Forum Archive Index - November 2000

["G Stolwyk" <stolwyk@wave.co.nz>]

Hi Warner,

 

I did'nt want to come in but seeing that my best performing stock BCH is being 'rubbished', I want to make following suggestions:

 

Goodwill, if justified and written off at a good amount, does not worry a good performing company. 

In RMG's case a lot of goodwill has been created by the takeover of a large number of firms, most with some goodwill attached.

 

As a consequence of the takeover, many of these firms had overlapping businesses and a portion of this goodwill ( paid to each firm's owners ) will therefore not produce anything: The overlaps had to be cut out! 

I am not against holding shares in RMG; given time, it could do well! Has it got over 485 mill. shares?

 

And,how does it compare with CLH, an Australian company, priced @ $A 1.73 but with only 85 mill shares?

I admit that the share price of Collection House - a competitor to RMG and ALLIANCE- did run up quickly and has fallen back somewhat. I am watching this stock at the moment!

Is there anybody who may want to comment on that stock?

 

As far as BCH is concerned, foreigners will pay present prices because of a perception that it will do quite well in the East, particularly in China where there could be a big demand for their systems.

 

Many of them won't be too concerned with the number of years- at a given growth rate-needed to justify that price!!

As long as their brokers keep recommending it, they will buy. As the number of shares available at a given price,declines, they could pay more. Once the big boys see that Baycorp's future is not that promissing any more ,then, they will quietly pull out!!    

 

In the meantime, I hope that you will do well with RMG!

 

Gerry