Forum Archive Index - February 2004

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

Snoopy,

 

              A couple of F/A thoughts . AIR is in an extremely volatile industry subject to buffetting in so many ways. - viz,  Activities of other major airlines , Alliances coming and going - Airport Landing charges  (Look at Wellington  charges per Infratil ) - Exchange rate movements enouraging or discouraging tourism , fuel price volatility etc etc. . Also special situations like the Ansett debacle waiting to happen . The presence of the  likes of the old BIL on the share register . Normally that would be a plus but they over time were clearly cemented in with a dog  as later demonstrated by their exit price. They had misread the industry and the fundamentals years ago . Their presence on the Register was in effect dirty linen for the world and the wary to see.

              No, AIR , should have stood out like a sore toe .

              Speaking generally, from a primarily F/A viewpoint ,and relative to the NZ and Australian markets alone. Assess whether your targetted company coming into view from a  prior  industry consideration eg. upturn in construction activity , - whether the market price  is justified based on latest NTA or other measurement?  If not,  what other considerations could be  factored into or out of the share price. Examine the top 10 or top 25 shareholders . This is easier done for  Australian than NZ companies.

For the latter you may have to refer to more historical shareholder Financial Reports. In the early stages the presence of a major player on the register will only be seen when the 5 % cap is breached. You will receive early warning on the internet of additions to or selling off of that holding. I am digressing but has anyone checked out Graeme Hart`s holdings in BPC . There are labyrinthal paths to camouflage his trail via primarily Millstreet Investments Ltd and Kintron Developments ltd and ,in turn,the original Rank Group  .Get into the pedigree of the latter and see the variety and incestuous cross shareholdings involved .

              Examine the categories of major shareholders. Are they institutions ? Generally an insurance company institutional investor will only be there for income and long term growth potential . That in itself is a reassurance however . It may be that your targetted company is in the same field as the institutional investor. This possibility makes it the more interesting. The possibility of a future play is on the cards. Chances are that you will also see a predator or catalyst featuring eg GPG . You can then pat yourself on the back that great minds think alike .  They too, before you, have sized up a situational play.

              Look at T/A charts . Determine whether creeping holding influences relative share prices with time. Get inside the head of those major investors . Suss out their investment horizons . Allied to this you have still to keep on top of what is happening to the company and it`s paricular industry as part of it`s normal operations in the business of making money.

              Probably stressing the obvious but it does no harm  to revisit strategies.

 

                                     Regards

                                                     David Stevenson