Forum Archive Index - March 2003

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

Hi hello,

> 
>I don't get their strategy. 
> 
>Buy high, sell low?
> 
>Can someone explain that to me?
>-- 
> 

I imagine it is some kind of risk minimisation strategy.  The logic 
being that if a share drops suddenly in value there must be some 
'insiders who know something' and so you should get out while the 
situation becomes clear.  I imagine fairshare ignores fundamental 
analysis as if they had done any on RBD it was clearly a much better 
buy at $1.25, than at the $1.55 or so they bought in at, or indeed 
the $1.70 or so where I made my most recent purchases..  

I did read the fourth quarter RBD sales report.  There was a bit of a 
worry in the decline of KFC sales, the main cash cow of RBD, during 
the quarter.  But given that KFC stores are in the middle of a 
refurbishment program that closes stores for a week (being 8% of the 
time in a quarter), and they have cut back on their cheap meal 
coupons (the ones that used to come through my mailbox at least), 
this might explain why RBD are very adamant that their decline is 
temporary.

RBD does seem to get its share price bounced about a lot by 
speculators.  At $1.25 you would have to balance the risk that the 
share price might go lower verses missing out on the 12% dividend 
yield if you don't buy.  But if you don't think 12% is good enough 
for you and you don't see any long growth upside in the share then I 
guess you would sell at $1.25 ;-P

SNOOPY

discl: hold RBD



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