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It is that time of the year, to pick stocks for 2010 and time for my stock picking monkey to come out of a self imposed 12 months hiatus for another stab at the stockmarket pages.
It is a bumper edition this year and I started it 1 week ago in between feeds for my time consuming wee girl - she had no say in what the stock picking monkey chose this year but could be encouraged to throw a dart or two at the end of 2010.
In the face of a global recession, an uncertain economic future that had a big impact at the end of 2008 and continues today, with dwindling share values, even for good assets, it is going to be hard to pick winners for next year.
2009 was a tough year for stocks, perhaps one of the worst in a generation
Please keep in mind dear readers that the picks are my own and they reflect my investment philosophy and not necessarily anyone else's.
My picks are based on a long-term view, regardless of the current short to medium term market turmoil and economic uncertainty.
NB: Since I think most of my portfolio consist of the best stocks on the New Zealand market, I found it difficult to pick stocks outside my realm of self interest.
After the release of Sky City Entertainment Group [SKC.NZ] half year profit to 31 December 2009 yesterday, I though it might be worthwhile speaking to CEO Nigel Morrison again to get his view on the company that he leads.
The result was a record for the half year of NZ$71 million on revenue up by almost 6% and cost cutting due to a capital raising last year and other efficiencies.
With this in mind lets put some questions to Nigel to get a better picture on where the company was in the half year and why and where the company might be headed in 2010.
The interview was conducted by email and Nigel completed it late last night so he was working like a trouper yesterday dealing with folk like me.
Back on December 13 2009 I picked 17 stocks in my Share Investor's 2010 Stock Picks .
At that time the market had been trending up for most of 2009 and stocks were well off their late 2008, early 2009 lows.
Since December the New Zealand Stockmarket and other global indexes have headed north with the NZX 50 Gross closing at an 18 month high today. (see chart below)
With this in mind lets see how my December picks have fared 4 months latter.
Main NZX picks
Fisher & Paykel Healthcare [FPH:NZ]
Picked at $3.24 the stock is now $3.32, an approximate 2.5% increase.
Fletcher Building Ltd [FBU.NZ]
Picked at $7.65 the stock is now at $8.50, an approximate 12% increase.
The Warehouse Group [WHS.NZ]
Picked at $4.03 the stock is now at $3.80, an approximate 5% decrease.
Sky City Entertainment Group [SKC.NZ]
Picked at $3.27, the stock is now at $3.29, a less than 1% increase.
Xero Ltd [XRO.NZ]
Picked at $1.55 the stock is now at $1.63, an approximate 5% increase.
Contact Energy Ltd [CEN.NZ]
Picked at $5.70, the stock is now at $6.50, an approximate 14% increase.
Mainfreight Ltd [MFT.NZ]
Picked at $5.60, the stock is now at $6.50, an approximate 16% increase.
Main ASX Picks
Caltex Australia Ltd [CTX.AX]
Picked at AU $8.00 the stock is now at $12.00, a 50% increase. Coca Cola Amatil [CCL.AX]
Picked at AU $11 the stock is now at $11.25, an approximate 2% increase.
Domino's Pizza Enterprizes Ltd [DMP.AX]
Picked at AU$ 5.10 the stock is now at $5.70, an approximate 12% increase.
Auckland International Airport Ltd [AIA.NZ] Up approx 5%.
Kathmandu Holdings Ltd [KMD.NZ] Up approx 20% but chosen for a dive that it took earlier in 2010
Port of Tauranga Ltd [POT.NZ] Even.
Michael Hill International Ltd [MHI.NZ] Up by approx 10%.
New Zealand Refining [NZR.NZ] Even.
Telecom NZ [TEL.NZ] Down approx 7 %.
Yum ! Brands Inc [YUM.NASDAQ] Up by approx 15%
In an overall rising market you are saying to yourself anyone can pick stocks (even a monkey with a dart can Darren) that are going to head north and you may be right. I picked some that have clearly done better than others and some that have fared very poorly indeed. Over 4 months you will get that but as time goes on stock prices will rise.
Stocks like Telecom have done particularly badly and I picked this stock because I thought it would plumb the depths, it did and bargain hunters would have done well out of this stock in the last 4 months and hopelessly over the long-term of course.
Some interesting moves down by the likes of the WHS and some very good rises by bell-weather stocks like MFT & FBU.
My best pick, a 50% rise in Caltex, just goes to show one can get lucky. It was trading at a comparative low when picked but oil prices were set to pick up on any economic recovery or at least the perception of one.
Overall a motley collection of results that will sort themselves out, given time, if I was right in the first place.
Disclosure : I own FPH, FBU, WHS, SKC, MFT, AIA shares in the Share Investor Portfolio.
The company has stated that it doesn't expect profit for at least the next 3 years.
Ecoya will be heavy on marketing and image and expect these two elements to help them establish a strong brand and hopefully sales and profit will eventuate.
I am naturally skeptical of a company that isn't making money from the get go and wanted to know more.
I didn't have to go looking for a contact as a mistake that I made with some figures from the 2010 result analysis got Ecoya's PR person onto me and I hooked up this Q & A with Geoff as a result.
The Q & A was conducted via email while Geoff was in North America on a sales trip for ECO and I want to thank him for taking the time to do this while he was busy with his business.
The Q & A
Share Investor - What was the primary reason you decided to buy into Ecoya and why list on the NZX when the money raised was only comparatively small and could have been found privately?
Geoff Ross – We choose to invest in Ecoya for many reasons. We saw a growth category, an ability to scale up relatively easily, a global opportunity, high margin, and a business that fitted with our skill set in high end consumer brands. Also the CEO of the business was a person we had worked with before and we rated highly. He had created a good product and got the business off to a good start.
We chose to list on the NZX because even though a small raise as it provided a good structure for our capital requirements – a fair valuation and the warrants to raise further capital as our business grows. Being a listed company also gives a credibility when operating in international markets. You are taken with a degree of seriousness when dealing with large clients such as department stores and also your key suppliers.
SI - You seem to be satisfied by the 2010 full year profit out earlier this month, is it fair to make any comparisons, good or bad, with previous years given the youth of the company and the rapid growth of Ecoya from a very small base?
GR - I think it is very important to make comparisons with previous years, even when young. Our goal is to double the size of the business each year. That is the trajectory we want to show in a high growth business such as this and that is what we want to report to our shareholders.
S I - How well did you think the Ecoya IPO was received by investors and the market in general?
GR - I would say OK. Previous shareholders of 42 Below had a good experience with us and were positive toward Ecoya because of our prior relationship. Investors outside this group are still pretty cautious at present. I would say that we got a better response from Institutions than I thought. And a weaker response from retail than I thought we would get. I would say this year is a very tough one for IPO’s. We got ours away, but I would suspect that further IPO’s, if any, will be slim on the ground this year.
SI - How was the value of the company arrived at, at just under $45 million it seems high given the company has yet to turn a profit and has sales of just over NZ$ 4 million?
GR - We did a huge amount of work on this. Our Investment Banking partners – Cameron and Partners were involved and we created various models. We have internal forecasts out 10 years. These were used in our valuations. We also looked at like valuations in this category – a useful one is a company called L’Occitane which just listed in Hong Kong. Typically valuations in this category are multiplies of Revenue. In our view we believe the value is fair for a growth proposition.
Growth Stories are relatively unusual in this market. A company such as Xero Ltd [XRO.NZ] listed with virtually no revenue. Rather the value is set on the combined prospect of the strategy, the opportunity and the ability of the the management to execute with the capital they now have. A growth company cannot be valued in the same way as say an old established Telco with limited growth prospects.
SI - Do you think the company has raised enough cash to allow it to pursue its stated aims and will it need more, apart from the exercising of the 2 warrant tranches, as the company develops?
GR - Yes.
SI - Why were pro-forma financial results used in the Ecoya Prospectus instead of the actual results, isn’t that misleading investors?
GR - By law you have to put in financial statements through to the end of the financial year you are in (Pro-forma statements) and then prospective numbers for a complete year following this. Which is what we did. We registered our prospectus a little before the end of our financial year – so that remaining period legally required prospective statements (which I understand you are calling pro-forma in this case)
SI - You built up 42 Below and sold it within a very short time-frame before any profits were realized. Is it going to be the same scenario with Ecoya and if not how will it be different?
GR - We will also grow Ecoya very quickly. We have a strategy which is about building the size of our revenue generating asset. In the years ahead we may simply ease off the growth pedal and allow the business to start generating a profit. At 42 Below we had several countries running profitably. However rather than easing off on the growth and allow the company to show a profit we continued with an aggressive growth plan and invest into new markets. If offers are presented, we will entertain them.
SI - The sector in which Ecoya operates is highly competitive, with quite a number of established players, what makes you confident that you can play them at their own game or, as you have stated in the Prospectus, that they would be interested in purchasing Ecoya sometime down the track?
GR - The challenge will not be play them at their own game – rather take a different approach. The battlefields really are brand and sales. We need to build a better looking brand, a better performing brand and a brand with a more compelling consumer story. And in sales we need to be better at it than the rest. We use our own people rather than reps or agencies. We think having your own people accountable to daily targets is a stronger way to build presence than leaving your sales in the hands of another group.
SI - What key elements will allow Ecoya to make inroads on its competition?
GR - Brand design is critical – we need to look great on the shelf and then in peoples living rooms and bathe rooms. Our environmental story is strong – using sustainable soy wax is also strong (most other candles are paraffin based – and lighting a paraffin candle in your living room is like starting a car in your living room) . We will also be doing a lot of the PR and marketing techniques that got 42 Below noticed.
SI - What are you doing to contain costs considering the current economic environment and the focus by other businesses on this important factor or is that not possible given the growth path factored into the company?
GR - It is absolutely important and is of course possible to contain costs. We run a very strong back office. We have an on line system that runs from a cellular hand held in our sales peoples hand through to head office, management accounting and then through to the orders of raw materials. This system allows us to look at any moment what is being sold, what the margin is and what our results are showing at that point. Everything is tracked by the minute.
SI - How has the introduction into the North American market been received and which retailers are selling your range?
GR - I have just come back from the US where I was selling up there. It is very early days, however I would have to say it has been received very well. It is a competitive market with out doubt – however the brand was received very well and the great thing about the US is that it is that much bigger. On my first call the Store (25 Park) agreed to take the brand on and we filled out the order form. The store owner then said – oh we have three more stores, can you replicate the same order for each store. The US has that much more scale to it.
SI - The global body and bath market is estimated in the ECO Prospectus at around US$22 billion. How much of a market share of that revenue do you expect to be selling within the next 5 years?
GR - We haven't released that to the market. I would say that we are not going for a share of the global market – rather a share of some specific markets. These being Australasia (where we aim to be have a significant share within the next 5 years), The US, and parts of Europe. Australia is currently our biggest market and will be for some time as we utilize the ‘home ground’ advantage.
SI - When is the company expected to turn a profit?
GR - Again this timing hasn’t been released to the market. We can say that the company will be investing in growth and that our current plans do take the company into profit. However this date is outside the years prospective financial statements and therefore has not been released.
SI - Marketing seems to be your area of expertise and you have used it to achieve some good results from companies that you have been previously involved with. How much will good marketing play in the growth of Ecoya and is it great word of mouth from current customers who will do most of the marketing for you?
GR - Marketing is vital. And word of mouth a big part of it. However our challenge is to make sure our customers want to talk about the brand to their friends – and their friends want to talk about it when they see it in peoples homes.
SI - Why are you lending shareholder money to directors to buy shares in Ecoya and isn’t there a more appropriate way to incentivize management to do better?
GR - We don’t have big director fees. In fact I would guess that we pay our directors less than any other listed company. In stead we want our directors interests aligned with shareholders – so that means shares. And we want to do this in a way that makes it attractive for very senior people to join our board. To get people of the calibre of Rob Fyfe from Air New Zealand Ltd [AIR.NZ], or Rich Frank, ex head of Disney, you simple can't offer them a small directors fee alone. We looked at ways of rewarding them with shares (rather than big directors fees) and the best solution seemed via a loan to them to purchase those shares. It is a meaningful way to reward directors and it does so with a currency that is the same as all shareholders.
SI - There is a considerable sum of money flowing from Ecoya to related parties for consultancy work and management fees on an ongoing basis. Is that practical given the relatively small capital base that was raised in the IPO?
GR - Yes there are two consultancy fees. One covers myself as Executive Chairman, Stephen Sinclair as CFO and Grant Bakers involvement. We are all on the board and we are all active in management. Currently Ecoya is 100 % of my time. This fee covers all our time and all our directors fees for all three of us. I consider this a nominal fee for three people who are both active in the business and on the board. The other consultancy fee covers our CEO – all of his time and his role on the board. Again it would make him one of the lowest paid CEO’s on a listed company. All of us are there to grow the value of the business and shareholdings, not by pulling big fees. So this is why there are consultancy fees – it covers senior management who aren't being paid by any other means.
SI - Is Ecoya capable of footing it with the big boys, especially as the company gains some sort of scale in terms of customer base and revenue size?
GR - Absolutely. We have paid a lot of attention to our systems and built a platform we can now grow from. You need this in place before embarking on a high growth strategy.
SI - What are your biggest challenges as the company expands?
GR - The challenges will be typical to those in any high growth business. When you double the size of your business each year you need to continually make sure you have the right organizational structure, you are re negotiating contracts to get the benefit of scale, you are watching stock control to make sure you don’t run out and you keep up with demand and you keep listening to your customers.
SI - Any business has inherent risks, especially a start up like Ecoya. How do you manage those risks in the normal business operating environment that changes due to economic cycles and other outside and inside influences?
GR - This is a huge question and could take pages. In short - I think this is part of the role of our board. We have monthly meetings where our results are tracked. We are continually reviewing our FX policy, our financial position VS plan, our product offering VS key competitors, performance of sales people etc.
SI - How much, if at all, has the founding and growing of 42 Below influenced your approach to Ecoya, how it operates currently and how it will operate in the future?
GR - It has been a huge influence. There are a lot of similarities between high end spirits and high end home fragrance and bath products. We learnt a lot at 42 Below. We want to use all those learning's going forward.
SI - Do you still have any financial interest in 42 Below?
GR - No.
SI - Who are some of your business mentors/heroes and why?
GR - I think Rob Fyfe at Air New Zealand has done a great job. You can feel and see the improvements in that company, to have done this in a company the size of Air New Zealand and done it so quickly is very impressive – they have now been named best Airline in the world. I think Richard Branson because the Virgin brand always feels fresh and young despite now having been round for a while and being a very large organization. I think John Key is doing a pretty good job (mostly) of running New Zealand as a company.
SI - What company or companies do you admire the most (apart from Ecoya)that you don't have a financial interest in and why?
GR - Wow – heaps. From Apple and Stationary company Smiggle for great use of design. To local success stories like Les Mills, Ice Breaker, and Eco Store.
SI - Are there any particular books , periodicals or websites that you have read that you would recommend to Share Investor readers in terms of business and investing?
GR - I like Wired and Fast Company magazine out of the US. Both usually at the front end of new business and especially at the front end of technology. I also like magazines like Vanity Fair or fashion magazines like Nylon as you keep abreast of popular culture and get a sense for where the next consumer trends are coming from. I like reading stuff that keeps me in touch with what is happening in popular culture and what will therefore drive the next consumer trends.
SI - In my investing experience I have found the level of business leadership in New Zealand wanting – with a few very notable exceptions - when it comes to making good long-term decisions based on sound business skills, the basic understanding of running a business and accountability when it comes to making mistakes and this is often reflected in businesses hiring from an overseas talent pool. What are your views on how we can get good shareholder representation in the boardroom?
GR - I think companies are putting the wrong people on their boards. The two most important qualities in a board I believe are:
* Have people on them who have actually built and run companies. At 42 Below all our board members had built or run their own company. The same is true at Ecoya. Too many boards have people who have never run a company – they are lawyers, accountants or management consultants. These people may have great skill sets, but they should not dominate a board. When this happens then only a narrow set of skills are being deployed at the board. No one is on there who is hungry for growth – rather they are on the board simply as a watch captain, not a driver.
* Have board members who are comfortable challenging each other. A piece of advice I got from Mark Weldon was “Don’t build a board where everyone is the same and therefore likely to have the same opinion – you and the other board members need to be challenged” Too many boards I have seen have career board people and all cut from the same cloth. I can’t imagine there is a great deal of debate going on at their meetings.
SI - What do you see as the strongest and weakest quality of your leadership style?
GR - Strongest – I hope I am a good listener. Weakest – give people a bit much rope.
SI - Where do you see yourself and the business you lead over the next five years?
GR - Ecoya to be the most respected brand in Home Fragrance, Body and Bath. Globally.
SI - Thanks for your time.
Geoff Ross Bio - From various sources
Geoff Ross has an advertising background and started with Saatchi & Saatchi back in the early 1990s. He most famously developed and grew and listed vodka maker/distributor, 42 Below , and sold it to Bacardi in 2006 for NZ$ 138 million.
Along with his wife Justine Troy he tells the Story of 42 Below in the book out this year, Every Bastard Says No - The 42 Below Story.
Geoff bought into Ecoya in 2008 and is currently helping run The Bakery, a platform from which Geoff and others are helping fund high growth business start-ups.
The Bakery has helped underwrite the Ecoya business.
About Ecoya -From 2010 Prospectus
The business operated by Ecoya was established in April 2004. It has experienced strong growth since the 42 Below founders invested in February 2008. During this time a skilled management team has been assembled, along with a platform for continued growth.
Ecoya manufactures and sells a broad range of body & bath and home fragrance products.
Ecoya uses natural ingredients to create environmentally friendly products that perform for the consumer (e.g. soaps, hand & body lotions and hand wash) and their home (e.g. scented candles and diffusers).
Worldwide, many consumer groups are becoming more house proud, paying more attention to their home style and also entertaining more at home. The Ecoya brand, packaging and merchandising will utilise a strong sense of design and aesthetic, which is an important part of meeting the needs of this developing consumer characteristic.
The term that Ecoya uses for a brand with an environmental platform that contains strong design with luxury elements is “Eco Luxe”. Ecoya expects Eco Luxe will be a growing segment within its home fragrance and body & bath categories.
Ecoya is also proud of its origins in Australasia and the Board believes that this provenance adds to the brand story as Ecoya expands into the Northern Hemisphere, as Australasia is perceived as a fresh and ‘New World’ region for fragrances and body & bath care.
Ecoya plans to maximise its international market opportunity. It is already selling its products across Australia and New Zealand in selected gift stores, home stores and department stores (such as David Jones’ 37 stores in Australia and Ballantynes in New Zealand) and in Nuance Group Duty Free in Australia.
Sales are being made in Shanghai (China) and Ecoya currently expects to have its first sales in the USA in May 2010.
CEO of Allied Farmers Ltd [ALF.NZX] Rob Alloway, has decided, now that the shite has hit the fan again with another "asset" inherited from the Hanover purchase going tits up, that the blame for the parlous position he and his company and its long suffering investors find themselves in is because Messrs Hotchin and Watson from Hanover overvalued the assets that the company had on its books at the time of the merger of Allied Farmers and Hanover back in late 2009:
Mr Alloway said the value of Matarangi provided in the 30 June 2009 accounts, used by investors to inform the eventually successful vote to merge, was "unrealistic".
Mr Alloway didn't pull any punches in his statement, and said the state of Matarangi was symptomatic of many former Hanover assets: “This is an unfortunate trend we have seen with most of the property and loan assets that were acquired, and further calls into question the real value of the shareholder support package contributed by Messrs Hotchin and Watson at the time of the Hanover moratorium. The investment community should have expected far better oversight of the moratorium from Hanovers directors, valuers, trustees and auditors.” NBR, 18 November 2010
Back in November 2009 (almost 1 year to this day) though Mr Alloway was singing from a different song sheet with the will of a man who had crossed all his Is, dotted his Ts and had the champagne on ice:
"We've left behind all the problems ... this is goodbye Hanover, Mark and Eric.
We've got all the assets and anything that's worth anything and said goodbye to the rest, they can deal with the problems. Any litigation or exposure they have is theirs." NZ Herald November 21 2009.
Alloway was also confident that Allied was more able to recover Hanover's bad loans than they were and we all know that was about as successful as Bernie Madoff would be at making a comeback as an investment adviser.
I posed this question back in April and then June, why are Alloway and his fellow directors at Allied not being prosecuted for a fraudulent prospectus? Fraudulent because the prospectus contained overvalued assets on the balance sheet that Hanover and Allied investors based their decision on to vote for the two companies to merge. Mr Alloway clearly admitted today that Hanover's assets were overvalued (what most people including me said back in 2009 and earlier.) or what he calls an "unfortunate trend", and that these overvaluations were what investors based their vote on.
An unfortunate choice of words.
What the ***k is he now saying?
He knows now what he should have known back in 2009 but is blaming Hanover for the mess Allied is now in?
It is called due diligence Rob, you didn't do it properly pre-merger and now you are trying to cop out of the blame that lies on you and your fellow directors at Allied.
At the very least put your hand up and do the right thing and take some responsibility.
My Mainfreight Ltd [MFT.NZX] shareholding really is a tale of two stories.
I bought my initial shareholding at $7.96 and $8 over 4 years ago and my most recent addition in 2009 for $4.20.
Yesterday the stock closed at $8.15, an all time high.
The two stories are as follows:
1. The initial shareholding has returned $1.02c in net dividends and 33c in tax credits with a rise in share price of 2%. This gives a total return of approx 19% or an annual return of approx 4.75%.
2. The second shareholding has returned 42c in net dividends and 33c in tax credits with a rise in share price of 94%. This gives a total return of approx 107% or an annual return of approx 71 %.
Apart from the quality of the company and the research you must do to find the right performance and management, what I am pointing out here is that the timing of your investment purchase is critical to your returns.
I was happy to buy the company at 8 bucks because I knew long term that I would be a winner and the recent share price rise and performance of the company is vindication of that but clearly buying stocks when the prospects for a good company are at a high is not always the best way of buying.
I have learnt this over the last 2 years of the stockmarket volatility, buying beaten down stocks (see below for links) in companies I already own, and it looks like another opportunity will present itself as global stockmarkets like the NYSE start to reach all-time highs (with the exception of NZX, Japan and a few others) in a global economic background that doesn't fit with stockmarket gains.
I am keeping my options open and being patient, so should you if you want better returns.
I have been writing about the takeover of the defunct Hanover Finance Company by Allied Farmers Ltd [ALF.NZX] run by Rob Alloway for over a year now. This merger has turned into a disaster for Allied and Rob as he and his fellow directors failed to do due diligence on the assets Hanover had on its books.
Mark Hotchin ran Hanover into the ground by removing a good portion of its cash as dividends for his own pocket, investing in poor quality assets and hocus pocus interrelated lending.
As big a failure Rob and the deal he did with Hotchin was - and it was a whopper - it comes as more than a jaw-dropper to find out that Hotchin has decided yesterday to come out with his gloves off and take an almighty swing at Rob and the way he is managing the assets that were subsumed from Hanover into Allied.
Please keep in mind that most of these so-called assets are of very low quality and are being sold into a market not this depressed since, well, the Great Depression.
Mark let rip yesterday in a letter posted on Hanover.co.nz:
Over the past 12 months, the Board of Hanover Finance Ltd (Hanover) and United Finance Ltd (United) has been alarmed at the decline and continuing erosion in the value of the assets that were transferred to Allied Farmers (Allied) in the debt for equity swap in December 2009. Increasingly we are being contacted by investors who share this view and are asking what action, if any, we are prepared to take.
Apparently investors in assets that Hanover used to operate and own and lost all their money in are now coming to the very same man who lost that money for advice?
The letter goes on to say that former Hanover assets are being flogged off in "fire sale" and that Alloway has been misrepresenting the financial state of the company to investors before the 2009 merger and defaming Hotchin though the media. This is of course true but Mark has a track record with this sort of stuff himself so can clearly spot this bird even without its feathers.
You can stop laughing now if you like but this might get you going again:
We are no longer prepared to sit aside and allow this to happen and will actively campaign on behalf of shareholders, including seeking to have Rob Alloway removed from the Board of Allied.
So Mark is going to bat for investors in Allied. Isn't that like putting Bernie Madoff in charge of the prison accounts?
I am absolutely stunned by the gall of this man in the face of what he has done to thousands of investors in Hanover.
By the way, he will be updating us on his Hanover website as this saga develops.
Mark Weldon started as CEO of the New Zealand Stock Exchange in the early part of the last decade and his main aim was to revitalise a flagging stockmarket and entice more investors into buying into NZX listed stocks. An aim that no stockmarket watcher would disagree with.
He has failed on those two counts alone with the stockmarket capitalisation less than it was 10 years ago and less Kiwis invested in the local bourse. Add to that a vacant IPO position over the last 2 years and regulatory problems related to dissemination of information to the market as a whole, rather than selected few, insiders trading on tips from mates and conflicts of interest of the NZX overseeing a market they participate in themselves and you have yourself what anyone would call a failure.
What might Mr Weldon be doing to correct these measures?
Work on some of the above? Quit and admit he has failed?
Instead Mark has decided that the answer to the problems the NZX has is to focus on "diversity" on NZX listed companies by making it mandatory that companies hire on the basis of race and sex before the professional and personal qualities of the candidate are assessed, to increase the level of women and "ethnic minorities" in the boardroom.
Weldon is proposing that boards demand direct reporting of "diversity" numbers; and it goes beyond gender to include "diversity" generally, which includes "ethnic diversity".
“We’re a very skinny economy, four and a half million people. If we systematically exclude, or don’t create good pathways or accessible opportunities for large parts of the population, whether women or immigrants, then we are both unduly limiting the size of the talent pool and we are unduly putting a handbrake on growth in a globalised economy, where diversity of views, and experience is really valuable,” Listener, August 22, 2011
He bases his idea on similar "diversity" mandates that are voluntary in Australia and were introduced last year.
Regular readers of mine will know that this sort of nonsense just doesn't work for me. NZX listed companies have a devil of a time attracting quality candidates at present and you only have to look at the poor management of a number of NZX listed companies to see what I am saying has merit.
Mark Weldon's "diversity" ideal is not the answer to attracting quality people to the boardroom. In fact it will actually make things alot worse than it is at present. Putting the racial background and sex of the candidate before the experience, personal attributes and professional qualifications of the individual is a clear recipe for disaster. Not only is it racism and sexism at its grubby worst, it is also a race to the bottom in terms of quality as candidates for positions are hired not because they are the best person for the job but because they have to fill some nut-bag socialist quota.
One only has to deal with a couple of Government departments to find out how Mark's idea of a"diversity" quota has dismally failed - basic English seems to be foreign to many hired under "diversity" schemes operating in various Government departments.
Mark really needs to reassess his position as head of the New Zealand Stock Exchange. He has failed to fire the NZX in his near 10 years as CEO and the "diversity"* idea of his really should be a full-stop on his career.
Staying where he is is an insult to those that work for him, directors on boards of NZX companies that he wants to gerrymander, investors in NZX companies like myself, and the country as a whole.
Avert your eyes now readers...
Bugger off Mark.
* I apologise for the quote marks but this is a word that has lost its real meaning and I cannot use it with any truth of mind in my writing when it doesn't actually mean what it is supposed to.
453 points. 453 away from history, 453 points away from being on top, 453 is the number that stands between you and life on the street.
I've done allot of things but working 1 day a week then 3 days the following week isn't one of them, until now, there just isn't any work.
I don't get the dole or any other type of state regulated scheme so its just me here on my own-some giving hell (what there is left) to the guys fixing up our place for sale.
You will do doubt be reading this wondering about what I think about the current comings and goings on Wall Street , whats happening here and what is going on in main-street here.
Well I do not know, gone is the hope that I had that we would be facing the gauntlet right now and paying off our loans and personal and public debt and that there would be public hints that this may have happened - ie the stock market at lows - that's lows - and all parts of the economy working their way out of their respective holes.
Instead it seems buttered up for more of the same.
Interest rates at an all-time low, but banks making more due to the fact that some of the money they have borrowed is at 2% or less, and people willing to to borrow more at relaxed rates means we are seeing another boom starting.
Little of that money is finding its way back to the productive sector.
Did we learn anything from the last nearly 6 years?
It appears that in the face of cheap money the answer is no. What happens when that money becomes dearer ?
Well I'm going to do something different for next years stock picks. I'm just going to pick what I have in my portfolio - minus the weedy ones - and add what I think will be some goers for next year.
So this list is going to be a lot shorter than usual.
Ill start my begging at Sky City Entertainment
This will finally be the start of many a fine year for this company. Many of the rules to relax gaming will apply and they all do so BEFORE the casino is ready to go.
Watch this start to climb from this year.
Fisher & Paykel Healthcare is another pick, picked again last year, it improved substantially this year and will do again in 2016. Plenty of money being spent, new things being created and sold at less and less cost.
All this means good things if YOU are a shareholder.
Mainfreight Ltd is well on track to deliver the goods in 2016.
Money has been spent on warehouses in Auckland, Hamilton, Christchurch, Brisbane, Melbourne, Los Angeles's and one other place I cant remember right now but trust me, they have shelled out the noodles, now they just have to bring them in.
Auckland Airport, it delivered in 2015, it will again in 2016.
Ryman Healthcare, is of course a definite push for the entry doors as this keeps getting bigger and bigger. Ignore all broker conflabs about when to buy etc. Do your own research and find the time to get yourself involved.
Contact Energy, get it while its under or close to 5 bucks. Its got a clear 3-4 years ahead as far as capital returns go and there maybe something up CEO Dennis Barnes sleeves.
Lastly i picked Hallensteins Glassons, You have to be PATIENT but you can pick it up and all day long its paying 10% plus.
And the best thing about it is that its NOT covered by analysts and brokers (surely two of the most painful words in the market-mans (see what I did there and I will do from now on) dictionary) So you can make your way without the bluff and bluster.
Its a good stock.
Now for two of the ones I don't hold.
Ebos Group, value in this stock AT MUCH LOWER levels. Like in the 7-8 dollars. Good management.
Infratil Ltd, I've been meaning to chuck a few shekels at you but you cant go wrong with their assets and the way the company is run.
Finally, something I see as a contender for M & A activity next year. Trustpower Ltd. That's the one Dennis has his eyes on.
Told ya Id be biased. Well if I cant get behind my stocks and sell them who else is going to.
Pick these stocks on dips in their share prices-they ALL have dips.
The Warehouse, excluded because its just about dead the rest of my stocks are headed for the hills in the next couple of years...they will have paid for themselves and start paying me pure profit.
Well, this year has been a good one for stocks on the NZX.
6324.26 vs 6824.00 as of today's date. The returns have been around 8%, to the overall investor, if you look at the overall index - that is without accounting for dividends.
I personally have got around a 30% return and that just keeps increasing as time marches on (and they will continue to increase) and I havent really bought much this year - because I don't have any cash - my lawyer currently gets that!
There have been many ups, the market in New Zealand was up to over 7400 in September and many downs, the index was down to 6174 in February.
Likewise the Dow Jones Index was up from 17,148.94 on 4th Jan 2016 to 19,216.24 on the 6th December.
Brexit and a whole host of other "its" have foisted their ugly head at us but regardless the world stays intact, we still make money and we always will.
With that in mind I will make a start.
Let me start where I always start with my biggest holding, Sky City Entertainment SKC.
At the moment, it is a steaming buy. Especially at below four bucks. Any lower, and it could go lower, it is a steal.
Big things are happening at Auckland Casino, Adelaide and these are all wrapped up for a long time yet - till 2048 in Auckland Casino's case.
There is talk surrounding a take over or merger with Sydney's Star City Casino but that is a rumour and I don't care, I don't want to sell.
Fisher & Paykel Healthcare FPH is a perennial pick, picked again last year, it improved substantially this year and took a dive from $10.93 to end up $8.20 at time of writing. 2017 will be its year and you may be able to grab it sub 8 bucks. You just don't know.
The German injunctions granted against FPH's German subsidiary have been lifted and this will transfer to the injunctions in the US Courts.
Plenty of money being spent, new things being created and sold at less and less cost.
All this means good things if YOU are already a shareholder.
Mainfreight Ltd MFT is well on track to deliver the goods in 2017.
This has been Mainfreights year, $15.36 on Jan 1 and $20.45 as I write this and a recently announced and increased record profit and a forward looking year looking positive in numbers - the only black spot is the US division. Time will take care of that.
That is why I have been a holder of this company for well over 10 years. I receive a 10% plus net return on this one.
Auckland Airport AIA, it delivered in 2016, it will again in 2017. It started the year at the high levels of $5.75 and trades this morning, 6th December, at $6.30 and traded as high as $7.75 as recently as September 1.
It could bust through 6 bucks in which case you should be in.
In fact and I will go off topic for a bit, the lower the stock you are interested in buying, have been following, done the research on etc, etc the more you should buy.
I did this during the GFC and it has paid off handsomely - anyway.
Back to Auckland Airport.
Its in transition right now - that is it is undergoing transformation - once this transformation is complete the port will be a stunner. Flash and new.
And it will begin again.
With all this building will the port become less profitable? No increasing profits are the rule and they have been for some time.
All those assets that they have, the land, the buildings are all central to the core that this will have lift off.
Ryman Healthcare RYM is of course a definite push for the entry doors as this keeps getting bigger and bigger. Ignore all broker conflabs about when to buy etc. Do your own research and find the time to get yourself involved.
This company is set to almost double in size within the next 5 years and their Melbourne sites are set to quintuple before 2020 and eventually get far bigger than little old New Zealand.
Contact Energy CEN, get it while its under or close to 5 bucks. Its got a clear 4-5 years ahead as far as capital returns go.
You just don't know when this stock is going to surprise you. With special div's and share buybacks this share has been a good one in the Share Investor Portfolio.
It will continue.
The Warehouse WHS is included this year as opposed to last year where I dropped it.
I still have long term doubts but with recent buying by one James Pascoe taking him up to about 20% I have to re - consider.
I would rather have a piece of this rather than not, so I am only picking this for some M and A action next year.
Do not pick this for the long term - its a loser.
Lastly my pick is Hallensteins Glassons HLG, You have to be PATIENT but you can pick it up and all day long its paying 10% plus.
And the best thing about it is that its NOT covered by analysts and brokers (surely two of the most painful words in the market-mans (see what I did there and I will do from now on) So you can make your way without the bluff and bluster.
Its due for a market upgrade in about a weeks time, when they have their AGM in CHCH.
Everything is looking good for a LARGE upgrade in profit.
Its a good stock.
Told ya Id be biased. Well if I cant get behind my stocks and sell them who else is going to.
Pick these stocks on dips in their share prices - they ALL have dips.
AND - do your own research - lots of it.
If your picks line up with mine good and if they don't that's also good because that is what makes a market.
It makes things interesting as well.
Next year could be another one like we have already had - some dips but mostly up - or it could - drop but be mostly down. Whatever it is it will provide opportunities for all of us to make money
See you next year.
P.S. If you have your own picks put them down at the bottom and tell us WHY you picked them.