Forum Archive Index - October 2000

["Malcolm Eves" <malcolm@easternasset.co.nz>]

I feel sorry for the person who writes as 2000@Z.com especially as he/she has taken  some loss on FFS. However, the comments that "it is a disgrace what FLC have done to their shareholders etc" is to be put in perspective with this weeks announcement. Those who have been buying FFS at the recent high  prices (e.g.. 80-90 cents) need to examine their own reasons for doing so. Those who are today still asserting that FFS has an NTA of $1.60 should prove it. Is it not reasonable to expect such "factual" statements to be backed up with more than just hunches?

The FLC board years ago put FFS in the state it currently finds itself, needing a huge cash injection to wipe out it's debt, and not Dr Deanne as seems to be been blamed. The actions/inaction's of previous Boards are obviously the issue and not this board as it tries to find financial solutions to a company that has not provided return on capital employed. It was speculative input only that drove some people to buy recently at the levels they did. It is interesting for me also to see that it is the discount brokers who rank highest in the sharechat survey (cheap trades?) whereas the full service brokers that I deal with rank at the bottom. They have been very negative on FFS with it's huge debt burden for a very long time. Do you get what you pay for is this too cynical? Did the discount brokers talk to people about the worth of FFS before you invested or did they just do a cheap trade? I don't know because I like to get as complete research as possible before I buy and for that I am happy to pay for full service including company research.

Yes heaps of people have lost money in this weeks announcement, but that is now the market recognizing that FFS was a dog and needed salvation. NTA may well be exactly where the market is now pricing the share. But I know that does not stop the hurt of a share loss and for that I sympathize with those who held the wrong company. The converse is the heaps of people who stand potentially to be better off with FEG.

This should not let someone like 2000@z.comm say he is leaving the country because of whats happened. It does happen else where and NZ is not unique in having poorly run companies over the past decade. Despite the drivel that spews out of RIL's mouth about class actions in 'proper" countries (very glad he/she has such socialist outgoing principles paying nearly twice the price for gas as we do, mostly in tax) NZ is no different to the rest of the world. It's called business and some businesses succeed and other fail. It happens here in NZ, in Japan, the USA and the back yard of the person with a huge chip on his shoulder, RIL. The market gives you the investor the chance to make investment decisions based on research and published facts. Not foolproof but the best that is available and newspapers or "the press" should be avoided. Research helps heaps but it only narrows the risks of investment. That said, you don't buy a house without seeing it and checking the piles etc. You shouldn't buy a company on just speculation unless you can do without the money.

Should you hold on to FFS or average down? The rights issue is going to average you down so unless you want more average then don't buy any more FFS at these prices. Maybe a debt free company can turn out a profit in the future but I will wait and see first.

And before I go did anyone really think that NZ forest assets would be that easy to sell to an overseas buyer with the likes of Anderton in control?