Forum Archive Index - December 2000

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

 

 

To Charlie Brown.

 

Charles,

 

Arising from your questions in your entry of Dec 6, here are additional comments: 

 

I study those stocks which are heavily undervalued (to reduce risk). Companies which are undergoing restructuring or have only been restructured recently, are selected, eg. LAC, AFF.

 

They will have to be of sufficient size, be growth stocks and be suitable to hold on to for a number of years. Few stocks fall in this category!

 

A well functioning heart helps: there is exitement and sometimes, disappointment:

 

I bought Oil & Gas at about $1.50 in the early eighties. Interest in oil stocks ran high and following some promissing news, the price rose to $4; if they were the first to discover, say some 20 mill. barrels, then the stock could rise to say $12!

 

 An oil geologist sent me maps.They had 2 drilling targets in the sea; one was close to a fault line which also ran close to the discovered Kapuni field on land.

I asked why they were not going to drill there, first.Their answer: the type of rig needed, was drilling somewhere else.

Result: Selected target was dry; by the time the other target was drilled (Kupe field), the public's interest had waned: I said goodbye to an extra $20,000 I could have had!

 

I did a lot of work on UBIX and sent it on to brokers. It was out of fashion and priced @ $1.20.

Here was a company with the most recent equipment and advanced know-how! Yet, very few knew about it.

After two years, the price rose to $5. After the Annual meeting, I distributed my latest projections and 3 months later, the stock rose to $11.20! Then, after a share split and a cash issue, the price suddenly declined due to a set of unfortunate circumstances.

 

I then concentrated on BCH. I was a shareholder for a some years but sold out as I thought that the balance sheet was too optimistic. As it turned out, BCH was downgraded; at one stage the share price was 7cents!

 

After the reconstruction when the price was about $1.25(Febr.'95), I recommended this stock. At first, few people wanted BCH. Much later, after a share split, it rose to $13.20 but is now about $12.

I think that the quality was such, that it did not need any 'help' in the last 2 years!

 

Now we have LACO. which was $1.20 in Jan.and $2.35 on Nov.4; then rose very fast to $4.10, but fell back to $3.65: a first class infrastructure stock with an entreprising Board! I have not sold any of my original holding!

Longer term experienced investors could buy at suitable dips. I outlined this stock in a special format so as to confine 'the good news' to a few pages in this 'Chat forum'. The potential investor can now refer to these longer treatises. 

 

 AFF was behind in their restructuring and got caught, when the supply of stock from NZ suddenly dried up, and they did not yet have the sales/procurement offices in place to fulfill the demand from overseas. I think that a price of 45 cents is reasonable just now as there are too many variables, the outcomes of which are difficult to predict. The Annual meeting is on Febr.21 and the result of some 4.5 months of trading/developments will come to hand! Their site:< www.affco.co.nz >  

 

 

My favorite stocks: LACO, QBE, TAB, WAM, BCH, AIA and SKC. Note that most of these are 'defensive' and growth stocks! 

 

I 'followed' QBE for about 5 years and finally decided to back it: < www.qbe.com.au >. Insurance premiums are to rise following a big shake-out in the industry and the greater frequency and magnitude of disasters. More flooding in Australia or England could affect profits. Last year, QBE managed to reinsure many job lots and made solid profits.

      

BCH is somewhat expensive for some investors. I referred to CLH in my entry of Nov 18. It was $A 1.74, now $2.54. I can't explain the fast rise in share price! CLH has some excellent software: < www.collectionhouse.com.au > 

 

TAB has been in the news lately: < www.nswtab.com.au >  They could become an indirect partner in an international racing TV channel. Many countries will then be able to engage in inter-active betting in their homes at any time!

TAB has sole perpetual rights in the broadcasting of most important horse races in Australia.

Prominent international racing clubs across the globe could join up eventually: latest news is that nearly all large clubs in England have agreed to the terms of the company which has been set up to run the system.  

Australia could have its own time slot in the 24 hours coverage of the world's best races! Watch this stock! Priced @ $A 3.47. 

   

AIA spends a lot of its cashflow on renewing the runway and building properties for its tenants. It is a quality stock but the share price moved back some time ago; it is now starting to rise: < www.auckland-airport.co.nz > It is an infrastructure monopoly stock.

 

WAM's price is somewhat static. That should change when we get closer to 2002/2003, when 2 very large land fills are to close and the waste is diverted to WAM's sites.( a new site will be opened as well by a competitor). It is a solid performer and is always on the look-out for more business.

An Australian company (ENE) is testing a new disposal system, called 'Swerf'. I don't know the implication of any successfull outcome on WAM, but am confident that they would be a partner or operator in any NZ entreprise.

 

I am one of the original public shareholders of SKC: < www.skycity.co.nz >. Pays a good dividend and their entertainment after the Annual meeting is superb!!

 

NB: The reader is not asked to invest in any of these stocks There is no quarantee that he/she will make any profits on any investment! Accuracy of any comments made, cannot be validated. Any investment will be at the reader's own risk!

   

Gerry