Tamsyn Parker 's Opinion

Money Editor for NZ Herald

Stock takes: Healthier heart

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Shares in Heartland New Zealand have been snapped up after selldowns by Pyne Gould and Torchlight. Photo / Thinkstock
Shares in Heartland New Zealand have been snapped up after selldowns by Pyne Gould and Torchlight. Photo / Thinkstock

Heartland New Zealand - the building society that wants to become a bank - may have a better shot at getting a banking licence now that George Kerr's Torchlight fund is no longer the biggest investor.

Two wealthy Christchurch businessmen have snapped up more shares in the business after major selldowns by Pyne Gould and Torchlight.

Greg Tomlinson and his associated trust Harrogate Trustee became the largest shareholder on Monday, increasing his stake to 8.8 per cent after buying 4.2 million shares for a total of $2.1 million between April 10 and July 6.

Yesterday rich-lister Philip Carter also emerged as a major investor through a substantial shareholder notice showing he now has a 5.4 per cent stake in Heartland after buying 15.4 million shares from Torchlight in an off-market deal.

Torchlight, which received $8 million for the shares, now owns about 3.9 per cent of the company.

Heartland's shares closed up 3c yesterday at 54c.

SLOW MOTION

News that Pyne Gould Corporation's subsidiary Perpetual Trust was freezing its Perpetual Mortgage Fund was leaking out well before it made the announcement yesterday.

It's probably no surprise given the fund stopped taking redemptions as of Thursday last week.

Despite the close scrutiny it is under from the Financial Markets Authority the listed company still seems reluctant to reveal information to the public.

Stock Takes wonders why it took Pyne Gould a week to make the announcement. Investors in its Perpetual Cash Management Fund must be eager to get their money out.

The Cash fund hasn't been taking any new money since April, when the FMA began looking into a related party loan it made to Pyne Gould subsidiary Torchlight.

Pyne Gould's minority investors must be looking on with concern at the situation.

Pyne Gould managing director George Kerr has a controlling stake in the listed company through a 76.3 per cent investment by Australasian Equity Partners.

The remaining roughly 24 per cent is owned by a number of institutional investors including rich-lister Hugh Green.

They could have sold out earlier this year through a takeover offer made by Australasian Equity Partners but are believed to be holding out for more money.

Pyne Gould's shares closed down 4c yesterday at 24c.

FIT AND PROPER?

The Financial Markets Authority's intervention with Pyne Gould's subsidiary business Perpetual Trust must surely raise questions about whether Perpetual should remain a trustee company.

Trustees are supposed to look after all investors' best interests.

Perpetual was also the trustee for large numbers of failed finance companies.

All trustees have to be licensed under a new regime by September 30.

SURPRISE INVESTOR

The Accident Compensation Corporation has emerged as a significant shareholder in insurer Tower, surprising some other market players.

ACC was tipped over the 5 per cent threshold on Wednesday last week after it acquired more shares through the dividend reinvestment plan.

Guinness Peat Group's share in Tower has also dropped slightly from 34.9 per cent to 33.6 per cent after the dividend reinvestment plan increased the number of shares on offer.

Shares in Tower, which is in the process of undergoing a strategic review, closed up 1c at $1.58 yesterday.

APPEAL UNLIKELY

Market watchers suggest an appeal by Guinness Peat Group over the €110.3 million price-fixing fine linked to its thread-making Coats business is highly unlikely.

Last month GPG lost its appeal to the European General Court in Luxembourg but said it would consider another appeal.

Delays in paying the fine have already cost €24.7 million in interest costs. A spokesman for GPG said no formal decision had been made on an appeal.

Shares in GPG closed up 1c at 46c yesterday.

POPULAR SECTOR

Several fund managers have been talking about the success of New Zealand's listed retirement village sector this week.

Milford Asset Management's William Curtayne blogged that the New Zealand retirement sector was a bright spot amid the bad news coming out of Europe.

Curtayne noted that both Summerset Group and Ryman Healthcare had posted figures this year showing new units sales were ahead of targets.

Last Friday Summerset said it had sold 83 new village units - double the previous year and 62 per cent of forecasts for the financial year ending December 31 made during its initial public offering last year.

In May Ryman said it sold 780 new and existing units, up 12 per cent on the 699 sold in the previous year and increased its build forecasts. Shares in Summerset and Ryman are both up over 30 per cent for the year to date.

Curtayne said the strong performance of the New Zealand retirement sector was a good example of how great opportunities exist, even in weak economic environments. "A wave of baby boomers reaching retirement age and reasonably strong house price growth has supported strong growth in this industry."

RYMAN OVERVALUED?

But one research company is not convinced that all is rosy.

Morningstar has downgraded its recommendation on retirement village builder and operator Ryman Healthcare from accumulate to hold after a 50c drop in what it believes the company's shares are worth.

Morningstar dropped its fair value from $4 to $3.50 due to its expectations of a drop in revenues and margins and an increase in the cost of equity.

The research firm kept its net profit forecast at $97 million for Ryman's 2013 financial year but lowered its 2014 financial year forecast slightly from $112 million to $111 million.

Ryman's share price has been on a steady trajectory upwards this year and yesterday they closed up 7c at $3.61.

METLIFECARE

A placement for shares in retirement village operator Metlifecare is said to have proved very popular with retail investors.

The offer for around 20 million shares is due to close on Monday and market sources say it has been oversubscribed by nearly double.

That has proved a little frustrating for institutional investors who also would have liked a little more of the company.

The share placement is part of the deal to merge Metlifecare with Vision Senior Living and Private Lifecare.

Retirement Villages New Zealand, Metlifecare's largest shareholder, has to sell down its stake to meet the conditions of the deal.

Share in Metlifecare closed steady yesterday at $2.18.

- NZ Herald

Tamsyn Parker

Money Editor for NZ Herald

Tamsyn Parker is the NZ Herald's Money Editor. A business journalist for ten years, she has worked in the UK and NZ for the New Zealand Herald, the National Business Review and a specialist publication on investment products for financial advisors. She is passionate about helping readers learn more about to make their money work for them.

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