Share Investor Friday free for all: Edition 8

It was 20 years ago Tomorrow



The day the market took a dive
in 1987.

No not Sergeant Peppers Band but the Great Stock Market Meltdown of 1987.

I didn't follow the Stockmarket 20 years ago. I vaguely recall a news incident at the time but didn't equate it with anything serious.

I was living in Sydney at the time, so the fallout from it wasn't as bad as it was apparently in New Zealand.

My introduction to the Stockmarket came almost exactly 10 years later, when I bought shares in the fast food operator Restaurant Brands (RBD)

Since then I have taken a great deal of interest in equities and my 10 years invested in it has taught me much.

Investing in the NZX has given me an appreciation of business, how fear and greed work in financial markets and most of all made money for me.

The biggest lesson that I have learnt is from losing money in a couple of stocks. That hasn't dulled my obsession with the market though.



Craig Heatley (left), and Allan Hawkins
after Rainbow Corporation lists on
the Stock Exchange in the mid 1980s


Unlike some who lost their shirts and more back in 1987 my loss wasn't very large and thousands of Kiwi investors haven't forgotten those heady days and wouldn't touch the sharemarket with a barge poll today.

The New Zealand Sharemarket was one of the worst affected back in 1987 and still hasn't recovered from the hit that it took. Most other global markets have multiplied their values many times in the last 20 years. The US market is now worth more than 5 times what it was worth all those years ago.

True, the NZ Stockmarket is a much more stable and regulated market than it was back in those wild west days but there are still some negative elements that linger today, most notably the insider trading that is done by NZX sanctioned broker firms and management of its listed companies.

Lets hope for a more positive next 20 years. NZX's Mark Weldon is doing a good job so if he straightens the rest of the markets kinks out then we might get somewhere.


Burger Fuel Shares get a Fuel Injection


Burger Fuel Outlet

It hasn't been only the global oil prices climbing lately.

Burger Fuel(BFW) the New Zealand based gourmet burger maker, has had its shares climb from a low of NZ$.60c to 70c over the last week.

On very low volume again but the down trend has reversed.

No news about how the new Kings Cross outlet is going and I will be waiting with with great anticipation for the lowdown.

Good news for this outlets sales will push shares a lot higher.


The Dice get Fluffy

First it was then it wasn't and now it is again.

Sky City Entertainment(SKC) the casino, hotel and cinema operator had its shares halt trading for 15 minutes on Monday because the NZX feared that the company was trading without full disclosure to the market.



Sky City Metro, Auckland
City

This was because there had been rumours that another company had approached SKC management with interest in the entertainment group mainly because a director of the company mentioned it to a reporter on Sunday.

This was initially denied then days latter it was confirmed by SKC management itself that there would be indeed another "interested party" doing due diligence with a view to buy the company.

The other company is possibly US private equity firm TPG which is examining the books of SKC, sources familiar with the matter said today, with any bid seen worth over $US2 billion ($NZ2.7 billion).

The new contender is unnamed.

The complexity and ups and downs with the possible takeover of SKC has seen much confusion and speculation over the last 3 weeks since the M & A speculation was mooted.

I'm still hoping the buyout is a failure because I see more value in the company long term and substantial capital returns to shareholders as cinemas in New Zealand and the Adelaide Casino go on the block.


Fishing for returns


Fisher Funds, the highly successful New Zealand fund manager is currently offering what could be a good investment in years to come, if their track record is anything to go by.

Their New Zealand and Australian listed investment funds have done very well since their inception, with excellent returns so far.

Their latest offering is Marlin Global Limited. "Marlin will provide investors with access to a handpicked portfolio of outstanding growth companies selected from around the world", according to the company website.

This is an excellent way to get exposure to global markets without the attendant fees and taxes to complicate things.

You can download a prospectus here but keep in mind that it may not perform as well as Fishers other funds.

I may apply for a small parcel myself.


The Dots get the Hots


Dominos Australia wants
a slice of the Global Pizza
Market.

Doing what our domestic Pizza Franchisee with the Pizza Hut license, Restaurant Brands couldn't do, the Australian arm of US giant Domino's is successfully expanding overseas.

It will open at least 35 stores in Europe each year until it reaches 1000 stores, betting on rising demand for home delivered food.

Domino's has a total of 667 stores, with 404 in Australia, 65 in New Zealand and a combo of 198 in France, Belgium and the Netherlands.

Restaurant Brands delivered appalling results when it bought the ailing Pizza Hut chain in Victoria Australia in 2000, with a total of around 60 stores.

Poor management was unable to turn company fortunes around and RBD has now almost finished selling their OZ arm after losing 10s of millions of shareholder dollars.

The pizza biz is a very competitive industry but if Domino's OZ expansion works then their slice of profits will get bigger.

Domino's Australia is listed on the ASX .


NZX Market Wrap

Today, the NZSX-50 benchmark index closed up 3.2 points at 4316.31, just 26 points below May's record high. Turnover was light, totalling $89.2 million. Air New Zealand(AIR) rose a cent to $2.12, Steel and Tube (STU) fell a cent to $4.38, Michael Hill(MHI) lost 20c to $10.30.

Carpetmaker Cavalier(CAV) was even at $3.25, Tourism Holdings(THL) dropped 16c to $2.32, Nuplex(NPX) fell a cent to $7.69 and NZ Refining(NZR) jumped 18c to $7.70 stimulated by rising world oil prices.

Fletcher Building(FBU)was up 4c at $12.38, F&P Appliances(FPA) was flat at $3.70 and F&P Healthcare (FPH) down 4c at $3.34.

Telecom(TEL) rose 2c to $4.54, while Contact Energy(CEN) was a cent higher at 943.

Sky TV(SKT) was up 9c at $5.95 amid talk over the company's planned on-market buyback. Small shareholders have been advised to vote against the buyback, which would increase the stake of Rupert Murdoch's News Corp to around 45.95 per cent, and possibly over 50 per cent eventually.

Sky City(SKC) was up a cent at $5.48, having added 7c yesterday over takeover activity.

Auckland Airport(AIA) rose 1c to $3.08, Freightways(FRE) was up 7c at $3.98, NZX climbed 10c to $9.50, and Rakon(RAK) was up 13c at $5.19, possibly over speculation of a good profit statement.

NZ Dollar Wrap





The following are Reuters currency rates:

(5pm today - 5pm yesterday, NZ time)

NZ dlr/US dlr US74.90c - US75.22c

NZ dlr/Aust dlr A83.72c - A84.16c

NZ dlr/euro 0.5235 - 0.5284

NZ dlr/yen 86.20 - 87.57

NZ dlr/stg 36.55p - 36.86p

NZ TWI 69.98 - 70.56

Australian dollar US89.37c - US89.32c

Euro/US dollar 1.4300 - 1.4231

US dollar/yen 115.12 - 116.44

Disclosure: I own SKC Shares

C Share Investor 2007

Sharetrader do dirty on Share Investor Forum

Further to the saga of Sharetrader VS the old Share Investor Forum site.

I have finally put two and two together.

Ive just been busy really.

One of the individuals has "connections" with the removal of my Share Investor Forum in July 2007 is the owner of Tarawera Publishing, Good Returns Books and owner of Sharetrader and Sharechat, my competition at the time.

They emailed me months back asking me to remove "unauthorised" advertising of their Good Returns Bookstore on my sites in 24 hrs otherwise legal action would be taken against me.

I was actually an affiliate of theirs.

The owner also pointed out to me in a phone conversation that the reason for removal of my site was for "copyright violation" but he denied links to the Sharetrader site.

He is clearly the owner.

In my opinion, when you take everything I have stated above, I find it hard to believe that the company is not connected with the shenanigans that I have outlined.


Related Links

shareinvestorforum.com




c Share Investor 2007

Wednesday Political Soup: Edition 2

Do ya think we are suckers ?

The vacuum of ideas that is the Labour Party Front bench never ceases to underwhelm.

The spectre of The National Party selling state assets to enable them to return a decent amount of capital to investors, in this case the taxpayer, is a case in point.

In recent days in the house the Labour Sisterhood takes every opportunity to attack the opposition that they will take the country "back to the bad old days" of the 1990s when the market ruled and greed was good.

Under performing taxpayer assets should be sold and even Labour agrees because they have sold and continue to sell taxpayer assets to this day. They forget that they started the ball rolling in the 1980s.

When the National Party suggest market led policy though Labour screams capitalist pig but when Labour sell taxpayer assets it is because "we can put the proceeds into better performing assets to get a better return", so said Trevor "looks like a duck, must be a duck" Mallard in Parliament today.

The suggestion by Bill English that schools might be financed and built by the private sector sends Steve "smarmy from Palmy" Mahary apoplectic but the financing of hundreds of private schools and state funded handouts to "early childhood centres has smarmy hiding his large head in a dark place indeed.

The crowning jewel is the kerfuffle over the so-called cap on doctors fees.

National wanted to remove the "cap" and let competition decide but Labour and the shrill left from the socialist pulpit decried that as crass and cruel.

The funny part of this is that there really isn't a cap under Labour.

Doctors are allowed to increase their rates by any amount they see fit. Increases are put before a board and so far none have been disallowed.

The only difference between National's proposal and Labour's current regime is that Labour have employed another platoon of bureaucrats to administer the board.

In the Labour heartland of Glenfield, one of the poorest areas of Auckland's North Shore, doctors are charging $60 a time. Not the less than 20 bucks that the hypocrites from Labour have lathered themselves up about.

The song is getting tired girlie's put on another MP3.


Cullen's Dogma eats its Tail

In the light of Australian Conservative leader John Howard promising major tax cuts next year for all Australians, Minister of Finance in New Zealand Micheal"Ive got your money and you ain't getting it back unless its through welfare" Cullen continues to prevaricate and prostrate himself into a frenzied soap-less lather over when and who is going to get a tax cut before next years big buy up election.

Cullen continues to mislead and treat kiwis like mushrooms, that an across the board tax cut wont help the "needy" and will help those "rich" instead, that is those on incomes over $40,000.00 dollars.

It isn't true to say that those that earn more are better off when taxes are cut because proportionally they pay more tax as the tax rates go up. They are actually penalised . The very opposite of what this pathetic socialist monetary historian would have us believe.

If you were to do what Howard has done though and make the first $10000.00 and more in the future, dollars tax free and cut the top tax rates you benefit everyone equally and you help out those on low incomes the most PLUS, wait for it, you give everyone the incentive to do better and work harder because the top tax rates are lower!

Sadly Cullen's dogma wont let him see reason and because he wants control, his tax cuts come in the form of welfare through his oxymoronic titled "working for Families" welfare package.

Local Hero's

Finally, the local council elections last week across New Zealand saw a huge move to the conservatives.

In Auckland, my local patch, the face for radio, Dick "Serial Killer" Hubbard, was sunk by the aptly named "Banksie".

Banksie has promised to stem Dick's out of control spending, when at one silly stage ratepayers were forking out 70,000 bucks for Somali families to call back home to see if elections were going OK.

That is not a joke.

Hubbard was a Labour backed lackey frequently seen on the lap of Helen Clark, our fearless Prime minister.

On Auckland's North Shore, where I live, George "If you cant afford increased rates then bugger off somewhere else" Wood was ousted for his lavish spending on overseas travel, a $40,000.00 council chocolate biscuit bill and a fleet of council vehicles so large stacked end to end would reach to the moon and land on that expensive white elephant the North Shore Busway, should a small wind blow.

Elsewhere, noted lefties and local radio racists Willie "one eyed" Jackson and John "Good Cop" Tamihere where spectacular failures in their quests to get the mayoral chains.

Jackson was heard to say on radio the next day that uncontested "Maoori Seats should be brought in so people like him could represent "their" people.

South Aucklanders were the clear winners for Little Willies absence.


Greed is Good


Emerson, NZ Herald, Thursday October 11 2007



C Darren Rickard 2007

Greed is Bad: Geneva Finance Folds

Geneva Finance, the latest New Zealand Finance company to go belly up has me slightly barking.

I say this because while directors and presumably trustees of the company have either been silent and or untruthful about matters unfolding over the last several weeks as their Standard and Poor's credit rating slipped from B+ to B- and now a D.

My first beef concerns the company and company trustee failing to adequately inform investors and prospective investors in the company, that the condition of the company was dire.

Investors and business media were repeatedly told by those in the know that Geneva was "doing fine" and they were able to trade themselves out of difficulties.

My take on the company at the this time was more negative than management and the writing really was on the wall when confusion reigned about a week ago when mainstream media were alerted to serious problems by a customer of Geneva that was told that they were not processing any further loans.

When questioned by several media about whether loans had been suspended it was at first denied then days latter validated.

Even at that point Geneva Finance was still taking deposits from investors and continued to do so until Monday, when the company announced they had defaulted on interest payments to investors.

My second beef comes to the point that directors of Geneva were accepting deposits from investors when they knew the company was in deep trouble.

Going further to this, the trustee, who is supposed to look out for investors when difficulties such as this arise has been strangely silent all this time.

Clearly the conduct of the directors of Geneva Finance and the Trustee has been less than adequate and serious questions put to them need to be answered.

The company is now going to ask investors in Geneva that they allow a moratorium be agreed to where the company will cease payments to investors for 6 months while they "restructure" the company.

Mr Riley said the plan would allow Geneva to stabilise its position, focus on negotiating a significant debt and equity transaction that would secure the long-term future of the company."

Shaun Riley, the chief executive stated:

The company had needed to "act quickly and prudently in the interests of our investors", he told Radio New Zealand.

"We're extremely confident that the period of the moratorium will be enough for us to put the company back into that stable position, secure that significant debt and equity transaction and really secure the long-term future of the company."

This is interesting language, it was also used over the last few weeks by the board to explain to investors that the company was doing OK.

Geneva Finance is owned by Finance Investments Holdings, which in turn is half owned by three Auckland property developers, Peter Francis, Gary Hitchcock and Nigel Burton.

As well as the 50 per cent holding, the trio own $7.1 million in preference shares, ranking above ordinary shares, and equivalent to another 35 per cent of the company's total capital.

Francis was a high profile "financier" in the 1980s and was chief executive of the failed Chase Corp, a top 10 company on the stock exchange in the mid-1980s which posted New Zealands biggest ever corporate loss before going belly up in the aftermath of the October 1987 crash.

Ironically it was only a day before the 20th anniversary of the crash that Geneva folded its tent.

Directors were not upfront with media and failed to fully inform investors in a prudent and sufficiently quick time frame.

The message is clear to me though.

It looks like management of Geneva Finance are simply trying to stave off the inevitable.

All the language and slack attitude of directors and the trustee points to this and directors so far haven't inspired the confidence in the market for us to think that they will come out with a positive conclusion in 6 months time.


Related Share Investor Reading

Hanover Finance: Hotchin Ponzi Scheme Suppression
Mark Hotchin Comes Out Swinging
Hanover's "White Knights" are really daylight robbers
Hanover collapse: It was just a matter of time
Money Managers Saga: 3 Story wrap
Money Managers gives First Step investors the middle finger
Greed is bad: Geneva Finance Folds
Financial 101: Learn before you leap
Kevin's Blog

Recommended Fishpond Reading



Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2007