Thursday, June 4, 2009

Richard Worth: Goff's posturing hypocritical to the max

Without a doubt, whatever Richard Worth did or didn't do, he clearly isn't Minister material anymore.  

Whatever the outcome lets judge him on the facts, which are currently subject to political conjecture, and when we do know the facts, if we ever do, the appropriate hand of justice should come down hard on his little head.

What I find curious though is criticism of John Key from Phil Goff and Labour for not being "up front" or quick enough to take action on this matter.

The facts are he acted as soon as he knew the facts and would have sacked Worth if he didn't fall on his own sword. End of story.

This of course is in stark contrast to Phil Goff's former leader.

She lied her arse through numerous Labour Ministerial gaffs,  and regularly did nothing when her ministers erred.

Some conveniently forget that months went by before Phillip Field was dealt to and then only mildly. Winston Peters was on the take from seemingly every sector of New Zealand and Clark did nothing. Benson Pope was in Parliament for months before anything was done about his curious ways with Tennis balls and young teenagers.

Ruth Dyson drunk driving her way across town ended up back as a Minister.

Having Phil Goff spearhead the charge against Key is a big mistake by Labour.

It mustn't be forgotten that "stick it on the bill" Phil wanted to make it legal in New Zealand for 12 year olds and older to have sex. He certainly shouldn't be pointing the finger, especially as this accusation against Worth involves sexual impropriety.

Johnny maybe starting to err on the side of the thieving socialists but I believe he is an honest man. The same cannot be said of one Ms Helen Clark.

Whatever the outcome of this saga, I cant help but feel that once again Labour's muck-raking is going to back-fire in spectacular fashion. 

c Political Animal 2009


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Monday, June 1, 2009

Stock of the Week: The Warehouse Group






In this Stock of the Week we are going to be looking at New Zealand's dominant general retailer The Warehouse Group [WHS.NZ].

Its a stock that hasn't been in the news recently although it probably should be, for a number of reasons, the least not being a sale process that appears to be in some sort of credit crises limbo.

It has been trading at a pretty steady share price for the last 6 months (marking time until news about its sale is forthcoming) at a range between NZ$3.00 - $3.75 and represents value whether you want it for a quick buck for its probable sale or if a sale falls through and you want a good solid company for the long term portfolio.

On its long-term merits the company has a dominant position in its sector of the retail market and a great cash flow that helps contribute to a gross dividend north of 8%. Spectacular in these days of 3-4% returns for term deposits or 5-6% for rental property.

Retail is struggling these days but that isn't going to last forever and The Warehouse is coping well with the current recession. It historically does well in recessions because of its low price perception.

The company has recently met its own forecast for profit in its March release of its 2009 interim profit and its forecast for FY 2009 is on track to meet last years profit of $90.76 million.

Good luck!



Disclosure - I own WHS shares


Stock of the Week series

Fisher & Paykel Appliances

The Warehouse Group @ Share Investor

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The fight for control begins soon

Share Investor Forum-Discuss this topic


Related Links

2009 Interim Profit Webcast

Go shopping at The Warehouse


Related Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A     Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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c Share Investor 2009

National's Budget like watching paint dry, Labour's would have led to economic disaster

Just looking back on Thursday's budget.

It wasn't really my cup of tea because it didn't cut back on spending enough. 

Lets face it it was politically safe and boring to the max -just what Key and Co need to be elected for a further term.

What was needed though was a massive cut back in the 10s of billions of wasteful social spending over the last ten years that got us in the current mess. Working for families, free money for students and that ridiculous "Gold Card" for seniors that will cost us dearly in the future amoungst other brain dead spending. We simply cannot afford these things.

Nobody got anything in the budget except another unaffordable socialist bribe, the home insulation scheme - stop insulating yourself with my money, keep yourself bloody warm!

We didn't get back the high taxes we paid over the last ten years either. Tax cuts were cut.
A really dumb move practically because we all know tax cuts stimulate economies more than any other tool but a good move politically because it looks like Bill English "cares" about the public purse.

As bitter as a  National Party 2009 budget is to swallow, one doesn't have to broaden ones imagination too far to surmise how much worse the budget would be under a Helen Clark Labour Government.

We would have had more of the same that we had under the last 10 years - Phil Goff has confirmed that many times over the last 8 months by reiterating we should be spending money we don't have. Taxes would have gone up instead of being just cut, we would have borrowed and spent our Children and Grandchildren's economic livelihood like Kevin Rudd, Barrack Obama, Gordon Brown and a number of other brain dead socialist morons around the world have over the last 8 months and interference from our Government would be more akin to a Stalinist regime only seen in North Korea.

We must remember the gleeful way Micheal Cullen gloated to National before the 2008 election that he had spent all our money, there was nothing left in the cupboard -"eat that!" to get a grip on where we would have gone from 2008 to 2011.

The man should be shot as treasonous for doing that but imagine his tax and spend regime under an economy in recession rather than the booming one that he inherited.

Yep, the 2009 Budget was boring but it is just what we need at a time like this, the alternative Labour Budget would have given us the Icelandic economic chills and brought us to our knees in short time.

At least with National we have a chance.

c Political Animal 2009


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Freightway's Capital Raising more of the same crap for small shareholders

I have been moaning, bitching and hitting my head against a brick wall recently because of how totally unconscionable a number of NZX listed companies have been towards their shareholders when it comes to the flurry of capital raisings that have happened over the last few months.

Scant little care and only lip service has been given to small shareholders like you and me.

The three capital raisings that I have participated in so far : Sky City Entertainment [SKC.NZX] , Fletcher Building Ltd [FBU.NZX] and Freightways Ltd [FRE.NZX] have all favoured the larger shareholders or in fact recent interlopers who haven't been shareholders at all. They received concrete shareholdings at a definite price, without having to stump up "lost cash" that stays in someone else's bank account until credited back to the recipient with their meagre allotment of shares.

Small shareholders have had to stump up the maximum amount of cash to get a scaled down number of shares at a price they are unsure of until after the offer is closed.

The latest stinker has been the Freightway's share offer that wanted NZ$5,000,000.00 from small shareholders but was over subscribed by 1040%!

As Kelvin Hartnall points out institutions got a great deal:

The total amount provided by small investors was $57 million, which is more than the total capital raising combined. This shows that it was completely unnecessary to dilute the share-holdings by giving institutions such a great deal. Essentially the institutional investors have received a great bargain at the expense of small investors.

I sent in the maximum $12500 and will get less than 500 shares. I needed around 1200 to avoid dilution. Here, from Kelvin Hartnall again is an approximate breakdown of what Freightway's shareholders can expect to get some time next week:

Aggregate pool $5,000,000
Number of share-holders 6,423
Pool available per share-holder $778.45
Issue price $2.44
Shares available per share-holder 319

This favouritism to the big boys is more of the same we small guys have expected and we have little protection from securities law, the NZX or any independent body. Bruce Sheppard from the Share Holders Association has been vocal as usual but has been met with the typical stoney silence or bullshit from company management along the lines of "well that is the best we can do in this economic environment".

Clearly that is wrong. Share offers for every good company that has made one so far have been wildly over-subscribed, so the moola is out there.

Other companies have at least made an attempt to even the financial playing field in their capital raisings by using rights issues to raise money. As rights issues are structured, a non -renouncable rights issue is one where shareholders are given the right to purchase new shares according to the number of shares they hold or they can forgo those rights if they wish. On the other hand a renouncable rights issue would allow shareholders to trade those rights to others should they not want to take up the rights offer.

In my opinion a renouncable share offer is the fairest way of raising capital because you get to buy in proportion to the shareholding you have and if new shareholders wish to participate in the capital raising they can buy the rights off you.

After that if there is a capital shortfall then and only then should institutions get a crack at stumping up some cash and the incentive to offer them a better deal, at the back end, would not only be appropriate but more than warranted.

Related Share Investor Reading
Discuss this topic @ Shareinvestor.net.nz

Relevant Links

Kelvin Hartnall's Blog
NZ Shareholders Association
NZX

Freightways @ Share Investor

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Discuss FRE @ Share Investor Forum
Download FRE company Reports



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c Share Investor 2009