Of Bulls & Bears

Friday 8th September 2000

Not easy money

A London-based investor apparently thinks he has come up with a superb arbitrage opportunity involving WestpacTrust instalment receipts. The instalment receipts are trading at about $10 per share. After allowing for the second instalment due in December, the total price would be close to $15 per share. On the Australian market, WestpacTrust shares are selling at about $A12.70 per share. At the recent exchange rate of 74.5c the value of WestpacTrust shares would be $NZ17. Therefore, for an outlay of $15 per share, a canny investor would stand to make $17 back. But the instalment receipts will convert into WestpacTrust Investments (not WestpacTrust shares) - a New Zealand-based subsidiary of the bank that was set up to return tax-imputed dividends on this side of the Tasman.

Too hot for some

Two institutional investors seem to be taking profits in food and spices group Burns Philp following the company's annual result announcement last month. This week, Credit Suisse First Boston Group announced it had cut its stake from 9.7% to 8.6%, two weeks after Union Bank of Switzerland sold down to below 5%, ceasing to be a substantial shareholder. These moves come despite the company's announcement in August of a 25% increase in net profit to $A82.2 million ($110m) on revenue down 6.3% to $A1.3 billion. Perhaps the divesting institutions think it is no longer a "recovery" share because it is producing healthy profits. A few years ago it was a basket case after making massive write offs and its shares fell to a few cents. The shares are now about 48Ac, up 1000% from their nadir.

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