Monday, April 14, 2008

Why did you buy that stock ? [Goodman Fielder]


To be honest I bought Goodman Fielder[GFF] because I noticed just about everything I shoved in my fat mouth was made by the company.

Everything from Vogel's bread, Olivani olive spread Tararua milk and cheese products and a whole range of food for breakfast lunch and dinner.

I thought before buying, that this company has a huge clutch of branded, staple, food products that New Zealanders and Australians have grown up with and people simply keep buying them!

What more could you want from a business?

That is pretty much the the main reason why I bought the company. Goodman's dominant brands give it the "economic moat" advantage that Warren Buffett talks incessantly about and the fact that the company, what it sells and how it functions, is very easy to understand, puts it above other more complicated industries, whose balance sheets are only decipherable by specialist forensic accountants with xray vision.


Why did you buy that stock?

Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]

Discuss Goodman Fielder at Share Investor Forum


Goodman's competitive advantage over its competition lies in its ability to leverage off those strong brands, excel during good economic times and plod boringly through the tough years, as we are having now-we all have to eat and that will never change.

Going back to Buffett again, he has a massive holding in Kraft Foods[KFT], a company similar in its branded food focus to Goodman Fielder, but alot bigger of course and he has been adding to his holding over the last year as the stock price tumbles.

Would I buy the stock again today? of course, I still hold it and have done for around 4 years and have been adding to my portfolio over the last few months.

The only crimp for the short to medium term are commodity prices like wheat and raw dairy ingredients, which add to retail product cost but are not always able to be passed on to the consumer.


Related Share Investor reading

Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger


Related reading

Kraft good in a recession -Everything Warren Buffett
Goodman Fielder - Corporate Website


c Share Investor 2008

Posted by Share Investor at 11:33 PM 0 comments

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Friday, April 11, 2008

Why did you buy that stock ? [Auckland International Airport]

In this second of a series of columns about why I bought a particular stock for my portfolio, lets hover over Auckland International Airport[AIA.NZ] for a while a see what motivated me to buy.

Recent political interference involved over a possible Airport sale aside, there wasn't a lot negative about this company to speak of before I plunked down my dineros.

Perhaps a large requirement for capital expenditure in the short to medium term, to expand the business to meet growth expectations was the only thing that would keep the company taxiing down the runway, the rest looked blue sky to me.

Why did you buy that stock?

Why did you buy that stock? [Freightways Ltd]
Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse Group]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]

Discuss this stock @ Shareinvestor.net.nz

Again, like Sky City Entertainment [SKC.NZ] Auckland Airport stood out as a monopoly, protected in its position for the foreseeable future and it has that "moatability" that Warren Buffett talks about :

The competitive advantage that one company has over other companies in the same industry.
The wider the moat, the larger and more sustainable the competitive advantage. By having a well-known brand name, pricing power and a large portion of market demand, a company with a wide moat possesses characteristics that act as barriers against other companies wanting to enter into the industry.

Warren Buffett

Auckland Airport, because of its monopoly position, has the ability to raise prices well above the rate of inflation and does so within its division of different businesses. From car parking and retail rents, to landing and departure fees, regular price rises seem the order of the day.

The economic moat factor is the main reason I bought shares in the company, although there are a couple of others.

The history of passenger growth for the company is excellent and more could be expected, but not guaranteed, in the future if history is any measure of the company going forward.

The individual share purchase cost relative to the various financial ratios and measures of the business in comparison to international airports was also an attractive carrot.

Bids by The Canadian Pension Plan Investment Board and Dubai Aerospace Enterprise for a premium of over 60% of my purchase price is evidence of how cheap the shares were. In a relative sense anyway.

Now the question I must answer. Would I buy this stock again?

Again political interference aside, yes(I will go into this in another column but I don't want politics to enter here)

The affirmative answer is reinforced by the long term growth prospects and again the fact that the company is unlikely to be challenged in its monopoly position in its industry.

Auckland International Airport @ Share Investor

Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Related Links

AIA Financial Data


Related Amazon Reading

Gaining and Sustaining Competitive Advantage (3rd Edition)

Gaining and Sustaining Competitive Advantage (3rd Edition) by Jay Barney
Buy new: $133.75 / Used from: $44.99
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c Share Investor 2008



Posted by Share Investor at 8:44 PM 0 comments

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MARKETWIRE: CPPIB reaction to Auckland Airport veto

CPP Investment Board

Statement From CPP Investment Board Following Government's Decision on Overseas Investment Act Application

AUCKLAND, NEW ZEALAND--(Marketwire - April 11, 2008) - The Canada Pension Plan Investment Board (CPPIB) today said it was disappointed in the outcome of its Overseas Investment Act application, which has been declined.

CPPIB's partial takeover offer for Auckland International Airport required CPPIB's Overseas Investment Act application to be approved in order for the offer to become unconditional.

The offer received the necessary levels of shareholder acceptance and approvals.

CPPIB's Vice-President - Head of Infrastructure, Graeme Bevans, said: "We are naturally very disappointed in the outcome.

CPPIB appreciates the support we have received from the 29,000 largely New Zealand, Auckland International Airport shareholders who accepted our offer."

Under the terms of the offer, the offer will now lapse. Shareholders who accepted the offer are now free to deal with their holdings as they wish.

About CPP Investment Board:

The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. As at December 31, 2007, the CPP Fund was C$119.4 billion (NZ$148.7 billion) of which C$2.5 billion (NZ$3.1 billion) represents infrastructure investments. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is investing in publicly-traded stocks, private equities, real estate, inflation-linked bonds, infrastructure and fixed income.

Based in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments.

UBS has acted as financial advisor and Bell Gully has acted as legal advisor to CPPIB.

For more information, please contact

In Canada:
CPP Investment Board
Joel Kranc
(416) 874-5163
Email: jkranc@cppib.ca
Website: www.cppib.ca

or

In New Zealand:
Consultus
Coran Lill
+64 27 600 8602
Email: clill@consultus.co.nz

Posted by Share Investor at 9:36 AM 0 comments

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Labour Vetoes voters' rights

From the Share Investor Blog today, in a unsurprising and but naked grab for votes in this 2008 election year, 50000 voters have just had their property rights trampled on because the Auckland Airport Merger with the Canadian Pension Plan Investment board has been turned down.

http://www.parliament.nz/NR/rdonlyres/2F9625A5-6D25-44B5-925E-D316DD5F5DF8/0/7801DavidParker.jpg
David Parker, Minister of a ship of
Fools.

Watch for the Poodle Party and its titular head Winston Peters come out waving the New Zealand Flag today. Its hard to keep a straight face though when he supports a government that has signed a "free trade" deal with China.

The politics of envy is alive and well in socialist, communist Aotearoa.


State Services Minister David Parker and Associate Finance Minister Clayton Cosgrove have vetoed the sale of Auckland International Airport[AIA]

After over a year of negotiations by two prospective parties, The Canadian Pension Plan Investment Board and Dubai Aeronautical Enterprise, all the time money and expertise that has gone into brokering a deal has been reduced to an international farce by the stroke of a socialist government pen.

The intervention has come at a time when markets are shaky and the economy is on a downturn and this added uncertainty has disappointed the market again and the 50000 odd voting age Mums and Dads who voted overwhelmingly in March to allow the CPPIB to buy their shares.

It is not hard to imagine what the CPPIB next move might be, but they have 3 options. Walk away completely, walk away while making a financial claim against the New Zealand Government, for their costs involved in axing a deal by retrospectively changing an overseas investment law, or push on in the courts to allow them to seal the deal.

The Auckland Airport would also have a claim for the millions of dollars of costs incurred for its shareholders because of the retrospective law.

NZ Herald's Auckland Airport merger coverage to date

The Battle for the Airport

Share Investor merger coverage to date

Latest Airport coverage
Cullen's move on Auckland Airport has far reaching effects
Cullen's move on AIA tax plan Anti-Business
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Posted by Share Investor at 9:12 AM 0 comments

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