Friday, December 7, 2007

Share Investor Friday Free for all: Edition 13

Bollard sits on his hands

http://www.illustr8.co.nz/images/Editorial%5Calan-bollard.jpg

Allan Bollard in a more animated frame of mind.


Allan Bollard rattled his sabre again this week.

Keeping the cash rate at 8.25% while telling us inflation was a risk down the road.

Well helloooo! could one of the reasons to the risk of inflation be your 4 rate hikes this year and multiple ones over the last few years?

The short answer is yes but the less interesting answer is that Bollard is clearly out of his depth.

Barely able to see over the rims of his accountant style glasses, he rarely has the vision to see further than what happens from day to day..

Instead of dropping the cash rate, as he should have, he risks putting the New Zealand economy at the sort of risk the Labour Government has put it under for the last 8 stifling years.

Labour did it with world record breaking high taxes, removing cash and investment from the economy and Bollard did it with the worlds highest interest rates outside the worlds other banana republics, ditto removing cash from street level and strangling productive investment, savings and business.

World economies are cutting rates to stimulate economies and Bollard sits on his hands. It looks like he will only move once the economic cycle we are in is in the middle of a meltdown.


The Warehouse wont be sold for a bargain


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Warehouse extra store, one of only three


It looks like it is all on for young and old in the fight for The Warehouse.

After the recent High Court decision granted New Zealand's Foodstuffs and Australia's Woolworths the right to bid for the general merchandise retailer the two prospective buyers have wasted no time in talking to Warehouse management.

Competition between the two to bid for the company is going to be intense and this writer has a $NZ 50000.00 bet that the bidding is going to be explosive.

There is talk of Foodstuffs teaming up with a private equity player to make a bid but the star likely to shine through is Woolworths. It has a very strong balance sheet, excellent cash flows and a history of paying good money for assets it really wants.

The share price has already done the impression of a Nasa rocket by taking off from below 5 bucks last week to close at NZ$6.65 today.


The Canadians Fly in, again.

In the long running saga that is the Auckland International Airport merger/takeover, yesterday news that the Canada Pension Plan Investment Board has changed the terms of its proposed amalgamation with the airport, stimulating more interest in the company's shares. CPPIB would reduce the convertible note component and increase the value of the ordinary share.

http://upload.wikimedia.org/wikipedia/commons/thumb/f/f8/Auckland_airport_international_terminal.jpg/800px-Auckland_airport_international_terminal.jpg

Part of the main Auckland international airport at Mangere

It is offering a convertible note, valued at $2.75, an ordinary share valued at 70.5c and 20c cash.

The proposal will be put to airport shareholders only if CPPIB's $3.66 a share all-cash partial takeover bid for 40 per cent of the airport is successful.

The proposed amalgamation, which requires the support of 75 per cent of airport shareholders, is the second part of the CPPIB's two-pronged scenario to negotiate a restructure of the airport's balance sheet to realize tax benefits.

That offer opens on December 14 and closes mid-March.

The possibility that the board will recommend the bid to shareholders could be a little dodgy considering the pedigree of some of its board members.

Lloyd Morrison or John Brabazon have voiced their opposition to such deals over the last 6 months or more of this long opus and the two council shareholders look reluctant to sell.

Who the hell knows really. The sale process of the airport has only been trumped in its complexity and opaqueness by the sorry tale of Sky City Entertainment and its managements' dilly dallying over bids for the casino company.


Hobson's choice


http://www.kiwisaver.org/assets/2007/5/9/GirlwithKiwifruit.JPG

According to NZ Government stats the Kiwisaver super scheme has 300,000 participants that have "chosen" to "enroll" in it.

What is left out of any analysis is that the scheme is an opt out one rather than opt in so the bulk of those 300,000 haven't done anything. They are merely too lazy to opt out.

Micheal Cullen, our out of his depth Minister of Finance, of course trumpets this as a great success but as usual leaves out the details when they don't stand the scrutiny of logical argument and clear thought processes.

Of course this is the chap who has spent the last 8 years telling New Zealanders that tax cuts don't stimulate economies but is going to hand our money back to us in election year 2008.

Good luck balancing your check book Mr Cullen.

I'm no big fan of this harebrained state controlled and controlling scheme because it is expensive and tax inefficient but it will benefit shareholders in New Zealand listed companies.


Burgers going for half price


http://nzdaisuki.com/yellowpage/upload_img/Burgerfuel.jpg

In Burger Fuel news, you guys out there love Burger Fuel:

According to Google information released this week, Burger Fuel was the subject of the most internet searches of any New Zealand listed company.

This is no surprise to me because I have known this little tidbit since the company listed back in July. Its the biggest search term on my blog as well, followed by the worlds credit problems and Pumpkin Patch Ltd.

Incidentally the share price still languishes at 60c and is thinly traded, with a massive $150 going through today.

Its still on my watchlist though.


NZX Market Wrap & commentary

6:27PM Friday December 07, 2007
By Melanie Carroll, NZ Herald


New Zealand shares made a late rebound today to recover the ground lost after last week's downgrade by international share index compilers MSCI.

The benchmark NZSX-50 index closed up 49.4 points, or 1.2 per cent, at 4092.9, its highest in over a week. Turnover totalled $109 million, and rises outnumbered falls by 58 to 38.

Lines company Vector was the standout stock, recovering to a two-month high of 251, up 6c or 2.5 per cent, from 218 last week.

"The stock always looked cheap anyway but particularly post-the MSCI selldown the market is starting to focus on fundamentals behind the stock, and the fact that there was effectively a profit upgrade in recent times," Macquarie Equities NZ investment director Arthur Lim said.

Other blue chips to rebound were Telecom, up 13c to 444, Auckland Airport, up 7c to 289, Fletcher Building, up 29c to 1169, Fisher & Paykel Healthcare, up 11c at 329, and F&P Appliances, rising 6c to 340.

Sky City was up 6c at 491, Sky TV rose 3c to 566, and Contact Energy slid 17c to 847.
The compilers of the MSCI indexes, which guide international trading and portfolio composition, downgraded New Zealand and are removing five of the top-10 stocks due to lack of liquidity and market capitalisation.

Remaining in the index are Telecom, Fletcher Building, Contact Energy, Auckland Airport and Sky City.

The Warehouse
was up 10c at 664, having jumped over 12 per cent since the High Court overturned a Commerce Commission ruling blocking supermarket chains Foodstuffs and Woolworths from bidding for the retailer.

"If you add back the special dividend of 35c, it means that the price is now the equivalent of $7. Clearly the market is saying it is unlikely that the Commerce Commission is going to appeal, and it follows news in Australia that discussions have started taking place between the different parties," Mr Lim said.

Air New Zealand was up 3c at 182, Nuplex gained 10c to 700, Infratil was up 7c at 297, Mainfreight rose 11c to 721, and Ryman Healthcare was up 2c at 212.

Freightways fell 6c to 374, Pumpkin Patch was down 5c at 265, NZX fell 5c to 925, and ING Medical Properties was down 2c at 122.

Among dual-listed stocks, ANZ jumped 50c to 3225, Westpac was up 35c to 3265, AMP rose 16c to 1192, and Lion Nathan rose 17c to 1090.

NZPA


Disclosure: I own Auckland Airport, The Warehouse shares

C Share Investor 2007

Thursday, December 6, 2007

Cartoon and comment; Emmerson: Winston Churchill Clark


C Emmerson, NZ Herald 2007


Emmerson gets to the nub or middle finger of the Electoral Finance Bill.

Labour and its cronies are blaming The NZ Herald for whipping up undue fear among the unwashed public but it is doing a stellar job over the EFB bill. A stand, the likes of which has never been seen since the heyday of Muldoon in the 1970s-80s.

On Wednesday in parliament Labour lapdog Winston Peters called the Herald's "attack" on the EFB a conspiracy of big foreign business trying to gain a foothold of power in New Zealand to enable them to make more money.

Paranoia clearly rules in Winston's office.

We can only hope he gets his foot caught in his mouth again on his latest holiday abroad.

Link to the Herald's EFB website: Electoral Finance Bill in detail


C Political Animal 2007

Electoral Finance Bill gets stalled in Parliament

They don't call it a political grind for nothing.


C Emmerson, NZ Herald 2007

The passing of the Electoral Finance Bill by Labour into law this week isn't going to happen.

The National opposition party are hammering every new clause to the hastily rushed and badly drafted bill and it is chewing up valuable parliamentary time.

There is a very distant possibility that National could stall the bill long enough for Labour to have to come back next February after the summer break.

There is of course the possibility that the house sit under urgency to pass the bill, as they have done with many other contentious constitutional and social changing legislation.

Whatever the time line, the bill is going to pass and the net affect will be that New Zealand citizens will have their democratic right to express their political views, without fear, in election year, removed.

C Political Animal 2007

Sky City Management: blind, deaf and numb

The absolute garbage that masquerades as management at Sky City Entertainment has got to come to a logical conclusion some time soon.

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The lobby of the 5 star Sky City Grand Hotel

The company let the market know that the only remaining suitor, which was rumoured as US private equity funds TPG and Apollo Management, was still attempting to arrange financing for a takeover bid.

Sky City management have been effusive, misleading and amateurish in their attempts to keep the market informed accurately and sheppard a deal with a prospective buyer.

If market experience from this end is as deficient as we know it, one can only imagine how the prospective buyer was treated.

Were Sky City management clear, precise and upfront with the two rumoured funds?

I seriously doubt it.

Now I'm not displeased that a deal looks like it is going to fall through but can you imagine this motley crew turning around the company and having the potential to put things back on track?

Not bloody likely mate.

Brook Asset Management, a large Sky City shareholder, has been angling for a board clean out for a long time and I would have to concur with that, for I cant see a way forward with sub standard people at the helm.

TPG and Apollo Management have apparently fallen short in the moola stakes because of the global "credit crunch" but I'm finding that a little hard to stomach considering the timing of the initial bid interest in September and at that time easy credit had already become a thing of the past.

What shareholders need is a clear assessment of where things are with any bid and it is certainly not up to Sky City management to wait around for a possible buyer to raise funds.

There needs to be an understanding from this last possible bidder that they are serious, give them a definite deadline-Sky City management have moved their deadline several times-and if they are not interested tell them to bugger off so we can all move on.

Without the current board of course.

You can bet the current state of indecision will also be permeating the business side of the company as well, not forgetting the considerable amount of money it will be costing shareholders in putting any bid together.

Roll the dice.

Disclosure: I own Sky City shares



C Share Investor 2007