Forum Archive Index - June 2002

["Morgy" <morgy40@xtra.co.nz>]

Snoopy
Couldn't agree with you more, this share went through the accumulation stage
as a growth stock starting  back in 1999 and is a classic case of  assessing
the "current stage" of the economic cycle, picking the potential growth
stock within the sector (normally a stock that is established but on a
current low), accumulating over a period & then eventually distributing to
the public (classic Brierley now GPG, I see the old Brierley dog skellerup
is dressed up for the party again, classic distribution to the mugs) once a
blind man could pick the trend.
I think Nick (which ever one) said something about seeing new machnery down
on the farm earlier this year or late last year. By the time a farmer has
got around to new machinery he has normally paid back all the borrowings
from the drought, flood, famine etc, fixed the fences bought back the stock
he had to sell, thrown some fert down, stashed some away for next famine,
drought, pestilience etc (because they know it will come, chime in any time
farmers, there's  a few on this board) & then got round to upgrading the
tractor,  I would suggest the cycle is pretty well 3/4 the way through.
Economic cycles are as normal as seasonal cycles  to the modern farmer and
history of course repeats itself,  so most will be battened down as interest
rates & the dollar rises, some will be smiling wondering why it lasted so
long.
In fact having never been in danger of stepping in cow "do do" (starbucks
dont allow cows on the premises),
I occasionally read the farming & commodities section in the Dominion &
Terry Hall (god writing in his bible)  said as much 9 months ago.
I thought your price range was pretty good but I think it could go to the
lower end (.80 or lower) at the low point of the next economic cycle
depending on how WRI handles itself this time through.

On a different tack, great to see so many posts, it was only recently that a
few were suggesting this board was dead, Long live the dead. Nice to see
Phaedrus no longer fighting a rear guard action, it was a bit like the
pantene advert, it wont happen overnight but it will happen.

Regards

Morgy

----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Thursday, June 20, 2002 5:36 AM
Subject: Re: [sharechat] WRI Chart


> Hi trader 100,
>
> >
> >
> >Following Snoopy's excellent post on WRI I thought a chart may be of
> >interest to some.  WRI has broken below a confirmed medium to long
> >term trendline so traders (other than those with a short term
> >perspective) are unlikely to see WRI as a buy currently.
> >
> >
>
> Thanks for the chart, and, as I thought, WRI is not one for the
> medium term trader.  I think it is worth noting on your chart the
> huge volume of shares traded in mid July 2001.   This was the point
> that major shareholder GPG sold out of the company.  If you observe
> the chart from this point onwards only, you will see it is much
> flatter. GPG sold out at a share price of $1, and the hsare price is
> only $1.04 today.
>
> GPG are a growth seeking company.  They got their growth from WRI and
> moved on.  Does this mean that the people who bought those WRI shares
> off GPG are fools?  No, not at all.   Those people were more than
> likely income investors, and buying in at the GPG exit point makes
> sense if that is your focus.
>
> The ideal income investor share chart is a horizontal line (allowing
> for dividends).   This means the income investor just sits on their
> shares, which keep their value, and lets the dividends roll in.
> Boring I know, and useless for traders, but it does keep the income
> rolling in!  And having income rolling in is of course the objective
> of the income investor.   Of course, all companies have growth and
> income elements built into them, so the notion of a 'pure' income
> investment on the sharemarket is hypothetical.
>
> Nevertheless the fact that the WRI chart has broken its medium and
> long term trendline is not a surprise.   Effectively WRI has gone
> from being a 'mostly growth' investment to a 'mostly income'
> investment.  It would be far more surprising if the trendlines were
> *not broken*!   From the point that GPG sold out, it would have been
> a fairly safe prediction to make that the long term 'growth
> trendline' would have been broken, and indeed it has happened.   WRI
> hasn't been a growth share for about a year.  So by my reckoning, the
> share chart is somewhat tardy in telling us this information!
>
> My prediction from here is that Wrightson will now range trade
> between $1 and $1.20 (if things go well) or between 80c and $1 (if
> they don't) for the next few years.  I certainly won't be putting all
> my 'income' money into WRI as I can't be sure this will happen.  But
> as part of a diversified portfolio of income investments I think a
> stake in WRI makes sense.
>
> Traders I know will regard this sort of thing as boring.   Those who
> get their income investment money only from bank term deposits, might
> take one look at the dividend yield of 15%, gasp, and say it is
> reckless.
>
> Investing in WRI certainly is much riskier than putting money in the
> bank.  But like all investments you have to evaluate the reward with
> the risk.  Weighing everything up and looking forwards, I think $1.04
> is a very fair entry price.  Because I now see WRI as an income
> share, the fact that the medium and long term growth trendlines have
> been broken is of no concern.
>
> SNOOPY
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "Stay on the upside of the downside,
> Anticipate the anticipation!"
>
>
>
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