport Ltd [AIA.NZ] .

I currently hold 3000 Auckland Airport shares after buying 1000 of them in November 2006 and 2000 in April of this year. (see small chart below for detail)

My Portfolio
Symbol	Price	Value	Earned
AIA.NZ	$1.600	$4800	$-540
You own 3000 [AIA.NZ] shares purchased at $1.78 [$5340]

This stock has been performing well fundamentally over the last 10 years and steady over the last 12 months. Its share price though has been fluctuating wildly over the last few years. From a high of over $3.60 during a competing bid to seize control of the company in 2007-2008 to $1.54 recently.

If I had held this stock for the full 10 years (see large chart at top) my return would have been a whopping 210%-including dividends, tax credits and minus brokerage, the NZX is a gross index of stocks.

By comparison if I had held the stock for just this last year (see large chart below) my return would have been a loss of just over 35%.

My total return after 2.5 years or so of holding AIA stock is a loss of just under 10% (see small chart above) That is after dividends and tax credits are added and brokerage applied, not bad considering the market drubbing of every listed NZX share but there is an 8c gain from the 2000 shares I bought in April at $1.70 each.

Having said that this exercise proves, once again, that the long-term bet is the only one to take.

Long-term, 8 in this series, short term 0.





Long vs Short Series

Michael Hill International
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Auckland International Airport @ Share Investor

Auckland Airport needs main focus on its core business
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c Share Investor 2009

Pizza Hut sell-off provides opportunities all-round

The finalisation of details yesterday of a decision made last year by Restaurant Brands [RBD.NZ] to ditch their company owned Pizza Hut restaurants and flog them off to owner/operators brings to an end the long running saga of this money losing brand in RBD's stable of 3 - KFC & Starbucks being the two others - brands.

For many years Pizza Hut has dragged down the company bottom line while KFC has struggled at times to hold up the whole company - Starbucks has also been a money loser since its introduction in 1999.

Many of my readers will know that I was a early shareholder of RBD and actively pushing management back in 1998 to ditch Pizza Hut and sell them to owner operators as that was how their competition was kicking Pizza Hut's backside.

Better late than never!

This latest development will be good for RBD shareholders. Not only will RBD get one-off money for selling Pizza Hut stores but they will also get ongoing management fees for each store that is sold-a sub franchisor of sorts, as YUM! still remains the big daddy franchisor.

All Restaurant Brands shareholders need is the double -Starbucks to be sold off - and the company will be much more able to withstand the highly competitive fast food market with KFC as the big star.

Of course the Pizza Hut sell off provides a good opportunity for individuals to buy a run down business and develop it into a good one.

A franchised pizza business like Pizza Hut, if run well, is a great way to make money.

Domino's Pizza owners in New Zealand have done this well over the years and this has left Pizza Hut as the also ran after being the dominant pizza force in New Zealand for years.

If you have a couple of hundred thousand free cash and access to debt you might well want to give RBD a call right now.


Restaurant Brands @ Share Investor

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Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's playing chicken with KFC
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2007 FY profit analysis
Delivering increased profit in October 2007
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c Share Investor 2009

Market Watch: Sky City Entertainment/Freightways Ltd

Interesting that both Sky City Entertainment Group [SKC.NZ] and Freightways Ltd [FRE.NZ] respective share prices are both approaching the price at which their recent capital raisings were issued at.

Lets have a wee look at Sky City first.

Today the stock closed at NZ$2.62 (see 2 month SKC chart below) just 1c above the $2.61 Share Purchase Plan (SPP) price, a purchase plan that I participated in just a month ago.

At the time I moaned and bitched that my current Sky City shareholding was going to be diluted, only getting just shy of 2000 shares in the offer. I had a feeling that the share price was going to take a dip because of economic circumstances (gee I am a genius), so I am going to take the opportunity to grab a few more thousand shares to top up my holding to 40000 or more .

Naturally I am very pleased about this turn of events in the market.

Likewise Freightways. I got gypped there too, and will be looking for at least another 1000 more shares to top up my holding to 10000. The current share price is $2.84 as of market close today so there is still another 40c to go before it will trigger a buy at the SPP of $2.44 but if you look at the Freightway's 2 month chart below you will see, like Sky City, the share price trajectory is in a downwards direction, so is possible that my buy price will be reached.



Time to put some cashflow to good use.


Freightways @ Share Investor

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Sky City @ Share Investor

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c Share Investor 2009

Stock of the Week: Burger Fuel Worldwide

This Stock of the Week will be a surprise to many because I have been very critical of this company since its IPO listing in July 2007. Burger Fuel Worldwide [BFW.NZ], the "gourmet" burger franchisor company that collects royalties off franchisees as a means of revenue -but currently derives more than half its revenue from food and beverage sales at two company owned stores-and has limped from a failed, over-priced IPO and incurred big but dwindling losses along the way.

Its cash reserves are almost exhausted and its stated reason for their IPO, attracting more franchisees to gain revenue growth for the franchisor, has come to a grinding halt because of "capital restraints".

All negative so far, but wait there's more! Some positive stuff!

There is a chance that Burger Fuel, management could pull things off sometime in the future and make a good sustained profit.

One of the reasons I picked this stock was its share price. It is getting close but not yet at, its true value. At 32c it is roughly a third of its $1 IPO price. There is little interest in and few buyers lined up as at market close on Friday 19, with the first cab off the rank offering 10c a share and the lowest 1c - the lowest ever bids for this stock, so a clear opportunity exists.

Burger Fuel isn't one of those solid stocks you would buy and not expect to lose money, it is purely speculative and high risk but if you have, like me , been watching the trials and tribulations of this company over the last 2 years, and thinking about buying some, now would be the opportune time to start thinking about it.

Anything less than 15c would be a good starting point.

Good luck!


Stock of the Week Series

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Burger Fuel Worldwide @ Share Investor


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Discuss BFW @ Share Investor Forum - Register free





c Share Investor 2009

Sir Robert Jones in his Autumn of Content

I am a contrarian investor of sorts. I say this because while I am buying stocks right now and looking at buying more, I also bought them while the market was at a higher level.

I have written about a couple over the last week, Michael hill and Doris Mousdale, and there are a couple of other New Zealand notables, Jan Cameron and Bricoe Group's [BGR.NZ], Rod Duke who are contrarians by nature.

Perhaps one of the worlds most famous contrarian investors is the world's richest man, Warren Buffett - he loves the current market turmoil, proclaiming such gems that he feels like a "Kid in a candy store" or a "Teenager in a whorehouse", when it comes to the prices he is paying for beaten down assets.

New Zealand has its own Waren Buffett in Sir Robert Jones.

He is as happy as a tar baby in a sandpit because the property tycoon has been buying property when everyone else is selling - NZ$100 million of deals done so far this year.

Some prescient quotes to a recent audience of property professionals show just how excited Sir Bob is:

"From a self- interest point of view, we look forward to a recession."

"We are not going broke. We buy buildings and those buildings are cheaper."

"Land developers go broke, building developers go broke, and for very good reasons, but they're too dumb to work it out for themselves."

"Why do banks keep financing them? Because the bankers get younger every year."

"I've survived more property cycles than most of you, so where's property going? Nowhere - property doesn't move."

You cannot get a more experienced commercial property man in Australasia than Sir Bob, as he points out he has seen this all before and no doubt capitalised on the troughs.

I recall him selling a large office block during one the boom times only to buy the same block back years latter for a much lower price - from memory it was a building in the 1980's Chase development, the full city block the "Finance Centre" in Auckland.

Sir Bob likens the economic cycles to the four seasons, with Winter the low point and Summer the high. He reckons we are in the Autumn of this cycle.

I think he is right and there is worse to come before it gets better but he certainly is making his autumn/early winter one of content rather than the alternative.

You should too if you have the cash.


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c Share Investor 2009

Burger Fuel Worldwide: Download full company analysis from Thomson First-Call

If you want to see how the Burger Fuel Worldwide [BFW.NZ] financial's stack up I have included a full collection of data out June 19, 2009 courtesy of Thomson Financial First Call Global/ASB Securities.

You will find balance sheets, ratios, charts, shareholder returns and all the Burger Fuel info you could poke a hot chip at. (see teaser below but download the full package at Share Investor Forum - you must join to download. It is free and takes less than a minute. I might do this for other companies if there is sufficient interest.

I only mention this because the company is getting close to my purchase price. Last sold at 32c and the next bid in at 10c (a low for the company) with one optimistic fellow offering 1c per share for 100,000 shares!

Key Measures for Burger Fuel Worldwide Value N/R Risk 2 Lower risk Growth N/R Income 5 Lowest VALUE Company Market Sector Aspect Earnings Model -- 0.89 0.88 P/E ratio -- 7.44 12.0 P/B ratio 4.38 0.85 1.68 P/E Growth Ratio -- 1.68 1.67 P/S Ratio 2.18 1.64 0.39 INCOME Company Market Sector Dividend Yield -- 7.7% 5.2% Franking -- -- -- Tax adj Dividend Yield -- 5.6% 4.1% Dividend Stability 0.0% 0.0% 89.3% RISK Company Market Sector Beta 0.67 0.98 0.74 Current Ratio 3.13 3.85 1.09 Quick Ratio 2.86 3.12 0.39 Earnings Stability -- 54.5% 53.7% Debt/Equity ratio 3.6% 0.0% 50.5% Interest coverage (x) -42.8 4.49 2.28 GROWTH RATES 10yr 5yr 1yr 2yr Fcst Sales -- -- 76.1% -- Cash Flow -- -- 52.6% -- Earnings -- -- 66.8% -- Dividends -- -- -- -- Book Value -- -- -16.4% -- Previous Close 52 week high 52 week low $0.32 $0.64 $0.20 P/E Ratio -- Sector Food & Staples Retailing Market Cap $17.0 Million Key Dates Listed 27/07/2007 Balance Date 31 March AGM -- Total Shareholder Return (avg annual rate) 1yr 3yr 5yr 10yr -20.0% -- -- -- Earnings and Dividends Forecast (cents per share) Curr -- -- EPS -1.3 -- -- PE(x) -- -- -- DPS 0.0 -- -- Yield(%) -- -- -- Source: Thomson First Call Global Estimates

Burger Fuel Worldwide @ Share Investor


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c Share Investor 2009