Forum Archive Index - January 2002
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[sharechat] Carter Holt - the brokers gravy train?
The Carter Holt Harvey shareprice has recorded a solid price rise over the
past few months even though the company continues to destroy millions of
shareholder wealth. The last financial years performance tells all. Another
desirory result for a company with assets in excess of $7 billion.
What drives such increases in their share price?
The answer was given by Terry Hall in the Sunday Star Times under the banner
"It's analysts who have the power". Terry reminded us that analysts are
the real powerbrokers in today's market.
Terry also made the point that while Carter Holt Harvey is cautious about
the outlook most analysts believe the trends point to better times.
Analyst's valuations vary from $1.96 to $2.41.
I ask does it really matter what analyst valuations comes out as? As long as
it is sufficient to warrant a buy the jobs been done. Just add enough to the
predicted price of logs and they will get the answer they want.
One should note that even at $2.41 the broker concerned is forecasting
continuing destruction of shareholder wealth.
Not surprising institutions have been buying lately. - those that have been
recently undeweight in this stock. Isn't it ironic that those fund managers
who have previously thought little of Carter Holt harvey's fundamentals now
need to buy (even though they most likely think that the stock is still a
dog) for no other reason other than that they are afraid of being
'outperformed' by other fund managers. I am afraid that is what beating the
benchmark is all about
The last word belongs to Shoeshine in the NBR who in usual honest way put
the rise down to 'the perennial chirpiness of sharebroking analysts. Carter
is the local market's second-largest stock. Like leader Telecom, it
generates a big proportion of the turnover that puts panini on brokers'
tables so "never say sell" is the watchword'
And Shoeshine is probably right when he say's 'It's tempting to cross your
fingers and hope a momentum is building out of which one of the biggest
owners of our economy's resources will eventually burst, showering
added-value wealth on its shareholders. Those buying up the shares in recent
days must have succumbed to that temptation'
Never mind what the stock is really worth. Just join in the party and take
the trading opportunities when they come about, and prosper.
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