Stock takes: In the doldrums

Telecom galloped out to a $9.27 high in 1999 - a far cry from this week's $2.14. Photo / Brett Phibbs

It's not often that a company is willing to admit things are worse than they appear but perhaps the XT mobile network saga has worn Telecom down.

The embattled telco has made it clear that its share price did hit its lowest level this week despite data from Bloomberg showing it hit a low of $1.76 on April 5, 1992 - well below the $2.14 it touched on Wednesday.

But Telecom insists that its analysis based on adjustments for different share issuances and cancellations over the past 19 years show the $2.14 figure is the lowest.

Regardless of the differences, it's still a sad sight after the $9.27 high reached back in 1999.

Telecom has been quick to point out that it has also been a very high dividend payer over the years.

But the problems with the XT network and the rural broadband funding changes have got analysts predicting a cut to the dividend.

Australian-based Deutsch Bank analyst Sameer Chopra reckons it will be cut from 21c to 18c while Geoff Zame, from Craigs Investment Partners, believes it will fall from 24c to 22c.

Investors will be holding their breath to see if Telecom's bid for the Government's new fibre roll-out is successful. Telecom shares closed up 1c at $2.15 yesterday.

SLOW TO DISCLOSE

Investors could easily have been fooled into thinking two large shareholders had dropped their stakes in Telecom as a result of the downgraded forecast on Tuesday.

Black Rock and National Australia Bank put in notices this week showing they have stopped being significant shareholders by dropping below the 5 per cent mark. But a closer inspection reveals the transactions actually took place on March 3 and 4. So why did it take so long for the market to be notified?

The NZX says shareholders have to file a significant shareholder notice as soon as "a person knows, or ought to know" about the change. Surely these two companies must have known about it before this week.

The NZX says it's only the medium for releasing the disclosures and it's up to the Securities Commission to monitor it.

"If we have any concerns on any issue that comes under the Securities Commission we would make a referral," the spokeswoman said. So what about in this case? "We are not able to advise whether we have made a referral." Likewise the Securities Commission says it is unable to say whether it is investigating.

MISSING LINK

Eyebrows have been raised about Huljich Wealth Management's decision to appoint David McEwen from sharemarket minnow Investment Research Group as a consultant on its investment committee. McEwen, a former journalist, is a qualified securities analyst but lacks the fund management experience that newly appointed chief executive Don Brash admitted the company lacks.

One industry insider described the appointment as a strange choice given IRG's previous investment track record.

Formerly known as Viking Capital, the company lost millions after its investment in fledgling bio-tech ICP Bio went belly up and its stake in Dorchester Pacific lost value in the wake of the finance company sector collapse amid criticism by Brent King, the founder of Viking and former Dorchester chief executive.

Some believe the appointment only came because of King's former Dorchester connections and his previous history with 42 Below founders Geoff Ross and Grant Baker and their involvement with New Zealand's well-heeled business community.

But McEwen points out that he, and not IRG the company, has been hired personally as a consultant by Huljich.

Asked why him, McEwen reckons it's because of his experience in analysing New Zealand and Australian shares.

"They looked around for someone that had the best fit in terms of strategy. Perhaps, it's because I try and do things the rest of the market don't do."

While McEwen admits he hasn't managed any pooled investments like KiwiSaver, he has looked after private client money for the past 10 years.

The new role means he will be a consultant to both IRG and Huljich. "My weekends are going to be a bit constrained," McEwen says. "But my day job is to research New Zealand and Australian equities - so no big change there - just two masters." IRG's shares closed yesterday at 1.1c.

NEVER TOO LATE

The Commerce Commission is not known for moving quickly - just look at how long it has taken to make a decision on the ING frozen funds - but a statement out this week shows just how long the wheels can take to grind.

More than 24 years after the merger of Wrightson and Dalgety the commission has admitted it could have communicated more clearly with a man who believes he lost business because of the decision.

The Commerce Select Committee has found in favour of stock and station agent John Dickson and recommended the Government make an ex gratia payment to him to recognise events which contributed to the loss of his opportunity to pursue legal action, and the effort and expense he has incurred in seeking clarification from the Commerce Commission and in petitioning Parliament.

The Government this week said it would seek legal advice on whether to compensate him.

Dickson claimed he had difficulty accessing saleyards after the merger and raised concerns with the commission that Wrightson was not meeting the conditions of the merger.

But despite setting the conditions the commission then said it may be unable to enforce them because of a law change that came in during the same year the deal went ahead.

The commission has been quick to point to the select committee's report which states that the commission did not cause the losses Dickson claims. But chief executive Nicholas Hill has said the commission could have communicated more clearly with Dickson.

WATCHING THE PENNIES

Graeme Hart might be Australasia's richest man but it seems he, or his company Carter Holt Harvey, has no qualms about squeezing a few extra pennies out of any deals they do.

Stock Takes understands suppliers of Carter Holt have been told they will have to wait an extra 10 days before being paid.

Instead of the usual 20th of the month payment schedule which most businesses in New Zealand work to, Carter Holt has told business partners they will have to wait until the 30th. The change gives Carter Holt an extra 10 days of working capital.

Forbes' figures out last week show Hart's net worth has grown from US$4.5 billion to US$5.3 billion and praised Hart as the "master of the leveraged buy-out".

But some have been quick to point out that he doesn't get it right every time.

Carter Holt Harvey has been trying to sell off $250 million of dairy farms for the past year after converting them from forestry to dairy after the milk payout price spike.

But Hart must be kicking himself for chopping down the trees after a log shortage has seen the price of timber soar. The price hit a 14-month high in February according to the ANZ Commodity Price Index.

KATHMAN-DOES

Kathmandu's first half-year result since its float last November has struck a positive note with investors.

Shares in the clothing retailer shot up 19c on the NZX yesterday to $2.38, breaking through its post-float price of $2.23 for the first time. Kathmandu has had a rough ride since November, touching a low point of $1.90 in January and February.

Investor confidence has increased in New Zealand and Australia since February 11, with the share price rising from $1.90 to a high of $2.25 in New Zealand and from A$1.50 to A$1.75 on the ASX even before the result was released.