Share Investor

Tuesday, June 7, 2011

I'm Buying: Fisher & Paykel Healthcare Ltd

Chart forFisher & Paykel Healthcare Corp Ltd (FPH.NZ)

This is a post made to answer a reader who phoned me the other day in relation to Fisher & Paykel Healthcare Ltd [FPH.NZX] and to explain to readers what I am looking at using the dividends provided to me from the Share Investor Portfolio over the last 3 reporting periods.

It just so happens that the readers phone call came at the same time I was considering buying FPH for the portfolio. I already have 5000 shares but would like to buy perhaps 10000 more for a long-term investment. My reader wanted to know if he should buy at its current price for a shorter term profit.

The case for buying shares in the company has been made many times by me (see links below)and perhaps the best indication of how good the company is as an investment can be found at the post Long Term View: Fisher & Paykel Healthcare which maps out what returns investors have had in the past and what they could expect in the future.

FPH is a well managed company with a good history of increasing profits and revenue based on their manufacture and sale of high end, well sought after medical products that have high margins and a reputation for cutting edge technology which more often than not beats its competition.

The only problem, if there is one, is that much of their business is done in US dollars and due to a weak US buck profits repatriated back to head office in New Zealand have been mostly static over the last 2 years.

This is where my readers request to ask if he might buy shares in the company and my perusing the company and its annual reports over the last 6 months has collided.

I have been watching the share price since I last bought shares in this company in June 2009 at $2.35 (see 3 year chart above) and have been a patient church mouse ever since for an opportunity to get back in.

The share price has taken a bit of a hit over the last 2 months (see 2 month chart below)due to the weak US dollar and over the last two weeks weakened further when their 2011 FY profit showed impacts from the dollar dragging on the bottomline.

Chart forFisher & Paykel Healthcare Corp Ltd (FPH.NZ)

Revenue and profits have grown over the years and their new products, especially their sleep apnea range has a good foot in the door in an ever increasing American market with overweight patients knocking on their doctors doors for help. This will clearly increase revenues in the future.

The currency affect will always be there so investors just have to deal with this. The company have forward hedging in place and next year expect a currency gain to the bottomline of NZ$14 million.

Now is a good opportunity to start looking at buying. The share is currently being buoyed by a 7c dividend which investors are eligible for until June 24, so one might be wise to wait until after that date to see what happens.

For investors like my phone caller wanting to take the dividend here and sell the stock if the share price stays level of rises just beware that because of that aforementioned currency negativity in the market this may not be wise.

For long term investors anything under 3 bucks is a good buy but I am going to keep waiting because I see an opportunity to get in at a far lower price. I will let you know what that is after I make my move.

For short term investors my advice is the same, be patient you can get this share for less.

Disc I own FPH in the Share Investor Portfolio

Fisher & Paykel Healthcare @ Share Investor

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Discuss FPH @ Share Investor Forum
Download FPH Company Reports

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c Share Investor 2011

Saturday, June 4, 2011

Guest Post: Wall Street Journal's Brett Arends - Why Housing is in a Depression

My interest was in this topic piqued by a story on late night TV last night when a story broadcast by the ABC Network mentioned that in the United States around one quarter of home owners had negative equity in their homes.

This led me to doing a little googling this morning where I found the following story on Marketwatch about the sorry state of housing in the US.

I have to state I had no idea that this many people had negative equity, I thought it was just under 10%.

Shame on me.

Now I know little about real estate but what I do know is that this is a very serious situation, for the US and the rest of the world, in terms of the economic fallout, given the sheer number of people in negative equity.

Remember it is what tipped us up in 2008 in the first place and it will continue to drag on the global economy no matter how much printed money the Fed throws at us.

Read on dear readers:

June 1, 2011, 12:01 a.m. EDT

BOSTON (MarketWatch) — It’s official. The house price collapse is now worse than it was during the Great Depression.

That astonishing piece of information comes from the researchers at the think tank Capital Economics.

It follows Tuesday’s news from Case-Shiller that house prices fell again in March, as the double dip gets worse.

Writes Capital Economics’ senior economist Paul Dales, “On the Case-Shiller measure, prices are now 33% below the 2006 peak and are back at a level last seen in the third quarter of 2002. This means that prices have now fallen by more than the 31% decline endured during the Great Depression.”

Hmmm. Recovery? What recovery?

It’s yet more proof that the nationwide financial bust is far worse than Wall Street is pretending, and it may be getting worse instead of better.

But try telling that to the Dow Jones Industrial Average DJIA -0.74% , high as a kite — in more ways than one — above 12,000. What is Wall Street smoking?

Capital Economics says the latest double-dip in housing should come as no surprise. It’s very much following a pattern seen in the early 30s, when a brief recovery also petered out. The same has also happened in other big housing busts around the world, the think-tank says. It believes prices are going to fall even further before we hit rock bottom, maybe sometime next year.

The double-dip in housing, which has left nearly 30% of homeowners in negative equity, increases the chances that the Fed may resort to Quantitative Easing III — although they will probably call it something else, if only to save their blushes.

In some ways, the collapse in house prices is even deeper than Case-Shiller is telling you.

After all, the official data take no account of inflation. During the Depression we had deflation — so while your home was worth fewer dollars, each dollar was more valuable.

Today we have (modest) inflation. If Fed chairman Ben Bernanke gets his way, we’ll get a lot more. We probably need it. Compared to wages, housing is now back to levels last seen in the late 1990s (see chart).

And the Case-Shiller data masks huge variations in housing markets. Prices have collapsed many suburbs, exurbs, rural areas, and in well-known disaster sites like Miami, Las Vegas and Phoenix. Meanwhile the declines have been much milder in places like Manhattan or Boston. Some high-end real estate is actually selling well. The buyers have money.

Is there a silver lining to this? Well, maybe.

If you can get the financing, housing is now cheap. Really cheap. Capital Economics reckons housing is now 24% undervalued, and is the cheapest it’s been in thirty-five years.

With mortgages rates on the floor, and inflation surely brewing down the road, housing in many parts of the country looks like a good deal. But you’ll have to be patient to see the biggest rewards. Capital Economics says, back in the Depression, it took 19 years for house prices to recover to their previous peaks.

Recent Share Investor Reading

Friday, June 3, 2011

Share Investor Portfolio: Value @ 3 June 2011

The Share Investor Portfolio was down in the first week of June, the second time in 2 consecutive weeks. The portfolio was down by 1.55% or $4183.34 on the May 27 update . For the first 21 weeks of 2011 the portfolio has increased by 13.46 % or $34324.33 . This weeks drop was due, primarily, to a 12c drop in SKC. There were a number of smaller falls and rises in other stocks but if not for a rally of 8c for WHS the portfolio would have been down over $1000.00 more than it was.

The total of unspent dividends and interest in the bank as at 26 May from the 2010 - 2011 earnings years is $25382.95 at close of reporting season for 2010 and at the end of the 2011 1st half reporting year. There are also approx $55000.00 in tax credits earned from the portfolio since it began in late 2002.

The Share Investor Portfolio has increased in value by 18.25% or $48081.58 since I began tracking it for this blog on October 11 2010.

Share Investor Portfolio as at 17:30:00, Friday 03 June, 2011 (NZT)

Stock

Quantity

Cost price

Total cost

Market price

Market value

Change

AIA

2,000

$1.700

$3,400.00

$2.295

$4,590.00

$1,190.00

35.00%

AIA

2,000

$1.510

$3,020.00

$2.295

$4,590.00

$1,570.00

51.99%

AIA

558

$0.000

$0.00

$2.295

$1,280.61

AIA

754

$2.150

$1,621.10

$2.295

$1,730.43

$109.33

6.74%

ASBPB

3,109

$0.000

$0.00

$0.685

$2,129.67

ASBPB

6,891

$1.000

$6,891.00

$0.685

$4,720.34

$2,170.67

31.50%

BGR

619

$0.000

$0.00

$1.450

$897.55

BGR

2,381

$0.990

$2,357.19

$1.450

$3,452.45

$1,095.26

46.46%

FBU

284

$0.000

$0.00

$8.870

$2,519.08

FBU

830

$9.750

$8,092.50

$8.870

$7,362.10

$730.40

9.03%

FPH

3,000

$2.350

$7,050.00

$2.960

$8,880.00

$1,830.00

25.96%

FPH

1,365

$3.720

$5,077.80

$2.960

$4,040.40

$1,037.40

20.43%

FPH

635

$0.000

$0.00

$2.960

$1,879.60

FRE

2,054

$0.000

$0.00

$3.260

$6,696.04

FRE

6,577

$3.630

$23,874.51

$3.260

$21,441.02

$2,433.49

10.19%

GFF

586

$0.000

$0.00

$1.350

$791.10

GFF

1,414

$2.330

$3,294.62

$1.350

$1,908.90

$1,385.72

42.06%

HLG

299

$0.000

$0.00

$3.720

$1,112.28

HLG

701

$2.530

$1,773.53

$3.720

$2,607.72

$834.19

47.04%

KIP

763

$1.480

$1,129.24

$1.030

$785.89

$343.35

30.41%

KIP

237

$0.000

$0.00

$1.030

$244.11

MFT

1,000

$7.960

$7,960.00

$9.880

$9,880.00

$1,920.00

24.12%

MFT

1,838

$8.000

$14,704.00

$9.880

$18,159.44

$3,455.44

23.50%

MFT

1,375

$4.200

$5,775.00

$9.880

$13,585.00

$7,810.00

135.24%

MFT

787

$0.000

$0.00

$9.880

$7,775.56

MHI

1,646

$0.860

$1,415.56

$0.930

$1,530.78

$115.22

8.14%

MHI

7,000

$0.630

$4,410.00

$0.930

$6,510.00

$2,100.00

47.62%

MHI

494

$1.050

$518.70

$0.930

$459.42

$59.28

11.43%

MHI

860

$0.000

$0.00

$0.930

$799.80

PPG

$0.000

$0.00

$0.260

$8.06

PPG

1,500

$0.440

$660.00

$0.260

$390.00

$270.00

40.91%

PPG

1,004

$0.800

$803.20

$0.260

$261.04

$542.16

67.50%

PPL

1,000

$3.090

$3,090.00

$1.150

$1,150.00

$1,940.00

62.78%

PPL

1,000

$2.870

$2,870.00

$1.150

$1,150.00

$1,720.00

59.93%

PPL

939

$4.200

$3,943.80

$1.150

$1,079.85

$2,863.95

72.62%

PPL

975

$0.000

$0.00

$1.150

$1,121.25

PPL

1,086

$1.530

$1,661.58

$1.150

$1,248.90

$412.68

24.84%

RYM

555

$0.000

$0.00

$2.710

$1,504.05

RYM

4,445

$1.970

$8,756.65

$2.710

$12,045.95

$3,289.30

37.56%

SKC

5,750

$7.430

$42,722.50

$3.580

$20,585.00

$22,137.50

51.82%

SKC

1,000

$7.600

$7,600.00

$3.580

$3,580.00

$4,020.00

52.89%

SKC

2,750

$7.700

$21,175.00

$3.580

$9,845.00

$11,330.00

53.51%

SKC

1,431

$8.750

$12,521.25

$3.580

$5,122.98

$7,398.27

59.09%

SKC

272

$4.720

$1,283.84

$3.580

$973.76

$310.08

24.15%

SKC

25,712

$0.000

$0.00

$3.580

$92,048.96

STU

$0.000

$0.00

$2.700

$210.60

STU

303

$4.740

$1,436.22

$2.700

$818.10

$618.12

43.04%

WHS

4,500

$3.730

$16,785.00

$3.680

$16,560.00

$225.00

1.34%

WHS

6,979

$6.000

$41,874.00

$3.680

$25,682.72

$16,191.28

38.67%

WHS

$3.710

$55.65

$3.680

$55.20

$0.45

0.81%

WHS

3,506

$0.000

$0.00

$3.680

$12,902.08

30.08%

	Total cost	Market value	Change
	$269,603.44	$350,702.78	$81,099.34

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 2011

Share Investor

Tuesday, June 7, 2011

I'm Buying: Fisher & Paykel Healthcare Ltd

Saturday, June 4, 2011

Guest Post: Wall Street Journal's Brett Arends - Why Housing is in a Depression

Friday, June 3, 2011

Share Investor Portfolio: Value @ 3 June 2011

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