Why doesn't the Sky City board just go the whole hog and issue dividends in gambling chips instead of money? Based on the company's investment record over the past few years, they clearly think their shareholders have an appetite for risk. Cash is boring, right? With gambling chips, some shareholders could win giant dividends and those that don't will effectively be reinvesting their yield anyway.
The "entertainment" company's new policy of issuing dividends as bonus shares doesn't appear to have been a hit with shareholders, but it is hard to say for sure because when the announcement was made on Monday the share price was in mid-slide - the stock has dropped 14c since then, but is down 29c since January 18.
New figures put out by the Ministry of Internal Affairs this week showing domestic spending on gambling fell for just the second time in 25 years were not great news either. The amount spent (in other words, the amount gamblers lost) at casinos was down 2.5 per cent.
Internal Affairs concluded that spending on gambling may have peaked in New Zealand - another reason for Sky City to get its Australian casinos into gear as soon as possible.
Goodman ramped
Who the heck is Meryl Witmer? She sure knows how to move a stock price. Goodman shares shot up 24c in two days this week to hit a record of $2.50. The only obvious trigger was a tip by Witmer in US-based investment magazine Barron's. Turns out Witmer is a young(ish), glamorous-looking mega-star of the US stock-tipping industry.
A partner with the exclusive US brokers Eagle Capital, her tips in the Barron's annual Roundtable column are hotly awaited by US investors.
So when Witmer starting talking up an obscure food and beverage company on the other side of the world, Goodman Fielder was suddenly getting the kind of publicity money can't buy on stockmarket chat rooms and blogs all over America. Looks like Graeme Hart owes her a beer.
The surge in US interest is making the pre-float cynicism of local fund managers look increasingly misplaced, says Macquarie Equities investment director Arthur Lim. It is also a reminder of just how globalised equity markets have become. "Increasingly, the key to these floats is that the destiny of the company is no longer in the hands of Australasian investors," he says.
Goodman shares closed at $2.48 yesterday.
Hip-hop style
Those hoping that Rakon will bring much-needed street cred to the NZX may be disappointed to learn that the tech company is not a founding member of US gangsta rap group The Wu-Tang Clan. That was Raekwon. But if Rakon does decide to list (they've said they'll make up their mind by the end of March), it will be exciting news for the exchange. Tipped to have a value of close to $150 million, the company isn't a heavyweight, but it is the kind of sexy growth stock the exchange needs to maintain investor interest. Navman - whose founder Peter Maire is a major backer of Rakon - is a Kiwi success story snapped up by international giant Brunswick. History suggests that Rakon will also end up owned by an international giant one day, but it would be great if local punters got the chance to share in some of its initial growth.
Vector outlook
Odds are that more than a few Aucklanders took up the opportunity to buy Vector shares last year and are now staring at their post-Christmas credit card bills and wondering whether they are worth hanging on to.
As an infrastructure company with a monopoly, Vector was hyped as a sure thing for investors. And it kind of was. It is still trading well above its issue price of $2.38. But after climbing as high as $3.34 immediately following the float, it was stopped in its tracks by Government (and Commerce Commission) talk of price regulation last September. Unlike some of its fellow lines companies, Vector appears to have reached an uneasy truce with the commission and has adjusted pricing to keep them happy.
At least one broker is picking that the worst may be over for the stock. Stephen Hudson, an analyst at Macquarie Equities, upgraded the stock from "under perform" to "neutral" on Tuesday , making the point that risks related to Government regulation are factored into the price.
Sadly for shareholders, that doesn't necessarily mean it will be trading above the $3 mark anytime soon. Macquarie puts a 12-month target valuation of $2.80 on the stock. It was trading at $2.64 yesterday.
Other brokers have said they are still cautious about Vector. Not so much because of the regulation risk - which they agree is priced in - but because management hasn't been particularly forthcoming with information and guidance on its long-term prospects. "They really haven't done themselves any favours," said one broker. "We haven't even been invited in to meet them and hear their story."
Uridashi hype
Job losses kept the high kiwi dollar in the spotlight this week. There is also still plenty being written about the Japanese love affair with uridashi bonds and how this is keeping the currency overvalued. Alan Bollard even followed Greenpeace's example and tried confronting the Japanese with direct action. But ANZ Bank chief investment officer Kevin Armstrong says commentators may now be focusing a little too much on Japanese housewives and international investor trends. Waiting for signs of a change in this foreign demand as an indication that the kiwi is about to roll over is akin to market-watchers six years ago waiting for US retail investors to stop buying technology shares as a sign of a peak in the Nasdaq.
The wider investing public is generally slow on the uptake and even slower to stop investing in overheated markets, he says. In fact, long-term charts showing ups and downs of the dollar compared with bond issuances indicate Japanese investors will still be buying after the dollar is well into its descent. When the dollar was high in the mid-1990s, the heaviest six months of bond issuance occurred after the peak.
Summer cheer
With all the doom and gloom hanging over the economy lately, it's nice to see the summer boosting sales at Hallenstein Glasson. Good December weather helped lift sales and meant its first-half result should be at least 25 per cent up on the same period last year, the company said this week.
Looking forward, the retailer has a natural hedge against an economic downturn built into its business model.
Glassons and Hallensteins stores sell fashionable clothes at budget prices. If consumers have to tighten their clothing budgets this year, it's a good bet that many will migrate from more exclusive outlets.
Cookie Bear for sale
Plans by French multinational Danone to sell Griffins Foods are now well advanced.
Sources say there are five potential buyers kicking the tyres - four private equity groups and one trade buyer. It doesn't look like Graeme Hart is the trade buyer - either through Goodman or Burns Philp. Shock, horror? Not really. "It's not unlike Graeme to sit back on a process like this," says a source familiar with Hart's dealings.
The billionaire doesn't like buying things as part of a competitive process but if Danone can't do a deal with the present suitors then expect to see him make a move. Griffins' popular range of biscuits, crackers and muesli bars would fit nicely with either Goodman or Burns Philp.
The privately owned Hansells food group - which bought the cordial brand Baker Halls Original this week - has been tipped as the likely trade buyer. The company owned by multimillionaire Gary Lane sold Goodman Fielder its Aztec Corn Chips and Krispa Potato Chips brands last year. The private equity contenders are tipped to include the usual Australian suspects such as Archer Capital and Pacific Equity Partners - which almost scuppered the Goodman float by making Hart a last-minute offer last November.
Danone has hired UBS to find buyers for the business, which is understood to be worth about $350 million. Griffins employs about 850 people in New Zealand.
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