Of Bulls & Bears

Friday 23rd June 2000

Investors ignoring paper profits

Shareholders of Fletcher Paper are almost certain to vote in favour of a takeover by Norwegian company Norske Skog when they meet early next month. Considering the offer is at $2.50 a share and the scrip is changing hands on the market at less than $2.40, a golden trading opportunity seems to be beckoning. Ferdinand has heard the price gap has been caused by institutions selling down now at a relatively modest discount to pump their money into the only other listed wood-enhancer, Carter Holt Harvey. This is an attempt to lock in potentially better gains later once other shareholders receive the proceeds from the Fletcher Paper takeover and look for a similar vehicle in which to invest. Whether related or not, Carter Holt's share price has risen several per cent since the beginning of the month.

Colonial price motoring up

A low dollar, rising interest rates and concerns about the economy seem to have put a serious dampener on the car market. Dealers report sales in May were well down on the same month last year and one Auckland dealer told Ferdinand some dealers were letting cars out of their yards at a $500 margin just to get some cashflow. Well try telling that to investors in Colonial Motor Co. In the past six weeks the motor vehicle distribution and retailing group's shares have risen from a little over $2.70 to around $3.15, a gain of around 15%. No announcements have been made that might spark such enthusiasm but Ferdinand notes the company's annual result is due in a month or two - and investors may be taking a punt that its 34% jump in interim profit will be sustained.

The pig has landed

The merger of e-tailer Flying Pig and Australian-based TheSpot was trumpeted with a brass band's worth of hyperbole last month and then shelved this month with one low-decibel toot. The reason: TheSpot ain't got no dough. The internet-only retailer, backed by Fairfax and Amazon, was said to have burned through $A12 million and only had a month's worth of cash left. Not exactly a match likely to make beautiful music for Flying Pig. Chairman Stefan Preston said TheSpot needed to raise some capital: "But the real reason is it doesn't make sense to have a huge multinational company hungry for cash but [it's better] to have two smaller companies hungry for money." A $5 million placement TheSpot finally secured this week was private and did not come from Fairfax and Amazon, Australian analysts said. "The bottom line is these [internet-only] e-tailers all over the world are in very big trouble," one said. "Their business models are wrong."

Heard the word? Shout bingo!

Tired of those interminable business meetings? Does your boss spout management jargon like he's just read a textbook? If so, you need Office Bingo! Ferdinand has heard of fed-up employees making up cards carrying a selection of the lamest corporate terms and taking them into meetings. Whenever someone comes up with a word like "proprietary," "mission," "win-win" or "empowerment" it gets ticked off. Score five in one row or column and one is able to shout "bingo" as loudly as one likes.

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