Forum Archive Index - October 2000

["Talacek, Philip " <pjt57@elec.canterbury.ac.nz>]

I'm not sure if NZR belongs on the list, as far as I can tell oil refining
is as close as one can get to a commodity business.  They would be the first
to say they have zero control on their margins.  They even sent a notice to
the stock exchange recently detailing and demonstrating how little control
they have.  Certainly things seem to be coming up roses for them at the
moment with the refinery constraints in the asia pacific region (did a large
one in Indonesia have to shut down?).  But the fact they are small price
taker in a highly  competitive global industry rule them out as a Buffet
stock IMO.  

Philip Talacek

> -----Original Message-----
> From: Krypt Or [SMTP:kryptz@hotmail.com]
> Sent: Friday, 6 October 2000 19:18
> To:   sharechat@sharechat.co.nz
> Subject:      [sharechat] Re - Telecom, Buffett & NZ Shares
> 
> Thus far we have:
> 
> SKC, RBD, AIA, BCH, WHS, NZR, TRH,
> 
> Once we have the list - Step 1 (more submissions please!) why don't we
> find 
> the top 5 by consensus discussing the below - Step 2?
> 
> (Thanks for the URL Brian (Brakenridge), what was your winners list Brian 
> (Gale)?)
> 
> No share will match the crieria perfectly but I like the outline by Philip
> 
> Robinson:
> 
> Quote
> 
> 1. Does the business have an identifiable consumer monopoly?
> It will be either a brand-name product or a key service that people or
> businesses are dependent on. A great product is where you start, but a
> great
> product doesn't necessarily mean a great company
> 
> 2. Are the earnings of the company strong and showing an upward trend
> Five or more years of earnings information is required. One looks for an
> annual per share earnings that are strong and show an upward trend.
> 
> 3. Is the company conservatively financed
> Star companies usually carry long-term debt of less than one times current
> net earnings. Sometimes an excellent company with a consumer monopoly will
> add a large amount of debt to finance buying another business, one has to
> judge whether the acquisition is also a consumer monopoly or not.
> 
> 4. Does the business CONSISTENTLY earn a high rate of return on
> shareholders
> ' equity?
> A return on SH equity of 15% at least and preferably more. High rates of
> return on equity are indicative of an excellent business.
> 
> 5. Does the business get to retain its earnings?
> One wants to invest in businesses that can retain their earnings and
> haven't
> committed themselves to paying out a high percentage of their profits as
> dividends. This way the shareholders can benefit from the full effects of
> compounding, which is the secret to getting really rich.
> 
> 6. How much does the business have to spend on maintaining current
> operations?
> Making is money is one thing, retaining it is another, and not having to
> spend it on maintaining current operations is still another. The capital
> requirements of a business may be so demanding that a company ends up
> having
> little or no money left to increase the fortunes of its shareholders.
> 
> 7. Is the company free to reinvest retained earnings in new business
> opportunities, expansion of operations, or share repurchase? How good a
> job
> does the management do at this?
> Share repurchases increase per share earnings and expansion of operations
> will hopefully utilise the retained earnings to give an above average rate
> of return.
> 
> 8. Is the company free to adjust prices to inflation?
> 
> 9. Will the value added by retained earnings increase the market value of
> the company?
> 
> 10.  The company should not be in the commodity business!
> 
> End Quote
> 
> _________________________________________________________________________
> Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com.
> 
> Share information about yourself, create your own public profile at 
> http://profiles.msn.com.
> 
> 
> --------------------------------------------------------------------------
> --
> http://www.sharechat.co.nz/          New Zealand's home for market
> investors
> http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join
> now.
> --------------------------------------------------------------------------
> --
> To remove yourself from this list, please use the form at
> http://www.sharechat.co.nz/forum.shtml.

----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join now.
----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/forum.shtml.