Bring on holidays from weird behaviour by odd corporates

Friday 14th December 2001

It is certainly time for a break.

This column was written in Wellington during a brief respite from wrathful downpours (more diabolical than godly) and a realisation no latterday Noah would float up the street to rescue the apparent righteous from the scourge of flood.

Nor was there any indication of early deliverance from international financial fire and the pestilence of political and economic fanatics, local and worldwide, of whatever dogmas.

It is customary at year's end to look at the periods notable, wonderful, weird and potentially significant occurrences of the period.

There were specific examples of each category in financial and investment markets this year, as opposed to the broad trends discussed in NBR Personal Investor last week (NBR, December 7.)

An interesting example of the potentially significant or eternally optimistic was in the Stock Exchange's daily memo last week.

Brierley Investments' chief executive Greg Terry changed his director's shareholding through two share purchases, one of 100,000 shares and the other of 50,000, taking his holding to 650,000 shares.

Mr Terry's second purchase was at a price, reported in Singapore currency of 22.5Sc a share, equivalent of the 30NZc ruling here on the buy date. Such confidence was admirable.

Brierley Investments will hold its annual meeting tomorrow New Zealand time (Friday, December 14, Bermuda time) in a salubrious Bermuda Hotel.

Very few, if any, of the company's many New Zealand-based private shareholders will get there and, apparently, will miss out on a briefing in this country.

A change-of-name motion will be considered at a BIL special meeting at the same time and place.

It will drop "Brierley" from the title. That made sense given the group's tactics in recent years, Sir Ron Brierley's opposition to them and his final retirement from the board. The move falls into the "notable" and "wonderful" categories.

A takeover offer for Otter Gold Mines from Normandy NFM (part of the Australian Normandy Gold stable) had notable and weird connotations, one of which I owe to (again, weirdly) a Radio Sport broadcast of an Australian state cricket match on Sunday night.

Between balls a commentator noted he held 4000 plus shares in Normandy. Back in the early 1970s the company was Poseidon, whose shares shot up to $A230 from Australian cents in a few months on inflated reports and market manipulation, before an eventual price collapse.

People associated with the company were detained (and doubtless well fed and entertained) as guests of Her Majesty as Queen in Her right of Australia. The Australian cricket commentator got his resident statistician to work out the current value of the shares, based on $A230 a share plus inflation compounded for 31 years.

Up came $A3.25 million, rather different from the shareholder's current market value of about $A7000.

The late Ron Jarden tried to dissuade a wellknown New Zealander from buying Poseiden at more than $A200 in 1970 but was ordered to do so. (I was in Mr Jarden's office when the call came through. We were interrupted during discussion of a non-speculative exercise.)

Stock Exchange internal activity this year came into whatever of the four categories you care to select.

The year started with the presumption the New Zealand and Australian exchanges would merge. That fell through. Our exchange fluffed about. It talked about boosting all aspects of New Zealand capital markets.

A noble, notable, wonderful, but weird theory, given six new listings (including new capital market status), four current delistings with more likely soon, a reduction in turnover and the flight of brokers from the retail market.

Add in the saga of the exchange's tortuous demutualisation process and an apparent government intention to ensure local control of its activities.

Some companies' rights issues could be placed among the notable, the wonderful and the weird, the last in the sense the organisations got their money through underwriting from financial institutions and/or majority shareholders.

There have been seven cash issues announced at the same time of writing but all were comparatively small, adding little to market liquidity.

Share buybacks, some substantial, outweighed the issues, cutting liquidity further, a matter which also suffered from delistings.

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