Forum Archive Index - February 2004

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

Hi Macdunk,
 
>
>It Is a complete waste of time spending countless hours working out
>what a company Is worth, doing all the mathematics, without 
spending
>five minutes on an exit strategy when the cycle turns.   The cycle
>keeps turning, spend the time recognising what the signs are      I
>admire my old mate snoopy, and the work he puts in at the beginning
>but when It comes to knowing when to get out when the trend Is over 
he
>goes down with It.     
>

You've been telling us the price of WRI should be falling for two years 
heaven't you Macdunk?  I guess if you repeat the mantra every day 
eventually you will be right.   It doesn't say much about your ability to 
time the market though.

You think it is a good idea to sell WRI?    Perhaps, for you, it is.
 
It all depends on what your strategy is Macdunk.    WRI is in my 
income share portfolio and that means I am buying an income stream 
at a  coupon rate.     As of yesterday the projected gross coupon rate 
was around 11%.      Know any bank that is offering even half that rate 
of interest?   I thought not.     

In addition to my 11% bond, I have free exposure to the agro-
biotechnology business through the WRI shareholding in Genesis 
research.   If it pans out I am sitting pretty.   If not, it effectively costs 
me nothing.    I regard any gain over and above my 11% pa as a 
bonus.    There are efficiency upsides in WRI retailing that could result 
in further windfall gains too.    

So I'll make a deal with you Macdunk.   If you can show me an NZ 
income investment with 
1/a better yield than WRI 
2/and which is complementary to my other income shares 
(CEN,SKC,RBD and LPC) and not a property investment

then I will sell WRI and swap across.  But I've had a look and I can't 
find anything better than WRI to fit the bill.

>
>The exit strategy Is equally as Important as
> the buying strategy probably more so, for the simple 
> reason we make wrong calls the lot of us      
>

Sure, so not being an expert on biotechnology, I'll let Allan Freeth 
decide when to quit the WRI Genesis holding for me.

>
>Why should we tie our money up for
> years trying to prove to ourselves we were right In the first place? 
>

To earn a rate of return that would beat 80% of the NZ share fund 
managers over a few years, or double the return of a term deposit, 
that's why.

> 
> The moment I think the cycle Is over I get out, regardless of how
> good the company Is.         Classic example
> Incomes  [ high dollar farm dropping].
>  I sold wri at $1.30 bought poa for the Americas cup, and
> made another thirty pc.    I made another thirty pc since then with
> the same money on hqp.           
>

Yes, and what is your strategy from here on in?

> 
>ps Any large buyer with anything up top would never pay $1.45 for
> wri  they only have to wait. $ 1.00 looming.
>  

The market price is the point at which the most distressed seller meets 
the most optimistic buyer.   *We* might be able to trade on the margins 
but Norgate is a big fish.    If you want to buy a large stake ( as 20% of 
the company is) you always have to pay a premium.

SNOOPY

discl: hold WRI


--
Message sent by Snoopy 
on Pegasus Mail version 4.02
----------------------------------
"You can tell me I'm wrong twice, 
but that still only makes me wrong once."


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