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Watson upbeat despite his fortune halving

By Nicholas Bryant

Friday 20th October 2000

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Eric Watson, who has a reputation for a Midas touch in the stockmarket, has seen the value of his holdings in listed companies slashed by almost 50% in less than a year.

Based on year-high value of stocks in which he holds a significant stake, Mr Watson's paper value has slumped from $358.7 million to $187.7 million, a 48% drop.

But Mr Watson said he was not bothered as he was a long-term holder in the companies and current prices were for the most part well above his entry point.

"We're not concerned at all, not in the slightest - if anything we're looking at further buying opportunities."

Mr Watson's private investment vehicle, Cullen Investments, last week took a 75% stake in the Warriors which was previously bought by the New Zealand Rugby League for $400,000.

After announcing the deal Mr Watson freely admitted his motives were not purely altruistic and he hoped his businesses could gain public relations spin-offs from involvement with a winning Warriors team.

However, he did not believe involvement in sports teams could have any positive affect on share prices.

"Most probably the opposite will happen," he said jokingly.

Since the beginning of the year the share price of most of the companies he has invested in has dropped, influenced by a reweighting of the technology sector after the "tech wreck" on April 17.

  • Advantage Group has dropped 68% from a $5.60 year high to $1.80.
  • Strathmore Group has plummeted 65% from a year-high of 60c to 21c.
  • Aquaria 21 has all but gone into liquidation, sinking 85% from a 21c year high to a day-trader-picked-over 3.1c.
  • Pacific Retail Group has dropped 24% from $2 to $1.52.
Mr Watson's healthcare groups have not fared any better, with Eldercare and Ebos losing 69% and 31% respectively from their market capitalisations in recent months.

Attempts to launch two new Australasian companies in Receivables Management Group (RMG) and Commsoft have also met with lukewarm responses from investors.

RMG is trading 35% down from its year high while Commsoft is faring only slightly better at 13% down from its peak since listing a month ago.

Mr Watson's other foray across the Tasman has not enjoyed much success either, with Canbet shares trading at 56% below their 2000 peak.

He has also been linked to a planned finance company and listed property company. Details became public earlier this year but neither project has eventuated.

Mr Watson said he had invested in a private property company, Axis Holdings, and called talk about the finance company "pure speculation."

With only a few weeks before pre-season training, Mr Watson's plans to relaunch the new Warriors team has also struck a major snag.

At last report only a few Warriors had signed up for new contracts after being told of a 50% cut in their pay.

In addition to his listed assets, Mr Watson has private interests in bloodstock and property and a 50% stake in Elders Finance, said to be worth $50 million.

Considered by many to be an important stepping stone for even broader involvement in the local investment market, Elders Finance has performed well since Mr Watson took a controlling stake late last year.

Bridging finance for a myriad of property developments rushed to be in time for the America's Cup proved a particularly lucrative line of business for Elders.

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