Forum Archive Index - February 2000

["Mark Hubbard" <mhubbard@es.co.nz>]

> Does anyone have an opinion on Restaurant Brands? For the longer-term
> investors amongst us, it seems to present good value at its closing price
of
> $1.36 yesterday.  A couple of weeks ago the stock was trading at $1.69.

Yes, I think its a very solid company, with very good cashflows. I purchased
about 2 months ago for $1.35, then sold down half my shareholding a little
time ago for $1.64 in order to lock in profits, because, despite being a
good company, that share price just doesn't seem to stay up very long. Best
way to profit from it seems to be to acknowledge that a fair valuation for
the share is about $1.70, thus 'trade it' by buying when low (such as now)
and selling to lock profits when it gets to the top end of the range. I find
it all a bit unusual and a little bit uncomfortable really, as I prefer long
term value investing (although I'm growing more and more to believe that
NZSE is very hard on long term value investors).


> RBD has never been an "in vogue" stock but has always provided good value
for
> its loyal investors. The company is predicting solid growth and better
profits
> for the current fiscal year - and with the Labour/Alliance government
> intending to increase disposable income for the majority of the
population,
> this can only bode well for RBD's future success.

One slight correction here Rebecca. The Labour/Alliance govt. is intending
to raise the disposable incomes only of those who don't work (and its right,
that it is this class that probably spends the most on takeaways). The
problem is that govt. can only achieve this by 'lowering' the incomes of
those that do work, and that are successful (ie, those that are responsible
for genuine economic growth). Pretty stupid way to run an economy, and
together with their inexperience (sic, the way Cullen has managed to
completely distort the tax system already), I believe denotes long term
structural problems for all NZ firms, and hence for their share valuations.
As with others on this forum, I have found the logical course of action
given this govt. and its actions already, is to quite heavily increase my
overseas equity weighting (although the lower and lower NZ dollar is making
even this painful).

Just my opinion of course.



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