Super Fund suffers cruel timing with Kathmandu share purchase

The Super Fund and Milford Asset Management purchased 765,988 Kathmandu shares on Friday, according to a substantial security holder (SSH) notice filed yesterday. Photo / Natalie Slade

The New Zealand Superannuation Fund boosted its Kathmandu shareholding on Friday, lifting its stake by one percentage point to just over 6 per cent.

The fund might be wishing it had delayed the purchase until after the weekend, however, as the outdoor retailer lost more than a quarter of its market value on Monday following a sharp downgrade to the company's profit expectations.

The Super Fund and Milford Asset Management purchased 765,988 Kathmandu shares on Friday, according to a substantial security holder (SSH) notice filed yesterday.

Milford has an external management mandate for the fund and holds shares on its behalf.

A value wasn't provided for the shares, but at the stock's lowest price on Friday they would have cost $1.5 million. In theory, the same number of Kathmandu shares could have been purchased for $1.1 million at Monday's closing price of $1.47.

Hindsight is a wonderful thing and in the context of the $27.5 billion Super Fund the unfortunate timing of the purchases is not a big issue.

Kathmandu said on Monday that trading over the Christmas period into January had been below expectations and gross margins had been adversely affected by discounting required to clear excess stock.

Consequently, Kathmandu expects to post a first-half loss of between $1 million and $2 million, compared with an $11.4 million profit in the previous corresponding period.

The announcement prompted Kathmandu's share price to plunge 26.9 per cent to close at its lowest level since July 2012.

A string of poor trading updates has knocked about 63 per cent off the company's share price since May, when the stock reached a closing high of $4. The retailer's shares closed down 1c at $1.46 last night.

A Super Fund spokeswoman said the fund was a long-term investor and was attracted to Kathmandu's "long-term story".

"We will be discussing the company's short-term trading difficulties with management," she said. "We will decline to comment on our future intentions regarding the stock."

The fund last week posted a 13.9 per cent return for 2014, but warned returns would be "more muted" over the coming years.

Meanwhile, Australian fund manager Tribeca Investment Partners has reduced its stake in Kathmandu from 5.7 per cent to 3.6 per cent, according to another SSH notice released yesterday.