Friday, November 13, 2009

What Infratil sale of Auckland Airport stake means

The sale of Infratil Ltd [IFT.NZ] 3.87% stake in Auckland International Airport to institutions [AIA.NZ] 3 days ago at first look might not seem good news for existing shareholders.

All is not lost however!

Infratil management state that their reason for selling was "consistent with recent capital management initiatives and provided additional flexibility to fund current and future opportunities".

That means they pretty much took a bath on their short term punt on the airport being sold 2 years ago and when the brakes were put on it by the outgoing Labour Government they held on for too long.

Of course another port sale could be way off in the distance but an investigation into the relaxing of the rules of "sensitive strategic" assets by the National Government earlier this year means that this would be more likely given another bid for the airport.

What is more important to Auckland International Airport shareholders is that the company is doing OK during the current downturn -stagnant profits are all the rage - and is likely to do significantly better in the long term.

The Canadians and Arabs were willing to pay 100% more than the current share price (oh that seems so long ago) so there is still value left in the near monopoly company that is the Auckland Airport.

And that fellow shareholders is the way you should be looking at the Ifratil sale.

Disclosure: I own AIA shares

Auckland International Airport @ Share Investor

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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

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Share Investor 2009

Tuesday, November 10, 2009

Stock of the Week: Ryman Healthcare Ltd

Ryman Healthcare [RYM.NZ] is a stock up there with Fisher & Paykel Healthcare [FPH.NZ] in terms of possible long term gains.

In my opinion it will grow revenue and profit for many years to come.

The reasons I have included it in this week's Stock of the Week are its long term prospects and the fact that I still think it is cheap stock at current prices.

The elder care sector that Ryman competes in has been growing for the company at a rate of 20% per annum for the last 10 years and shows little sign of abating. In fact current growth rates could look quite modest in comparison to future growth.

Demographics show that in the future the elder population that will need such care that companies like Ryman provide will increase by around 150% over the next 20 years or so.

The stock has been cheaper over the year at a 52 week low of NZ$1.14 but at a $1.97 close yesterday and an all-time high of Over $2.70 at its peak, considering its potential growth this still makes Ryman a good long term stock.

Buy on any weakness if this stock is for you.

Good luck!

Disclosure: I own RYM and FPH shares

Stock of the Week Series

Restaurant Brands Ltd
New Zealand Refining Ltd
Hallenstein Glasson
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
Sky City Entertainment Group
Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances

Ryman Healthcare @ Share Investor

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Discuss RYM @ Share Investor Forum

c Share Investor 2009

Monday, November 9, 2009

Kathmandu IPO: Shares set for discount

According to a Bloomberg story the Kathmandu Holdings [KMD.NZ]IPO looks set to be oversubscribed, indicating that either this is the best IPO since IPOs were invented or that investors have failed to look close enough into the prospectus for the numerous omissions and sleights of hand made by current owners Milford fund shareholders and their associates and decided there is money to be made.

If the Myer float last week is anything to go by Kathmandu is going to begin trading at a deep discount when the shares begin trading on the NZX and ASX in late November.

Myer Holdings Ltd [MYR.ASX] shares were dumped as institutions holding stock soon realised they couldn't stag the issue and began to sell off.

Those patient investors wanting to get Kathmandu shares may get them for closer to their worth if they are willing to wait a while and let Mr Market decide what the company is worth.


Prospectus date Friday, 23 October 2009

Retail Offer opens Tuesday, 27 October 2009

Retail Offer closes 5:00pm AEDT/NZDT, Friday, 6 November 2009

Institutional Offer and Institutional Bookbuild opens Tuesday, 10 November

Institutional Offer and Institutional Bookbuild closes Wednesday, 11 November 2009

Pricing and allocation announced Thursday, 12 November 2009

Expected commencement of trading on ASX (conditional and deferred settlement basis)
and on NZX (conditional settlement basis) Friday, 13 November 2009

Institutional Offer settlement and last day of conditional trading Tuesday, 17 November 2009

Shares expected to begin trading on a normal basis on NZX Wednesday, 18 November 2009

Expected despatch of holding statements and any refund payments if required Thursday, 19 November 2009

Shares expected to begin trading on a normal settlement basis on ASX Friday, 20 November 2009

Kathmandu @ Share Investor

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c Share Investor 2009

Friday, November 6, 2009

Has Warren Buffett Gone Nuts?

Make no mistake, I am a big fan of Warren Buffett. I follow his investment style in my own Share Investor Portfolio as faithfully as I can given my individual circumstances and background and have followed his fortunes closely in the years that I have known about him but I think he has gone a little nuts over the last year or so.

The past 12 months of financial turmoil has seen saturation coverage of the billionaire as he professes to be "Buying American", doing very large deals to buy stakes or debt in Harley Davision, Mars/Wrigley, Goldman Sachs, Tiffany, a whole host of other stocks and his latest coup de grace, the full takeover of Burlington Northern Santa Fe, the large North American railroad freight mover.

His media over-exposure on its own seems a little desperate but the move on Burlington seems a little over the top considering he seems to be paying full price for the company, something he usually tries to avoid.

This deal will be Buffett's Berkshire Hathaway largest deal ever to take full control of the 77% of the company it doesn't already own and comes on top of news that his company will do a 50:1 share split of its "B" listed shares, something that Buffett has talked against for as long as he has run Berkshire.

None of these things on their own -with the exception of the Burlington purchase - indicate anything else other than looking to buy a "bargain" during the current economic downturn but the latest large purchase just seems to smack of putting it "all in" in an attempt to score the big one. Something he has done many times successfully in the past.

I know alot less than Buffett about the rail freight business, it may be a great long term purchase and there could be an ulterior motive to the move apart from the freight business but if you pay too much for an asset, well that is something Buffett has written books about. He normally wouldnt do it.

He really has me a little worried about the real state of affairs of the current financial turmoil. It is worse than what most would have us believe but Warren's actions smack of a man who knows that things could be alot worse.

Warren Buffett @ Share Investor

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c Share Investor 2009