Forum Archive Index - January 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Pat,
 
>
> 
>Some of you may have read today's article on how a high NZD is
>impacting farmers.  Does this have a flow-on effect on companies
>such as Wrightsons, Allied Farmers, Pyne Gould, etc.?  Does a high
>NZD erode their NZD-denominated earnings?
> 
> 

Yes it does.  But the market is way ahead of you.  This is why it is 
possible to buy such shares as WRI on a dividend yield of 15%.   It 
is true that the dollar has risen a little quicker than most 
anticipated.  Perhaps WRI may trade down from $1.17 to $1.10 or so 
within the next couple of months because of this.

But what's your alternative?  Sell and put the money in the bank?  
Let's say you were able to get a super competitive bank interest rate 
of 7.5%.  That is still only half what holding those shares in WRI 
will pay you.   So as a shareholder in Wrightsons you can take your 
dividend, swallow a capital loss of some 7.5c per share, and still be 
ahead.   Isn't that quite an attractive worst case scenario?  That's 
why I'm sticking with my WRI.

SNOOPY

disclosure: hold WRI


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