Stock of the Week: Contact Energy Ltd

In this Stock of the Week I am going to look at the electricity generator and retailer Contact Energy Ltd [CEN.NZ]

The company has had short-term profit speed bumps, with another profit downgrade out today, but long-term the company will continue to grow its profit.

A part of a quadopoly, its generation assets alone should put it in anyone's bottom draw. Its attractiveness in today's turbulent stockmarket background made it one of my picks back at the end of last year and the solid nature of its profit, during an economic downturn and in better times should make it the backbone of anyone's portfolio.

There is another good reason to own the stock, especially if you have a short financial attention span. Origin Energy, Contact's majority owner, is likely to make another play at getting control of the whole company. Origin would have to pay close to double today's market capitalisation.

Beware though, there are drawbacks to owning shares in the company-the management, inside Contact and those that hold the purse strings at big daddy Origin are awful managers of this asset.

Yes a monkey could run an electricity company and that is exactly what you get with these guys but they will always make money under good and poor management.

Good luck!

Disclosure - looking at buying


Stock of the Week Series

The Warehouse Group
Fisher & Paykel Appliances

Contact @ Share Investor Blog

MarketWatch: Contact Energy - June 2009
MarketWatch: Contact Energy - Jan 2009
Contact Energy looks bright during dark times
Share Investor's 2009 Stock Picks
Follow the Monopoly Board

Discuss this topic @ Share Investor Forum - Register free

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c Share Investor 2009

MarketWatch: Contact Energy

Contact Energy Ltd [CEN.NZ] have come out with a profit warning this morning, lower than guidance made by the company in January 2009.

Profit for Contact’s 2009 full year is expected to be 30 –33 per cent less than the year ending 30 June 2008.

With the share price finishing at $NZ5.80 at market close on Friday there is going to be a good opportunity to get shares today a sale price - the market is going to savage Contact.

Keep in mind though that the market should have anticipated the downgrade as all the signs were there for a slight profit drop from Contacts own guidance in January 2009.

A great chance to stock up for this good long-term company.

Remember, it is still making a profit and will only continue to increase those profits over the long-term.

Related Share Investor Reading

Marketwatch: Contact Energy
Contact Energy looks bright during dark times
Share Investor's 2009 Stock Picks
Follow the Monopoly Board


Contact Energy Investor Info

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

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c Share Investor 2009

Andrew Williams; Putting the "H" back in Hypocrite

I see Andrew Williams, North Shore's bent Mayor is desperate for media attention again, getting his bloomers in a twist about his flagging mayoral fortunes.

Mr Key made the comment about Mr Banks, a National Party member and former minister, during a speech at a National Party conference on Saturday.

"Can I start by acknowledging the mayor – more importantly the super mayor of Auckland city – John Banks," he said.

North Shore City Mayor Andrew Williams said he was appalled at the insinuation.

"For a prime minister to come out 15 months before a local body election, already endorsing a candidate is absolutely appalling," he told Radio New Zealand.

"And to John Key I would just say I am absolutely shocked, and Prime Minister apologise." Stuff.co.nz

Sometimes you really should known when to shut your fat gob.

It would nice to see angry boy livid about his North Shore Council's wasteful spending on things like wine for electioneering for his political friends.

Nothing wrong with Key backing his man if he was and Andy's little hypocritical ways just keep digging a bigger hole for himself.

More Mad Mayoral Musings

Andrew Williams: The Great Panjandrum

My Correspondence with the Mayor

Fruitcake Andrew Williams must go

"Crunchy the Clown" article

Breakfast TV pokes fun at Mr Williams

William's goes ballistic at North Shore Events Centre

Andrewwilliamsismad.blogspot.com

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c Political Animal 2009

Another reason to ignore Rod Oram

From Share Investor Blog

Make no mistake Rod Oram is a mad bugger. I loathe his socialistic/political slant on business and economics and quite frankly a third form economics student who is deaf, dumb, blind and insulated from reality with a 100 mile layer of pink batts would know more than him about the subject he thinks he is so proficient at.




The man buys carbon credits to offset his "carbon footprint" for goodness sake!

The reason for my vitriol this time?

His nonsensical piece on National deferring payments into the Cullen Fund in Stuff today.

This master of economic sleight of hand wants our Government to borrow billions to fund pensions:

They are wrong on both points. This is a once-in-a-generation time to be investing, particularly if you are an entity with low debt, secure cashflow and a long-term strategy. The great global economic contraction has savaged prices of shares, property, businesses and other assets. Buyers might have to ride out some short-term corrections but they can reasonably expect handsome long-term gains.

Oram would have us borrow to buy investments? Its a MAD, MAD, MAD MAD ... plan! In these current times debt must be lowered. Oram is 100% correct when he says people should buy assets when they are beaten down in value. I have over the years but not with borrowed money Rodney! Higher debt to fund this scheme will increase interest rates for New Zealand borrowers.

In addition to this Oram is really making a mountain out of a molehill on the decision to defer payments to the scheme. What he fails to mention is that the scheme funds a very tiny portion of what is needed for retirees:

Connecting it with superannuation, though, was entirely political. Even Dr Cullen made clear there was no link to future entitlements and future taxpayers were always going to have to meet 89% of costs.

Bill English’s decision not to borrow for the fund will increase that by just 3%.

Moreover, in national-income terms, Mr English’s decision relates to just 0.2% of GDP from 2030.

It is ridiculous to worry about such a number. The smallest economic shock over the next two decades – positive or negative – could double or eliminate it, as could small productivity changes. Matthew Hooton, NBR 2009.

The vast bulk of retirement funding then will come from the tax base at the time and that is where growing the economy comes in and is clearly vastly more important than taxing workers heavily now to fund such a small addition to retirees income in 20 years time.

The best solution of course is for individuals to save and pay for their own retirement. With a taxpayer funded scheme payments are subject to interference from all political colours and with the tiny contribution from the Cullen Fund that is subject to inefficient bureaucracy and cost and inexperienced individuals investing money on your behalf - something that Rodney skirts over without nary a whisper- there is no guarantee that any money will be there when you retire anyway.

Labour would have deferred payments into the fund. That economic dipstick Michael Cullen designed the fund for such economic circumstances as we are suffering under now.

Oram's columns have been quoted by Labour in Parliament ad nauseum recently so it is clear Labour are taking their playbook from commentators like Oram or vice versa:

Hon PHIL GOFF: It made $1.75 billion. There is nobody in this House who does not understand that the best time to invest funds is when the market is at, or close to, the bottom. By the National Government’s theory, New Zealand homeowners should be selling their house now and buying it back when the prices have risen! That is National’s philosophy. Kiwis know that it makes no financial sense, so why cannot the Prime Minister and the Minister of Finance see that? Parliamentary Budget Debate, May 2009.

It doesn't really make allot of sense now does it? Would you borrow right now to buy shares?

The answer, if you are sane, is a clear NO.

Both Labour and Lefties like Oram are politically motivated and economically illiterate. We cant borrow and hope, we must instead grow the economy and accept personal responsibility for funding our own retirement.

Any other way is dishonest and as history has shown us will fail.

Recent Share Investor Reading

• Danny Diab & Restaurant Brands
• "Government Motors" unlikely to survive
• Stock of the Week: The Warehouse Group
• Freightway's Capital Raising more of the same crap
• Stockmarket Education: How do you buy shares?
• Analysis - Mainfreight Ltd: FY Profit to 31/03/09

Discuss this topic @ Shareinvestor.net.nz

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c Share Investor & Political Animal  2009

Another reason to ignore Rod Oram

Make no mistake Rod Oram is a mad bugger. I loathe his socialistic/political slant on business and economics and quite frankly a third form economics student who is deaf, dumb, blind and insulated from reality with a 100 mile layer of pink batts would know more than him about the subject he thinks he is so proficient at.




The man buys carbon credits to offset his "carbon footprint" for goodness sake!

The reason for my vitriol this time?

His nonsensical piece on National deferring payments into the Cullen Fund in Stuff today.

This master of economic sleight of hand wants our Government to borrow billions to fund pensions:

They are wrong on both points. This is a once-in-a-generation time to be investing, particularly if you are an entity with low debt, secure cashflow and a long-term strategy. The great global economic contraction has savaged prices of shares, property, businesses and other assets. Buyers might have to ride out some short-term corrections but they can reasonably expect handsome long-term gains.

Oram would have us borrow to buy investments? Its a MAD, MAD, MAD MAD ... plan! In these current times debt must be lowered. Oram is 100% correct when he says people should buy assets when they are beaten down in value. I have over the years but not with borrowed money Rodney! Higher debt to fund this scheme will increase interest rates for New Zealand borrowers.

In addition to this Oram is really making a mountain out of a molehill on the decision to defer payments to the scheme. What he fails to mention is that the scheme funds a very tiny portion of what is needed for retirees:

Connecting it with superannuation, though, was entirely political. Even Dr Cullen made clear there was no link to future entitlements and future taxpayers were always going to have to meet 89% of costs.

Bill English’s decision not to borrow for the fund will increase that by just 3%.

Moreover, in national-income terms, Mr English’s decision relates to just 0.2% of GDP from 2030.

It is ridiculous to worry about such a number. The smallest economic shock over the next two decades – positive or negative – could double or eliminate it, as could small productivity changes. Matthew Hooton, NBR 2009.

The vast bulk of retirement funding then will come from the tax base at the time and that is where growing the economy comes in and is clearly vastly more important than taxing workers heavily now to fund such a small addition to retirees income in 20 years time.

The best solution of course is for individuals to save and pay for their own retirement. With a taxpayer funded scheme payments are subject to interference from all political colours and with the tiny contribution from the Cullen Fund that is subject to inefficient bureaucracy and cost and inexperienced individuals investing money on your behalf - something that Rodney skirts over without nary a whisper- there is no guarantee that any money will be there when you retire anyway.

Labour would have deferred payments into the fund. That economic dipstick Michael Cullen designed the fund for such economic circumstances as we are suffering under now.

Oram's columns have been quoted by Labour in Parliament ad nauseum recently so it is clear Labour are taking their playbook from commentators like Oram or vice versa:

Hon PHIL GOFF: It made $1.75 billion. There is nobody in this House who does not understand that the best time to invest funds is when the market is at, or close to, the bottom. By the National Government’s theory, New Zealand homeowners should be selling their house now and buying it back when the prices have risen! That is National’s philosophy. Kiwis know that it makes no financial sense, so why cannot the Prime Minister and the Minister of Finance see that? Parliamentary Budget Debate, May 2009.

It doesn't really make allot of sense now does it? Would you borrow right now to buy shares?

The answer, if you are sane, is a clear NO.

Both Labour and Lefties like Oram are politically motivated and economically illiterate. We cant borrow and hope, we must instead grow the economy and accept personal responsibility for funding our own retirement.

Any other way is dishonest and as history has shown us will fail.

Recent Share Investor Reading

• Danny Diab & Restaurant Brands
• "Government Motors" unlikely to survive
• Stock of the Week: The Warehouse Group
• Freightway's Capital Raising more of the same crap
• Stockmarket Education: How do you buy shares?
• Analysis - Mainfreight Ltd: FY Profit to 31/03/09

Discuss this topic @ Shareinvestor.net.nz

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c Share Investor 2009

Share Investor House Keeping

O.K. First just a list of the New URLs that you can reach the various parts of Share Investor from.

I have culled some of the ones that have proven useless and confusing.

You can find everything Share Investor at shareinvestor.biz

The following are individual URLs for Share Investor's main sites.

Share Investor Blog

- Shareinvestorblog.com

Share Investor Forum

- Shareinvestor.net.nz
- Shareinvestorforum.co.nz
- Shareinvestorforum.com

I added the .co.nz address for the forum to make it known to visitors it is New Zealand centered.

Just a footnote. As far as the business part of Share Investor goes, readers might be interested to know that it is now financially self sustainable (I hate that word but use it here in its true meaning) and advertising is paying its way.

I hope you keep reading.

Cheers, Darren.

Share Investor.

c Share Investor 2009

CSPAN: President Obama Speech to Muslim World in Cairo

So Barrack "The Man with a Plan" Obama has conceded to the Muslim Masses in Cairo that he intends to appease those that wish to butcher innocents in Western countries.

It would be fair enough if Muslims were going to listen to him and act positively on their barbarous murdering ways but any friendliness and kombaya dancing around a fire by the beach holding hands with westerners would be done with a sword behind Muslim backs ready to chop off any hands or heads that dare critique the Muslim religion.

I am not interested in making friends or as Obama says "respecting' others who would otherwise wish you dead if you think contrary to them.

The ghost of Neville Chamberlain has come back to haunt the planet.

A very sad day and a dangerous turning point in history.

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c Political Animal 2009

Danny Diab & Restaurant Brands

Well, he has finally done it.

Over the years Danny Diab, franchisee of a number of Pizza Hut stores in Sydney and a director of Restaurant Brands Ltd [RBD.NZ] has managed to cobble together a holding of 5% in the company that he works for.

He hasn't had to shell out a huge amount of money to get his holding of almost 5 million shares, as the share price of the company has been predominantly below NZ$1.50 since he has been on the board and well below $1.00 for the best part of a year.

We know he is a successful Pizza Hut operator in Australia but there is alot we don't know about the man and his possible motivations for owning such a large stake of RBD.

Lets have a look at his investment strategy first.

He owns his RBD holding through his investment vehicle Diab Group and we can understand his motivation for getting into RBD as an investment because he has experience in the QSR industry, through hands on experience and through his investment philosophy:

Our investment philosophy is to deliver long term growth while managing risk. Relying on detailed research data and a proven approach to investment success, we:

• Construct a portfolio that manages risk while maximising long-term performance.
• Establish optimal asset allocation.
• Select a mix of investments to provide the best possible return for our level of risk tolerance.

To ensure we stay the course during a variety of market conditions. Diab Investments seeks long-term capital appreciation by committing equity to:

• high-quality companies with superior management
• high-quality index products with significant downside protection
• high-quality interest bearing warrants / convertible notes
• By leveraging the capabilities broadly available within the group, we aim to generate superior returns.

The Diab Group integrates a diverse portfolio of companies which operate in the advisory, quick service restaurants, manufacturing and investment markets.

We already know Danny is a long term investor because he has been with RBD for around 7 years as an investor and latter as a non-executive director but what of his continued future with RBD?

We can only guess but it would be natural to assume that he would want to continue to increase his shareholding in the company and there is nothing that motivates an individual to do more or work harder than owning a large financial stake.

His continued presence on the RBD board and as one of the largest investors in the company is something that should encourage long suffering shareholders.

RBD shares were up 1c yesterday to 99c on reasonable volume.

*while Danny has a big presence on the internet he must be camera shy because I couldn't find a photo of him.

Restaurant Brands @ Share Investor

KFC Doubles up on Double Down record one day sales
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Pizza Hut sell-off provide opportunities all-round
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Restaurant Brand's Pizza Hut faces increasing competition
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c Share Investor 2009

"Government Motors" unlikely to survive

Even big companies with "enduring brands" that have been around for a long time die.

Being big and around for 100 years certainly didn't help General Motors or what is now being cleverly dubbed "Government Motors" from heading towards the abyss.
No matter which way you cut it the big GM is certainly in an abyss it will find its way impossible to climb out of, without even more massive amounts of cash to keep it afloat.

Lets face it, the company has been a basket case for a long time and hasn't made a profit for around 5 years. The nail should have gone into the coffin eight months ago but that great economist Barrack "I have a Plan" Obama decided he knew more about cars and how to build them than Henry Ford and proceeded to sink 10s of billions of American taxpayer dollars into it in the hope that doing the same thing it had been doing over the last few decades was going to turn the company around - amazing how resuscitive other peoples money is eh folks!

Ain't socialism a wonderful thing.

Here we are now 8 months later and there is talk of sacking thousands of highly overpaid car workers, killing multiple brands, ditching 2000 dealerships and even selling the car that beats the Toyota Prius for being ecologically sound, The Hummer, to a Chinese company.

But is that going to save it?

Short answer, NO.

But why?

For a start dropping 2000 dealerships simply isn't enough, they have 6,426, to be exact, to Toyota's 1,461, so try dropping another 2000 to reduce those massive overheads that are dragging GM down. Start with that and in combo with some of the other cuts - especially the gold plated pension plans - that just might work.

The big problem that GM has though is that it is now effectively a Government department and we all know that politicians and business equal failure with a capital F.

Some of us my age (43 years young) remember British Leyland being "rescued" by British taxpayers in the 1970s. Where is it now ?

It no longer exists.

It made poorly designed and built cars that politicians had influence over building and nobody wanted to buy them.

Mr Obama wants cars to be built that are "greener", whatever the hell that means and instruction on high from mad socialists like him will result in the same fate that was visited on BL 30 years ago.

Success for GM is almost impossible under its present ownership and Obama's "plan" to get the company out of the crapper seems to be a combination of the ability to sell cars to Americans that they don't want from a company that they already own by using taxpayer money(again) to bribe them to ditch their old cars, so they will buy the new ones from Government Motors.

This will apparently allow the company to sell 10 million cars a year, make the cash flow (out and in and out again of taxpayer wallets) and then they will be able to make a profit.

Again, ain't socialism wonderful!

No plan yet from Obama about just when that 50 billion loan is going to be paid back to Americans.

It never will.

Recent Share Investor Reading

• Stock of the Week: The Warehouse Group
• Freightway's Capital Raising more of the same crap
• Stockmarket Education: How do you buy shares?
• Analysis - Mainfreight Ltd: FY Profit to 31/03/09
• NZX Market Diary: June 1 - 8 June 2009
• Stockmarket Education: What is a Share?

Discuss this topic @ Shareinvestor.net.nz


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c Share Investor 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