Forum Archive Index - May 2000

[Chris Darby <darby@ak.planet.gen.nz>]

After this from Rod Deane yesterday I placed a sell for FFS late in the 
day.  


"It is important to note that the Board has nothing imminent to announce 
in
relation to the overall futures of Building, Energy or Forests.  Indeed it
may be some time before we make further progress, but we are committed to 
our
target of December 2000 for the completion of the Group Restructuring.  We
will of course inform shareholders as soon as we have anything 
substantive to
announce."
End.  


Fortunately I was not traded and now see FFS at the 91c mark and FEG at 
509c, both on solid volume.  I read 'nothing imminent' as an opportunity 
book a profit and re-enter upon downward correction.  Fletcher stocks 
have a reputation for yoyo-ing and presenting trade look-ins.
But it appears that I am lonely in my response and FFS has decided to 
power on in price.

If the price spike is in response to a general improvement in export 
prices (NZAF forecast 38% rise in export value out to 2003) why is there 
no rub off on CAH.  For now I will hold and watch. It may prove more 
valuable to ride FFS to final seperation now, rather than trading in and 
out.

On CAH, well the price is down due to expectation of a capital return and 
possible mop up by IP that did not come through.  Re-investment risk by 
expanding in Aust is not favoured by the market and given FFS is 
definitely in play, that's where the money is going.  

The big question is, will IP take out the balance of CAH.  Their move on 
Champion in the US signals they are active, but what's in it for them 
here.  They already have board control so complete access to cashflow is 
the only element missing.   Wrapping up 900m shares at maybe $2.50-$2.80 
is a sizable ask to get at the cash.  On the other hand it can only get 
more expensive for them as the forests, wood products and pulp paper 
tissue markets recover.  

Advice to myself right now is hold FFS till announcement time and buy CAH 
around $1.70 in anticipation of improving operating conditions and long 
shot mop up by IP.

Chris     

PS  FLB looks undercooked at 195c though it responds badly to the high 
interest rate environment.        

      

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