Forum Archive Index - May 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Matt,

It was interesting to see the Air New Zealand share price chart again 
and we can thank Phaedrus for it.

However, what do you intend to do with this chart?   I would suggest 
that considering any of those share price figure plot points before 
the capital reconstruction became inevitable late last year is not 
wise.

Now, I know that Phaedrus would say that the chart is only an 
approximation, as it doesn't allow for dividends cash issues and 
whatever else.   However, I would go much further than that.  So much 
capital was introduced into Air New Zealand during the 
government reconstruction that if you attempt to use the chart as 
presented, not only is it inaccurate, it is *dangerously misleading*.

Immediately before and immediately after the capital reconstruction 
the underlying business did not change instantly.  However, instead 
of the AIR shares listed on the stock exchange representing the 
whole company, those same shares were only representing 18% of the 
business.  To account for this, you have to scale down the figures 
before this reconstruction time period accordingly.  What you must do 
is take the closing share price before the reconstruction and scale 
them by 18/100 or 0.18.   Take an example:  The share price closed at 
$1.58 at the end of year 2000.   However, on your graph you will need 
to use the figure $1.58 x 0.18 = 28c.   Only by doing this will you 
be able to glean anything meaningful from this chart.

SNOOPY



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