KEY POINTS:
The equity market, Stock Takes has been told by brokers and fund managers, is forward looking, with prices reflecting companies' medium-term prospects rather than present conditions.
What to make then of this week's series of fresh two-year lows?
With the economy, according to some observers, probably already shrinking, the market would suggest even harder times are yet to come.
The NZX-50, which is in a bear market, hit a string of fresh 27-month lows this week and is down almost 17 per cent for the year and 22 per cent down on the 4342 high in May last year.
Top stocks have been some of the hardest hit with the NZX-10 index down over 20 per cent for the year to date.
Within the top 10, Fletcher Building has suffered more than most, yesterday closing at $6.54, less than half of the $13.42 high it hit in May last year and down about 43 per cent for the year.
Fisher & Paykel Appliances is down around 40 per cent this year, while Healthcare is not far behind at 37 per cent.
Auckland Airport is down 32 per cent for the year and Infratil, partly thanks to its bold purchase of AIA shares, is down 28 per cent.
Across the rest of the top 10, SkyCity is down 29 per cent for the year, Sky TV is down 26 per cent and Kiwi Income Property Trust is off 13 per cent.
Market leader Telecom's shares, having already been crunched by the Government a year before sub-prime, have only lost 11 per cent since the start of the year.
Best year-to-date performer in the top 10? Contact Energy - yesterday its shares closed at $8.32 against $8.34 on December 31 last year.
WHO'S NEXT?
A worrying aspect of Dominion Finance Holdings's troubles disclosed this week is that the company was seen as one of the sounder ones outside top-tier companies UDC, South Canterbury and Marac.
Industry figures have told Stock Takes there are other companies operating in the same space as Dominion Finance - ie, property development finance - that are of a similar size and would have been expected to hit the wall before Dominion. If a well-run, reputable outfit like Dominion is struggling in the current environment, outside of the top three companies, who is safe?
Then again, since Dominion announced this week it was working on a moratorium proposal, its reputation has been somewhat tarnished.
As reported on Page 3 of today's Business Herald, some debenture investors are complaining that Dominion withheld repayments of principal days before it disclosed its problems, which could land the company in hot water with its trustees.
Moreover, the NZX is asking questions about Dominion's level of market disclosure.
In addition, Stock Takes has heard that subsidiary Dominion Finance Group's trustee Louise Edwards of Perpetual Trust recently called in Deloitte to investigate aspects of Dominion Finance Group's business.
Yesterday Edwards declined to comment on this matter but did not deny it.
She referred Stock Takes to Dominion Finance Holdings' chief executive, Paul Cropp, who has yet to return our call.
Edwards says she has yet to see details of Dominion's moratorium proposal and hoped to have a better idea of the company's intentions over the next couple of days.
Dominion Finance Holdings shares tumbled 38c to close at 12c yesterday.
ADVENTURE TOURISM
Tourism Holdings shares have been badly hurt this year, losing 35 per cent of their value for the year to date.
The company, New Zealand's only pure tourism play which was almost snagged by ill-fated MFS Living and Leisure last year, recently sold its Milford Sound assets to concentrate on its core motorhome and campervan business. That sale and other divestments of non-core operations should reduce the company's gearing ratio from 35 per cent to 30 per cent, say Aspect Huntley analysts, who also believe tourism's long-term prospects look upbeat.
Tourism Holdings lowered its full-year 2008 profit guidance a week ago to a range of $15 million to $16 million from the $16 million to $18 million previously advised and that has only added to the downward pressure on the stock.
This has created a buying opportunity, says Aspect Huntley, which has a fair value on the stock of $1.75 against its close yesterday of $1.49 and rates it "Accumulate".
COLOURS TO THE MAST
Masthead Equities' Mark Stewart has all but ruled out making an offer for control of Wakefield Health - in which his company has now amassed a 19.31 per cent stake - for the time being at least.
Masthead, the Christchurch-based Stewart family's investment company, has been buying up Wakefield shares in the past week, paying about $9 a share and spending approximately $25 million.
"We've got no intention of taking over, we're just trying to be a long-term shareholder. As you know, things change ... but our current intention is that we're not putting a takeover on the table."
An emphatic denial of any interest in a takeover, then - for now.
Masthead and Stewart have a reputation for a bruising approach to takeovers. The company's last major foray into healthcare saw it bid for Abano. The takeover didn't succeed but Masthead sold its stake to interests associated with Abano for a very tidy profit.
At the time, Stewart talked up his family company's intention to build up substantial healthcare investments. Masthead also owns 10 per cent of medical equipment and products supplier Ebos.
Yesterday Stewart said he was keen to talk to Wakefield's board about opportunities in the healthcare sector.
"It's a big industry - $12 billion and growing - and this is a very small part of it, as Abano and Ebos are as well. There's lots of opportunities if you look around."
Wakefield closed down 2c at $8.98.
CLIMBING TOWER
Guinness Peat Group's offer for a further 15.7 per cent of Tower New Zealand closed last night after easily reaching its target. Stock Takes heard from one of GPG's top executives recently that Tower has been the company's most profitable investment yet.
Those gains are largely on paper so far, but Sir Ron Brierley's investment firm is "cashed up", its top brass say. While market conditions are likely to throw up possible acquisitions at prices that would have looked attractive a year ago, market uncertainty means the company is likely to be extremely cautious, Stock Takes understands.
GPG shares closed down 5c at $1.48 yesterday. Tower was steady at $2.17.
KEEPING IT REAL
Finally, a tip of the hat to market operator New Zealand Exchange, which has reinstated real-time release of market announcement headlines on its free access website. Sure we'd like to see the whole announcement go up immediately, but this will do for now.
Stock Takes has learned a valuable life lesson out of all this - you don't appreciate what you've got until it's gone.
