Forum Archive Index - January 2004

["David & Jill Stevenson" <djstevo@quicksilver.net.nz>]

You present a good contrast between AMP and Warren Buffett`s Berkshire Hathaway . I am sure the comparison has not been lost on  AMP shareholders over the years  . Is it that Berkshire have less emphasis on Life Insurance and more on Fire and General cover  which  latter are of cost plus nature into future years  ( and  also allow reinsurance protection)  and can never be substituted or abandoned, no matter how  public attitudes change.? Changing public philosophy to life insurance requirements over the last twenty years must have had a profound effect  on traditional insurance companies. Unlike AMP`s attempt at geographical diversification Warren Buffett is hardly another example . He has an uncanny instinct to identify what he likes and invests heavily .His home-spun homilies belie his consummate finesse.

   Your reference to Deutsche Bank reminds me that their Investment Services advisory arm was possibly involved in facilitating Graeme Hart`s original entry into Burns Philp several years ago. I don`t use the word "disastrous" as a qualification as the Jury may be still out on that one. But the point I make is that their involvement with Hart and related guarantees cushioned the share price fall collapse on him personally. The nature of the protection , I believe, was some buy back arrangement if the share price fell below a given level  I  imagine that recourse was not followed but Deutshe alternatively would have had to perform  overtime to salvage the situation. 

   Regarding GPG, their strategy does appear difficult to fathom. Personally, I feel they may have waded into an investment without due process and then taken their eye off the eight ball dissipating energies by locking horns with Perry Corp., and CITIC . The Forests  now having value only as kindling wood with todays deteriorating exchange rate. It is hard to determine whether, allied to their direct holding in FFS, and their more substantial investment in Rubicon ,that forests  were the greater strategy  or whether there is more significant underlying value in Rubicon`s non forestry assets. But what reliance can you put on valuations of intellectual property type assets such as their biotechnology portfolio..

 

                                               David Stevenson