It's all eyes on The Warehouse today - and not just because the company is releasing its annual result. There is renewed speculation that Stephen Tindall may be negotiating to sell down his 51 per cent stake.
The share price has been creeping up steadily for the last month and closed at $5.17 last night - well above the $5 Foodstuffs offered for its stake back in June.
It has risen 62 cents, from $4.55, since August 10.
Immediately after the Foodstuffs stand Tindall was ruling out selling out and he is understood to have rebuffed several offers from foreign suitors in the past year.
There are plenty in the market who believe it is just a matter of time before he gets the right price or - importantly for a man like him - an offer he feels will leave the company with a good long term future.
That could mean a deal ensuring a strong local cornerstone stakeholder.
Staff members say the usual auditing queries they get around the time of the annual result have been far more detailed than usual - something that hints at a due diligence process.
Market talk is that things may be coming to a head.
Since July Foodstuffs has had a 10 per cent stake - so they would need to be involved in any full takeover, but there are many other possibilities.
Unflappable kiwi
The dollar hasn't been doing what it is supposed to and that could be bad news for export stocks.
To cut a long story short, the kiwi is supposed to be falling as the economy slows, which in turn boosts returns for exporters.
But our interest rates are still proving too attractive to the Japanese and US yield investors who continue to invest in New Zealand dollar bonds. That pushed the currency to a six-month high on Monday.
Ratings agency Standard & Poor's managed to knock US1c off its value on Tuesday by pointing out some harsh facts about the local economy in a report that was clearly noticed by some investors. But it has already started to bounce back and was trading at US64.75c yesterday - certainly not weak by historical standards.
When the dollar started to fall in the first half of the year stocks like fisheries company Sanford benefited almost immediately.
So it comes as no surprise that Sanford fell from $5.20 in July (about the time the dollar began to strengthen again) to its $4.20 close yesterday.
Affco is another stock at risk if the dollar won't lie down. The most important part of its export season gets under way from December so there is still time for a currency down trend to resume.
It will also be a worry for the likes of Fisher & Paykel - both Appliances and Healthcare - and other manufacturers squeezed by rising costs.
Although none is foolhardy enough to factor a lower currency into their profit forecasts it will have been a factor for analysts. If it continues at current levels we may see some revaluations in research notes.
Big dry
Another potential downside for agriculture-related stocks was highlighted by Westpac this week. The dreaded El Nino is looming again.
The weather pattern - which brings lower than usual rainfall - has about a 50 per cent chance of occurring this summer, say weather gurus.
It doesn't necessarily mean severe drought but it would almost certainly knock the top off production volumes.
Westpac estimates that it could cause production to fall by 7 per cent and would push economic growth closer to the 1 per cent mark next year.
Farmers on the already dry east coast of the South Island would be most vulnerable. The likes of Affco would be shielded to some extent because most of its suppliers come from the upper North Island. But El Nino would be bad news for rural services companies like PGG Wrightson and Allied Farmers.
Of course the El Nino is by no means a certainty.
"The uncanny habit of El Nino appearing when the NZ economy is already in a slow patch does not fill us with confidence," Westpac's economists conclude.
The last serious El Nino occurred in 1997/98 and wiped more than $600 million (0.9 per cent) off GDP.
Another go
It doesn't really make sense to lump Contact Energy in with stocks like Telecom and Vector with regard to regulatory risk, says Ian Waddell at Wellington brokers WJM.
It is definitely not a monopoly: "There are just so many generators and so many retailers," he says.
The shortage of national power supply also weighs against regulators taking action. Waddell sees Contact as a good buy on the basis that Origin is likely to be back for another crack at taking it over. Contact's balance sheet is strong and there is a huge build-up of imputation credits that have to be dealt with at some point.
Waddell forecasts that Contact's gearing will continue to fall to the point that it will be positively geared by 2012 even allowing for a fall in margins. Unless it finds some big new investments then a capital return to shareholders is on the cards.
Given that Origin is the largest shareholder with 51 per cent, another bid remains virtually self-funding and ultimately inevitable, Waddell says. It is just a question of timing.
The shares closed at $6.92 last night.
Telco woes
Speaking of regulatory risk, Andrew White at Goldman Sachs JBWere has done some work on the potential damage to Telecom's value if it were to face further regulation in the mobile phone sector. The note is timely because the Commerce Commission is expected to make a statement next week giving some indication of what it's got in store for the mobile sector.
The bottom line is that regulation is likely to knock between 11 per cent and 23 per cent off Telecom's value, argues White, who highlights three likely scenarios.
The first - that the regulatory status quo is maintained - is the least likely, he argues. That's because it requires Vodafone (and to a lesser extent Telecom) to proactively change its pricing behaviour to allow increased competition.
The second outcome - regulation of wholesale services - would allow new entrants into the market on the back of Vodafone and Telecom's existing networks. This would lower Telecom earnings by about 9 per cent and knock 11 per cent off its value. It is the lesser of two regulatory evils.
The third is also the most likely, White concludes. That scenario sees regulation introduced to enable new players to build their own networks. That would knock 23 per cent off White's valuation - to just $3.10 a share. White says he expects the tone of the commission statement to be negative and that belief underpins his "sell" recommendation.
It should be noted that White has consistently taken one of the more negative views on Telecom since the unbundling began. It should also be noted that until now he has been one of the most accurate with valuations- well until this week at least.
White has a valuation of $4.04 on the share but the past week has seen it have a good run. Though still volatile it seems to have found a new range with the bottom well north of the $4 mark. It closed at $4.27 yesterday.
But the recovery remains fragile and vulnerable to negative news. It probably wouldn't take much to put White's valuation back on target.
Sorting the gift horses from the nags
Folk in the horse racing industry are not shy about taking the occasional punt on a long shot. So perhaps it shouldn't be too surprising that plenty of members of the said community were prepared to put a few bob each way on tech stock Plus SMS.
Unfortunately for the owners, trainers and even jockeys who bought Plus SMS shares this year it appears the odds weren't presented quite as accurately as they should have been.
Plus SMS management revealed last Friday that a number of inaccurate statements had been made about the progress of the business.
The stock has since dropped from 34c to close at 14c yesterday. It has been as low as 8c and the Securities Commission is investigating some of the trading that went on before the announcement.
There are still plenty of questions.
What is curious is the extent to which that one particular community has been targeted by those with an interest in ramping the stock.
Word-of- mouth is a powerful advertising tool.
<i>Stock takes:</i> Red shed action
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