Forum Archive Index - July 2000

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

>
>One question for you , considering you have rather a
>negative view on wrightsons and are not seeming to be 
>very confident of their prospects why are you a 
>shareholder?
>   nick
> 
>


Nick, a very good question that I don't mind answering.

I got into Wrightsons when it was split off from Fletcher Challenge 
some years back.  So I never actually consciously bought the shares.
I got them via a shareholding in Fletcher Challenge.

I started taking a more active interest in them in 1995, when the 
share price ranged between around $1.10 and $1.20.  Yield was good 
(dividend was 16cps in 1995).  New Zealand is a farming country  and 
I had no other interest in farming, so I thought.  "What the heck, a 
safe boring investment for the bottom drawer."

In subsequent years the dividend was cut and cut again (until in  
1999 no dividend was paid) and the share price plunged to around the 
30c level.   There was a somewhat , I thought at the time,  
opportunistic offer for small shareholders to cash up at around 60c 
while the shares were on the way down.  I thought if the company was 
a good enough for Wrightson's to buy it's own shares I should hold 
too (with hindsight I should have bailed then of course).   At the 
low point the total worth of my shares in the company was around 
$300.  In other words,  I would lose 10% of my capital by selling.  
Since I could get by without the $300, I decided to leave it there.

When GPG started to show an interest and did a lightning raid on the
company, that again got my interest.   I entertained the idea of 
buying some more and riding on Sir Ron's coat-tails.   But strangely 
enough, whenever, I had the spare cash to invest, there seemed to be 
better investments around.   And putting on my Warren Buffet hat, I  
was struggling to see where Wrightson's competitive advantage was.

Sorry to sound negative, but from 1995 to 1999 how would you feel 
about a steadily sliding share price and ever reducing dividend?  
There was the annual beat up about how things were going to get 
better the next year, yet they never did.   So that is why I am 
questioning whether the current board/management has the ability to 
turn the company around.  They are *all* accountants and lawyers, 
albeit some with a hobby type interest in farming.   Accounting and 
legal knowledge are essential to business to be sure.   But the 
current board seem like wannabee farmers masquerading as experts.  
Why did they authorise buying their own shares at 60c, when 
subsequent to that deal the price has been nowhere near there?   
Being a merchandising company I would like to see at least *someone* 
with that sort of background at either senior management or board 
level.

I guess I'm still sticking around with the thought that Sir Ron might 
buy me out in the medium term.  I don't expect the share to plunge in 
value from here, but I don't expect it to soar either.

To end on a positive note I did get a very nice picnic lunch and 
fascinating tour of the Wrightson Lincoln based research centre at 
the 1998 AGM. SNOOPY





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