Forum Archive Index - August 2003

["Morgy" <ica.sports@xtra.co.nz>]

Harry

With the greatest respect I think you must accept that an active investment
strategy in NZ might be completely different to Buffetts US operation. The
biggest impediment to high returns for fund management and investment
businesses like Buffets is the difficulty in being able to move large sums
of money between investments with the requisite liquidity requirement in
both the target and departing stocks. Hence the desire to stay involved once
the investment decision is made. This must therefore leave them exposed in
lean years and also to sudden "news" events that the smaller less
capitalised trader can avoid or take advantage of. I have on a number of
accasions pushed the line that Buffett has the advantage in that he has for
the most part ownership or active board roles in his "investment companies".
I believe your strategy loses the advantage gained by the active private
investor to quickly move between trending sectors and associated stocks. As
for divident return, I dont think that you have to hold for 12 months before
you are entitled to a dividend. Lots of money can be made during that time.
I agree with Macdunk that beating the bank isnt  exactly a dynamic goal and
once again I grind away at the same point that while one doesnt disagree
with what your philosophy is however its relevancy to the small active
investor is limited by your application of it. I think also the time input
element is an important component of your investment philosophy.

Regards


Morgy


----- Original Message ----- 
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Friday, August 22, 2003 1:12 PM
Subject: Re: [sharechat] WRI and POA by macdunk


> Hi Macdunk,
>
> >
> > I sold Wri at$1.30 last Sept watched them drop In price and against
> > all my expectations rise back to an all time high today. What I find
> > hard to figure out after a 13pc drop In profit which was expected and
> > the next 12 months prospects not any better the share price Is going
> > up.
> >
>
> The WRI result was down for sure, but the second half was not nearly
> as down as the first half.   I think that your comment Macdunk
>
> "the next 12 months prospects not any better"
>
> explains to me why you are baffled by the run up in the WRI share
> price.
>
> Bar all standards except the 2001-2002 year, the 2002-2003 year for
> WRI has been very good.  But if you only look at the trends and do not
> understand how to value the fundamental strength of this business
> ( like 95% of sharemarket investors do, I'm not singling you out here )
> you will completely miss this.
>
> >
> >It must be the high dividend that Is the attraction not the
> > short term prospect.
> >
>
> I think you are right there.   The WRI dividend is still well covered and
> is not likely to decrease.   Furthermore you will get over twice the
> income from WRI shares than you would from holding a bank term
> deposit.
>
> Again, if you only follow the trends you will completely miss that fact.
>
> >
> > I set my sights higher than an above average
> > dividend to keep me happy If I am to stay on a 20pc pa target.
> >
>
> 20% pa compounded is a far greater return that even Warren Buffett
> has achieved over the last ten years.   Perhaps I am missing the point
> Macdunk and you will still be happy if you fall short of your target.
But
> could I suggest to you that if you are changing your investment
> strategy to try and achieve this self imposed target you may be taking
> extreme and IMO, unnecessary and unwise risk.   Myself, I'll be very
> happy if I score an 11% return on my so called 'income' portfolio (the
> one in the Stockguru competition) this year.
>
> >
> >pwc Is paying 16c a share dividend pa with better short term
> > prospects than WRI but I am slightly over weighted with them
> > even although they are trending along  nicely.
> >
>
> 16c on $1.70 is a yield of 9.4%.   A good yield, but nowhere near as
> good as WRI, principally because WRI dividends contain a tax credit
> and I understand PWC shares do not.
>
> Since I think the outlook for both PWC (an electricity lines company)
> and WRI is fairly flat, can you explain to me why you see PWC as
> having the better short term outlook?  For a start doesn't PWC have a
> lot of debt?   OTOH, WRI has very little term debt.    Do you think PWC
> can maintain their profitability as interest rates rise?
>
> SNOOPY
>
> discl: hold WRI, do not hold PWC but interested in keeping tabs on
> them.
>
>
>
>
>
> >
> > Has anyone any Ideas on what Is likely to start up
> > trending? I am running out of companies.
> >
>
> --
> Message sent by Snoopy
> on Pegasus Mail version 4.02
> ----------------------------------
> "Sometimes to see the wood from the trees,
> you have to cut down all the trees."
>
>
>
>
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