Forum Archive Index - October 2000

["hugh webber" <hugh.webber@clear.net.nz>]

I'd have to agree with that. At first glance they start to suggest a
Buffett
stock as they are the only oil refinery in NZ and controlled by the 4 or so
major oil companies operating in NZ which dominate or used to dominate
world distribution trade. However the oil co's seem to use a route other
than
NZR to remit the profits from rapidly raising prices and very slowly
cutting them.
I did see that things were on a rapid improve at NZR but Buffett demands a
track record. Because of a thinness and short history of a number of NZ
co's
e.g. privatised ones, one starts looking for possible newly emergent
Buffett
stocks.....

cheers,
Hugh

----------
> From: Talacek, Philip  <pjt57@elec.canterbury.ac.nz>
> To: sharechat@sharechat.co.nz
> Subject: RE: [sharechat] Re - Telecom, Buffett & NZ Shares
> Date: Sunday, 8 October 2000 13:43
> 
> 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
> > 
> >
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