Money Editor for NZ Herald

Stock Takes: Cashing in

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Sir Ron Brierley has argued that as a significant shareholder he is always thinking about what is best for investors. Photo / Natalie Slade
Sir Ron Brierley has argued that as a significant shareholder he is always thinking about what is best for investors. Photo / Natalie Slade

Veteran corporate raider Sir Ron Brierley has cashed in some of his shares in Guinness Peat Group.

The director, who was nearly booted off the board of the investment company earlier this year, yesterday revealed he had sold $2.87 million worth of shares.

Brierley retains a 2.89 per cent shareholding in GPG - worth around $26.7 million at yesterday's trading price of 57c.

GPG is in the process of selling down its assets and recently said it would rename itself Coats "at the point when GPG shareholders' investment is predominantly represented" by the UK threadmaker's business.

Fund managers and investors have strongly criticised Brierley for failing to put the best interests of investors first but he has argued that as a significant shareholder he is always thinking about what is best for shareholders.

Stock Takes wonders how long Brierley will want to keep his remaining shares in the company now that he has lost control of the business, is no longer chairman and is hanging on to his board seat by a thread?

Shares in GPG closed steady on 57c yesterday.

The performance of the two Fisher & Paykel companies couldn't be more poles apart this year. Takeover target Fisher & Paykel Appliances is so far tracking as the best performing stock on the New Zealand sharemarket this year with a massive return of 251.4 per cent.

Haier's bid for the appliance-maker has seen its share price soar, edging out tech stocks Xero and Diligent who have been the main stellar performers this year.

One surprise in the top five is children's clothing retailer Pumpkin Patch with a return of 89.1 per cent - obviously things aren't all bad in the retail sector.

But at the other end of the scale returns haven't been as healthy. Fisher & Paykel Healthcare is second from the bottom in a comparison of the NZX50 index stocks with a negative return of 3.02 per cent.

The only NZX50 stock to do worse is PGG Wrightson with a negative return of 7.9 per cent.

Minor shareholders in rural services provider PGG Wrightson must be feeling anxious about the struggle by its major shareholder Agria to pay its debts on time.

New York Stock Exchange-listed Agria owns 80.8 per cent of Agria Asia, which in turn owns 50.22 per cent of Wrightson, and was due to repay a $10 million loan to Livestock Improvement Corporation this week and a prior ranking loan of $25 million to the ANZ bank.

Agria took out the loans to buy the shares in Wrightson.

On Wednesday, Livestock said it was still in discussions with Agria and it had given the company an extension on the loan to enable it to source additional funds.

It has given Agria until December 19 to pay half the loan back with the balance due in March 2014. Livestock has also increased the interest rate charge on the loan to reflect the delay.

Agria says it has also reached an agreement with the ANZ to extend that loan.

Agria could be forced to sell some of its Wrightson shares to fund the repayment which could potentially shift the balance of ownership and control over the company.

Shares in Wrightson closed up 1c yesterday at 35c.

Shares in Trade Me hit a stumbling block this week with investors disappointed at the guidance given at the company's annual general meeting.

The auction site's share price tumbled 21c in one day falling from a high of $4.45 to $4.24.

One fund manager said the AGM had been "pretty underwhelming" and the company's growth looked like it was going to be less than expected.

Trade Me had been going from strength to strength since its listing last year but it appears to have been hit by a dose of reality.

The fund manager said Trade Me was just as exposed to cyclical elements of the economy as other companies and investors should not expect it to be immune to the slow economic growth New Zealand was facing.

Shares in Trade Me closed down 10c at $4.19 yesterday.

New Zealand companies with exposures across the Tasman are starting to feel the heat from the difficult Australian economy.

Rubber-goods specialist Skellerup released a profit guidance downgrade this week, noting the tough trading environment it faces.

The company had a record result in 2012 but expects its profit to fall by as much as 11 per cent over the next year. Shares in Skellerup fell 15c to $1.58 on the news, eventually closing at $1.60.

But it's not likely to be alone in feeling profit pressures.

One market player suggested retailers Pumpkin Patch and Kathmandu could also face tougher times as well as other stocks with Australian exposure like Fletcher Building, Fisher & Paykel Appliances and Tourism Holdings.

"The cruel reality is, if they have a meaningful exposure to Australia their performance will come under pressure ," he said.

The NZX's decision to close earlier on Christmas Eve and New Year's Eve should be good news for investors.

In the past the market has remained open until 4pm on those days and Stock Takes suspects some companies have taken advantage of pre-holiday periods to release less favourable news to the market.

With a shorter day there will be less chance to slip bad news out. Brokers will also appreciate the early 1pm close off which will allow them to get the party started earlier.

The Financial Markets Authority has given its blessing to the NZX to allow its new diversity reporting measures to come into force but most companies won't have to supply any break-down in gender metrics for their boards and officers until halfway through next year.

Main board listed companies will have to include the information in their annual reports. But the rule only kicks in for companies releasing reports covering balance dates ending on or after December 31.

The majority of New Zealand's listed companies end their financial years in either March or June and then release their reports several months after that.

While Moa's promoters have said the intention of the tiny brewing company's upcoming float was not to facilitate its eventual sale, Stock Takes notes that the once-New Zealand owned brewer, Lion, is a keen buyer of small, craft breweries downunder.

In June, Kirin-controlled Lion bought Little World Beverages in a deal that valued the craft brewer at A$381 million.

Shareholders in the West Australia-based Little World Beverages, which makes Little Creatures and White Rabbit beers and Pipsqueak cider, signed off on the deal in September.

Sydney-based Lion, whose origins go back to New Zealand's Lion Nathan, brews Tooheys, XXXX and James Boag's. Lion was taken over by Japan's Kirin in 2009.

Little World began in Fremantle in 2000, expanding into Victoria in 2009 with the White Rabbit brewery in Healesville. The company is building a new brewery in Geelong in order to expand on Australia's east coast.

Lion is in the habit of buying craft breweries. It already has James Squire and Knappstein under its belt.

Moa, in its offer documents, has forecast two years of losses. The document also contains the comment: "There can be no certainty that Moa will be able to generate a profit in the long term."

Moa shares are expected to list on the NZX on November 13.

- NZ Herald

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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.

Read more by Tamsyn Parker

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