Forum Archive Index - January 2002

[ichi@ihug.co.nz]

Dick O'Connor wrote:
> 
> If I may suggest it, what say we talk about success for a while. 
> How about each person naming a favourite share 

OK, I'll give it a go.  At the moment my favourite NZ share is
Fletcher Forest (FFS).  Don't laugh.  It's like a rocket, waiting
to blast off.  Even at current timber prices, FFS is hugely 
undervalued.  And those timber prices have considerable upside.

Yeah, I know there's a lot of negative talk about the 'wall of wood'
and 'global warming' and decreasing demand and so on.  But Fletchers
has always been very cyclical.  Even before they split in four, they
had big swings between highs and lows.  When Fletchers was low, 
there was a lot of negative sentiment about the company, but when
prices turned (as they always do) it was flavour of the month.  We
saw the same thing with Wrightson (another mare from the Fletcher
stable).  When it fell to 30 cents, it became my favorite share.  
A no-brainer, really.  As a debt-free company, WRI could wait out 
the rural downturn and be ready to blast off when conditions improved.

I now see FFS in the same situation.  An established company in 
a cyclical primary industry, with competent management and little 
financial pressure.  Sitting on a low, waiting to blast off.  I 
can't say that it will blast off this year, or even next.  But its 
day will surely come.

DISCLAIMER: 
~~~~~~~~~~~
I hold FFS.  In fact, it's my biggest holding (although less than 10% 
of my total portfolio).  That's the best advice I can give:  no matter
how attractive the investment opportunity, don't put too many eggs in
that basket.  I can't believe the number of people who (apparently)
take their 'life savings' and invest it in one lump.  Still, I suppose
if it goes sour there's always Social Welfare or the Holmes show.


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