Share Investor

Monday, June 15, 2009

Share Investor Portfolio: June 15 2009

The Share Investor Portfolio now contains 17 stocks listed on the NZSX. The bulk of the portfolio started back in 2002 and I have added to the bulk of it by using dividends and some cash.

Since the last update in May 22 approx NZ $7000 was added due to 3 capital raisings. (1 2 3)

Fletcher Building Ltd [FBU.NZ] has added 114 shares | Freightways Ltd [FRE.NZ] 431 shares | Sky City Entertainment Group [SKC.NZ] 1915 shares.

The Share Investor Portfolio as at 15 June 2009

Auckland International Airport [AIA] 3000
ASB Capital NO. 2 Ltd [ASBPB] 10000
Briscoe Group Ltd [BGR] 3000
Fletcher Building Ltd [FBU] 1114
Fisher & Paykel Healthcare Corp Ltd [FPH] 5000
Freightways Ltd [FRE] 8631
Goodman Fielder Ltd [GFF] 2000
Halleinstein Glasson Ltd [HLG] 1000
Kiwi Income Property Trust [KIP] 1000
Mainfreight Ltd [MFT] 3125
Michael Hill International Ltd [MHI] 3000
Postie Plus Ltd [PPG] 2535
Pumpkin Patch Ltd [PPL] 5000
Ryman Healthcare Ltd [RYM] 5000
Sky City Entertainment [SKC] 36915
Steel & Tube Holdings Ltd [STU] 400
The Warehouse Group Ltd [WHS] 8000

The Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy by Robert G. Hagstrom
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c Share Investor 2008,2009

Anti-Smacking law needs a good beating

The official campaign has started for people to take part in the Citizens Initiated Referendum on Labour's anti-smacking law passed in 2007

The postal referendum runs from the 31st of July until the 21st of August and asks the question 'should a smack as part of good parental correction be a criminal offence in New Zealand?'

It is being held as a postal referendum this year because Prime Minister Helen Clark refused permission to have it during the 2008 General Election because she thought it would cost her votes.

It will cost New Zealander's more than $9 million as a result.

It sounds like John Key is against changing this facist law but it must be changed for the sake of our families and our kids.

They are in danger if the anti-smacking law is not repealed as it fosters out of control children and lack of personal responsibility.

c Political Animal 2009

Stock of the Week: Michael Hill International

In this Stock of the Week I am going to look at the multinational Jewelry retailer Michael Hill International [MHI.NZX]

Like every other business and especially retailers, Michael Hill is suffering somewhat from the economic downturn, its results to 31/12/08 that, but this company has a long history of good returns to shareholders and spectacular revenue and profit growth and the drop in profit will not last forever.

Over the last year or so the company has shifted its direction from a pure jewelry discounter to a more upmarket player, with its own branded watches and a range of luxury branded products, starting with Michael Hill Perfume.

Expansion from its present base of over 230 stores is on the cards with a goal of 1000 stores by 2020, the bulk of them being in North America, which kicked off in Canada a few years ago and entered mainland America at the end of 2008 when MHI purchased 17 stores in Illinois and Missouri from Whitehall Jewelers who were in Chapter 11 Bankruptcy.

Of course this is risky, there are many retailers that have washed up on the retail rocks in the land of the free because of unwise and unsustainable expansion, many of them in 2009, but Michael Hill's (the man and the company) expansion strategy up till now has been carefully calculated every step of the way and so far has paid off.

Canada has proven a tough nut to crack thus far but prospects were improving until the recession hit late 2008.

Michael Hill (the man) thinks this is a perfect time to expand and I am with him there - cheaper start-up costs makes for a good base to grow from and gives leeway to get through the tough times.

Which brings me to the share price. The stock hit a low of 45c earlier this year but has risen up to 69c market close on Friday. The stock has been as high as $1.25.

I am looking at buying more on share price dips, and they will come.

Good Luck!

Stock of the Week Series

Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances

Michael Hill International @ Share Investor

Hill Family makes Claytons Takeover bid for Michael Hill International
Michael Hill International Ltd: 2010 Full Year Profit Analysis
Long Term View: Michael Hill International Ltd
Michael Hill International: 2010 half year profit commentary
Michael Hill Makeover kicks off
Michael Hill International: 2009 full year profit commentary
Toughen Up: What I have learned from the hard times
Stock of the Week: Michael Hill International
Michael Hill TV3 60 Minutes Interview
Long VS Short: Michael Hill International
Marketwatch: Michael Hill International
Michael Hill's profit shines
Michael Hill takes on the windy city
Why did you buy that stock? [Michael Hill International]
MHI has defined growth strategy
MHI profit sparkles

Discuss MHI @ Share Investor Forum

Download MHI Company Reports

Recommended Amazon Reading

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

Saturday, June 13, 2009

Mt Albert By-Election win a Turning Point in Labour Party Leadership

Congratulations to Labour's David Shearer for winning the Mt Albert By-Election by a landslide tonight.

He beat Melissa Lee from National, by a far larger majority than Helen Clark beat the National Candidate in the November 2008 General Election.

What does this tell us?

Well, it says that Shearer is a popular fellow, albeit in a safe seat a Labour party Monkey could win but what it also says is that Phil Goff's days as Labour Party leader are numbered.

With Helen Clark polling lower than Shearer and with Goff a part of Helen's old 2008 team the writing is on the wall for Goff. He was and is part of a dying Labour under Clark and now him and Shearer is its future.

The big win tonight really is the turning point for Goff's leadership and a grab for the top job cant be far off for Shearer and what will be his new team.

Goff simply cannot beat John Key in the 2011 General Election but after tonight Labour Party hierarchy will know for sure that David Shearer will have a much better chance.

Tonight's result has not been good for Phil Goff but it has been great for Labour's chances come 2011.

	Transforming Leadership by James MacGregor Burns Buy new: $10.88 / Used from: $6.34

LIVE: Mt Albert By Election Results - Final Results

Even though it might seem the results are a fait accompli, you can get Mt Albert Election day results here at Political Animal as they come in.

It aint over until the fat politician has his hands on your money.

By-Election Results -- Mt Albert (Final results)

Candidates

Electorate Number:	26	Final:	No
Polling Places Counted:	30 of 30 (100.0%)	Votes Counted:	19,992
Less than 6 votes taken in Polling Places:	0	Special Votes:	1,114
Leading Candidate:	SHEARER, David (LAB)	Majority:	9,187

BAGNALL, Jim		IND		22
BAKER, Ari		IND		15
BOSCAWEN, John		ACT		943
BOYCE, Ben		B&B		151
DYER, Simonne		KIWI		85
FRANCE, Malcolm		PBP		13
GREEN, Dakta		ALCP		85
KANE, Rusty		PCP		5
LEE, Melissa		NAT		3,426
NORMAN, Russel		GP		2,418
PISTORIUS, Julian		LIB		35
SHEARER, David		LAB		12,613
TURNER, Judy		UFNZ		82
VAN DEN HEUVEL, Anthony Joseph James		HR		14
WOOD, Jackson James		IND		9
Candidate Informals				76
TOTAL				19,992

The Chief Electoral Office aims to have the official results for the 2009 Mt Albert by-election published here by noon Wednesday 24 June.

c Political Animal 2009

Contrarian Investor: Doris Mousdale

A few months ago I decided to get all Pollyanna-ish, to stop writing about the economy in the doldrums, because it is going to do what it is going to do and instead focus on stocks, business and as some in the financial world say look at things "going forward". The contrarian investor approach if you like.

Doris Mousdale

A positive spin, because I am sick of the mind numbing daily focus, usually inaccurate and at its worst pure guess work, of talking heads telling us how bad it is and how long it is going to last.

With this in mind I am going to do a series on people or businesses that are doing the opposite to everyone else.

Growing instead of retrenching, starting business rather than closing and hiring instead of firing - you get the picture.

I suppose I was inspired by Michael Hill's interview on 60 Minutes this last Monday where he told us that he was more positive and excited about his Michael Hill International [MHI.NZ] Jewelry business than any time in his life.

The man is looking at the global economic downturn as an opportunity to expand, get cheap retail sites and reach 1000 stores by 2020.

With this positive theme in mind lets take a look at the book business and one person in particular that has been in the business for many, many years, Doris Mousdale.

She has had positions with Whitcoulls, Dymocks, Real Groovy. Made redundant from her position with Dymocks in April she has decided to open up her own bookstore, Anthology, in Auckland's Newmarket shopping district.

Now with a very competitive book market in New Zealand and with book chains downsizing, shutting and moving head offices to Australia, Mousdale certainly has taken the bull by the horns and gone in the opposite direction.

She thinks her personal touch as an owner operator and experience in the book industry will mark her out from other book retailers:

"I'm feeling quite confident about it, I think the independent bookstore has a lot to offer the surrounding community. There are still people out there who want the next best read, and they want it recommended to them." See full story.

I think she is right. A point of difference is crucial to survival in business, especially in retail, especially in the cut-throat book biz and most certainly during an economic downturn.

Mousdale has a niche to fill - experience and personal service- because she cannot compete on price and title range with the Borders of this world and her move to position herself where she is , is canny to say the least.

This comes on top of a broad downturn in all retail and a movement away from pricier entertainment and gift giving to more affordable product like a book to read or a movie ticket, instead of that weekend way in Taupo.

If Doris can get through the tough times, her business is going to go from strength to strength and she has certainly chosen a opportune time to make her mark. Contrarian investors have almost always had better returns than those who go with the crowds, as their start up costs are always cheaper -in Mousdale's case with on going business expenses negotiated at a time when relative bargains can be had.

Good luck to her.

Related Links

Doris Reviews Books - Leightonsmith.co.nz

Recent Share Investor Reading

Friday, June 12, 2009

Burger Fuel Worldwide: Closer look at Company Accounts

Further to yesterday's analysis of the Burger Fuel profit to 31/06/09, which I thought was misleading for shareholders, because of largely meaningless comparisons made between 2009 and 2008 profit. If you want to get a better picture of how things are really going have a look at the brief company accounts. ( you need to be a Share Investor Forum member to see them - join here)

Look especially at revenue for the company and where it comes from and look closely at year to year comparisons.

On first look the NZX release makes Burger Fuel Worldwide [BFW.NZ] position look quite good (and the lower loss is clearly a positive) but it is a different story once you look closer and in more detail.

Nice management spin.

Burger Fuel Worldwide @ Share Investor

Burger Fuel doesnt rule out capital raising
Burger Fuel Worldwide: Closer look at Company Accounts
Burger Fuel: Running on Empty
Burger Fuel leaves investors hungry
Burger Fuel management cagey over company progress
Burger Fuel cooks up Dubai deal
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Burger Fuel: Inside info?
Burger Fool IPO: Burger Fool?
Exclusive Interview with Burger Fuel's Josef Roberts
Burger Fuel's Daytime drama
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Director explains share price drop
Burger Fuel slims down in value
Burger Fuel and Coke
Marketing Burger Fuel's future
Pumpkin Patch VS Burger Fuel
Burger Fuel results and commentary

Discuss this Topic @ Share Investor Forum

c Share Investor 2009

Thursday, June 11, 2009

Analysis - Burger Fuel Worldwide: FY profit to 31/03/09

Burger Fuel Worldwide [BFW.NZ] had their profit for the year to 31 March 2009 out today and I expected a poor performance but on the surface it looks like things are getting better. It is difficult to compare this years result to last years as operations for 2008 are for less than 12 months of operations.

Lets have a look at the results in a bit more detail.

Key Points

1. Revenue for the franchisor up 70% to just over NZ$ 8 million.

2. More than half of franchisor income derived from food & beverage sales of company owned stores.

3. Losses pegged back 67% to just over 700K.

4. Revenue for franchisee & company owned stores up by over 15% to nearly $26 million. (Food and Beverage sales)

5. 3 more stores added to take total to 28.

6. International agreements for 3 territories signed.

7. losses slowing in the last half year.

8. No "material" borrowings.

9. Cash on hand substantially lower from $3.5 million last year to just over $1.5 million.

There is good indication of improved sales and slowing losses at both the franchisor and at store level but it isn't clear as to how much of the slowing losses are due to the logical response of management to cut back on costs due to the global recession. These costs were higher in the last period and would have contributed to the higher losses.

Much of the excitement around the Burger Fuel IPO 2 years ago was in the growth for the company and spectacular growth was needed to achieve good profit for the franchisor. As this appears to have slowed in the last half, expectations would be that this growth and profit are going to be delayed somewhat until economic conditions make growth a good business proposition again. This is pointed out by an executive director of the company Josef Roberts, who has indicated that expansion has been slowed considerably in new territories in the Middle East and in Australia where consolidation and more branding will be done before any more expansion there.

High growth and profit is needed to justify the high capital value that is currently put on the company, in comparison to its profit and future prospects, and shareholders are unlikely to see any concrete sustained profit until economies of scale are reached and unfortunately that means more money being spent on building up the business.

A big worry is that more than half of company revenue is from food and beverage sales from company owned stores, the rest comes from royalties, licensing and franchise fees and advertising charges to franchisees, originally forecast to be the bulk of income for the company during pre-IPO publicity.

With just over $1.5 million of cash at hand, which is substantially lower than for the last comparable period , the company is going to have to either borrow money or go to shareholders when it wants to start expanding again.

Until then they are just marking time.

Please Note

It must be noted that 2009 figures are difficult to accurately compare to last years because the 2008 period was only for 9.5 months and management haven't indicated whether adjustments have been made to reflect that in their own figures -it looks likely not to be the case so the large increases in sales and lower losses must reflect the two different reporting periods. In addition there are many accuracies in comparisons made because of less than two years in business and one off IPO costs other costs and other revenue included previously, making current year results look better than they should at first glance.

Burger Fuel Worldwide @ Share Investor

Burger Fuel doesnt rule out capital raising
Burger Fuel Worldwide: Closer look at Company Accounts
Burger Fuel: Running on Empty
Burger Fuel leaves investors hungry
Burger Fuel management cagey over company progress
Burger Fuel cooks up Dubai deal
NZX share trades with strings attached
Don't buy Burger Fuel, yet
Burger Fuel: Inside info?
Burger Fool IPO: Burger Fool?
Exclusive Interview with Burger Fuel's Josef Roberts
Burger Fuel's Daytime drama
Burger Fuel share price out of gas
Beefing up store numbers
Director explains share price drop
Burger Fuel slims down in value
Burger Fuel and Coke
Marketing Burger Fuel's future
Pumpkin Patch VS Burger Fuel
Burger Fuel results and commentary

Discuss this Topic @ Share Investor Forum

c Share Investor 2009

Banks not participating in Recession

Bill English wants customers to "take banks to task" a nice attention grabbing headline and politically expedient but as I have found, my bank just isn't listening.

I mused a few months back as to why banks were not participating in the current recession, coming to the party and giving New Zealanders a break, considering taxpayers are now guaranteeing their own banks.

Lets face it, gone are the days when your bank manager knew your name and cared about the service they gave you and it seems even when it counts the most, in dire economic circumstances not seen for 70 years, they simply bury their heads in your money.

My bank's approach to the recession and what effect it might be having on me is to sack its staff, to make we wait longer in a line of other disgruntled sheep, falsely ask me at the counter what will I be doing in the weekend, ask if I want to buy insurance and then continue to punish me 25 bucks a time if I forget to have sufficient funds in my account when an auto payment is due. Its kinda like Robin Hood with a smile, except the taxpayer is paying for the arrows.

Short of forcing banks to play their part, and we don't want that, it seems the only pressure that might work is pressure from every bank customer on their bank manager.

The likelihood of that happening from the average passive Kiwi consumer is less than Lynda Carter coming back and playing the lead role in the new Wonder Woman movie.

It is worth a try though.

*Cartoon from Emmerson

Banking @ Share Investor

Bank Guarantees: Time for banks to return the favour
The Return of Bryce
Banking Madness!

Discuss this topic @ Share Investor Forum

c Share Investor 2009

Wednesday, June 10, 2009

Air New Zealand wants another taxpayer bailout

Rob Fyfe has decided that having more than NZ $1 billion of taxpayer money in the Air NZ bank isn't enough.

Proving once again that he is the evil socialist I initially pegged him as he now wants more taxpayer money to subsidise his failing airline, Air New Zealand [AIR.NZ] for "marginal routes."

Jeez Rob, I thought in the real world if something is marginal you simply either cut your costs to regain profitability or if you cant make a decent return simply stop operating.

How bad are things at the national, taxpayer owned carrier then?

Well, the pressure is coming from a number of sides.

Yet another tourist downturn, and these happen frequently for a number of reasons and is why I would rather burn my money than "invest" in an airline, means that bums on seats are down.

This doesn't look like it is going to get better anytime soon. In fact it could get allot worse.

More competition from the likes of Virgin Pacific/Blue and Jetstar mean those margins that Fyfe talks about are getting thinner than the air in a depressurised 747 before a crash landing.

The cost of jet fuel is rising quicker than you can say the Arabs have got me by the family jewels. Every buck of extra cost on aviation fuel means millions off Air New Zealand's bottomline.

To be fair, everyone is being affected by this global pandemic ("swine flu" included) of economic circumstances and every airline is getting it up the tailpipe but having said that, why, with little money left in the taxpayer pocket, should we now be stumping up more borrowed money from China to keep a failing business in the air?

If you are a Air NZ shareholder (apart from the taxpayer) you should be very worried.

Disc I own AIA shares in the Share Investor Portfolio

Auckland International Airport @ Share Investor

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Softening opposition to CPPIB bid for AIA
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What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
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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?

Discuss this Stock @ Share Investor Forum - Register free
Download AIA Company Reports
Download Queenstown Airport Company Reports

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The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
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c Share Investor 2010

Monday, June 8, 2009

Michael Hill TV3 60 Minutes Interview

I just watched the Michael Hill interview on TV3's 60 Minutes.

I know little about the man but the usual stuff: he bought his first Jewelry shop in the late 1970s when his house burned down. He was 43.

Along the way he wrote down his goals that he would have x number of Michael Hill International [MHI.NZX] stores by a particular date. He has achieved every goal he set in that respect and now has well over 200 stores in New Zealand, Australia, Canada and from late last year the USA.

His future goal is to have 1000 stores by 2020, with the bulk of them being in the United States.

His recipe to get there is to brand himself and his company as "desirable" brand that everyone would want -a tough proposition in these tough times considering that other luxury brands are floundering with sales drops of up to 50%.

The image change has started in Australasia, with flash new stores that sell cut price jewelry as they traditionally have but alongside that higher end bling and Michael Hill branded watches and his own perfume line.

He seems very excited about current economic conditions, seeing it a an opportunity rather than a curse. The opportunity is, as he sees it, is that these dire conditions will allow him to reach his goal of 1000 stores just that much sooner, and cheaper.

I think he is going to get there.

Michael Hill International @ Share Investor

c Share Investor 2009

Cadbury's chip off the old family block & lose customers

It has been 5 minutes since my last confession, I am chocoholic. I don't however need help with that.

The following is only serious if you love chocolate.

What I do need help with is Cadbury's decision to change package size design and formula for their range of family sized block chocolate range.

Previously 250g, these family blocks now range from 190 grams for the "chrunchie bar" block to 235 grams, all at the same price.

The dairy milk block is 200g and Carramellow 220g for example.

Looking at a old 250g Carramellow next to a new one today I noticed that the were the same size.

Why is that you ask?

Well the new blocks are packaged in thick cardboard instead of paper and aluminum - how sneaky of Cadbury.

I noticed shoppers looking at the new blocks with confusion and then going down to the Whittakers display to buy different flavours, all in the same size pack don't you know!

Also their chocolate is now made with vegetable fat rather than animal fat - that ain't chocolate anymore folks its a cocoa drink with water.

After calling 0800 Cadbury to complain, the chick there told me their family block had been different sizes for 20 years ( PR bollocks!) and that I was mistaken -hey I told you I was a chocoholic, I know my chocolate baby.

Whittaker's is who I will be buying my chocolate from now on -less confusing and they are made in New Zealand instead of Cadbury's blocks that are made in OZ.

A glass and a half of milk per block?

Not anymore.

c Political Animal 2009

(UPDATE) TVNZ Follows China with Wendy Petrie censorship

A picture of said fist pump

I wasn't going to post the Wendy Petrie (dish?) Youtube clip where she punches the air after David Bain trial coverage , just like the synapses in her little blond head are doubtless doing the same, until TVNZ got all high and mighty about it because they wanted the clip removed.

This was apparently due to the fact that it harmed the State broadcasters "image" - they mean the image of a left leaning muck-raker that spoon feeds its viewers with opinion dressed as fact.

So here for your enjoyment is the offending clip. It is not viewable from the Youtube website which says the clip "cannot be view from your country" because TVNZ have come down on them.

Guess they cant report on China doing the same with the internet?

Doesn't Wendy's hair look great though?!

c Political Animal 2009

Share Investor

Monday, June 15, 2009

Share Investor Portfolio: June 15 2009

Anti-Smacking law needs a good beating

Stock of the Week: Michael Hill International

Saturday, June 13, 2009

Mt Albert By-Election win a Turning Point in Labour Party Leadership

LIVE: Mt Albert By Election Results - Final Results

By-Election Results -- Mt Albert (Final results)

Contrarian Investor: Doris Mousdale

Friday, June 12, 2009

Burger Fuel Worldwide: Closer look at Company Accounts

Thursday, June 11, 2009

Analysis - Burger Fuel Worldwide: FY profit to 31/03/09

Banks not participating in Recession

Wednesday, June 10, 2009

Air New Zealand wants another taxpayer bailout

Monday, June 8, 2009

Michael Hill TV3 60 Minutes Interview

Cadbury's chip off the old family block & lose customers

(UPDATE) TVNZ Follows China with Wendy Petrie censorship

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