Stocktakes: Stellar Run

Meridian Energy is to resume talks with Rio Tinto about its contract to supply power from its dams to the Tiwai Point aluminium smelter. Photo / Simon Baker

STELLAR RUN

As this is the last column for 2012, Stock Takes would like to note this year as one of the best for the New Zealand Stock Exchange.

As of Wednesday's market close, the NZX50 index was up 22 per cent from the start of the year - not bad for a country where economic growth has been relatively flat.

The NZX50 is well up on the ASX200, which was up 13 per cent, and larger indexes like the S&P500 which rose 13.6 per cent, or the FTSE100, which was up just 6.7 per cent.

But it seems unlikely such a stellar performance will continue next year.

Craigs Investment Partners head of research Mark Lister believes shares will still have a positive year but says the forecast is likely to be around 10 per cent. "While the economy might remain sluggish, earnings growth for the NZX50 is forecast to be close to 10 per cent next year.

"These factors combined should be enough to see us post another positive year of returns, although it may well be in the 7-10 per cent range, rather than 20 per cent plus as we have seen in 2012."

The NZX50 index closed down 20.5 points, or 0.5 per cent, yesterday on 3974.72.

VERY DILIGENT

Top performing technology stock Diligent Board Member Services could be eyeing a Nasdaq listing.

The boardroom software company presented to potential New York investors yesterday - understood to be the first time it has formally presented to its local market.

Diligent is headquartered in New York and much of its business is in the United States.

Shares in the company have soared 130 per cent in the last year and now that it has cash on its books and the potential for a dividend pay-out it would be attractive to some of the bigger fund managers.

Its presentation shows impressive growth with user numbers jumping from 27,500 to 46,000 in the last year and revenues nearly doubling from $18 million in 2011 to $36.7 million in 2012.

Diligent's shares closed up 10c yesterday on $4.60.

AUSSIE BUYER

The Commonwealth Bank of Australia and its subsidiaries have emerged as the largest unit-holder in the Fonterra Shareholders Fund.

The CBA posted a notice yesterday showing it has a stake of 7.43 per cent in the first substantial security holder notice to appear for the fund.

After sliding back a bit last week the fund's unit price received a boost on Monday with Fonterra announcing a 25c increase to its 2013 forecast farmgate milk price of $5.50.

The units rose 8c on the news although fund managers said the milk price was not meant to be a driver for the performance of the units.

Units in the fund closed up 25c yesterday at $7.01

MIGHTY FINE

The Government took a step closer towards its desire to partially float Mighty River Power by June this week after the Maori Council lost its initial legal bid.

It seems likely the Maori Council will appeal the decision but that hasn't stopped preparations for the float continuing in the background.

Stock Takes understands Mighty River was undertaking presentations to brokers on its geothermal business this week.

The other concern dogging the Government's partial power company floats may also be resolved soon.

Meridian Energy said this week it was resuming talks with Rio Tinto before Christmas about its contract to supply power to the Tiwai Point aluminium smelter.

The Tiwai smelter uses about 15 per cent of New Zealand's power and any closure of the plant would have a material impact on supply and demand.

LAPPING IT UP

The New Zealand Superannuation Fund and Milford Asset Management have emerged as substantial shareholders in alternative milk company A2 Corporation.

The two asset managers increased their stakes in the company as part of a $20 million private placement and share sell-down by its three main owners.

Milford now owns 5.75 per cent while the Super Fund, part of which is managed by Milford, had a 5.275 per cent stake.

Late yesterday the Super Fund dropped its shareholding below the substantial security holder level to 4.9 per cent.

The placement shares were sold at 50c apiece, well below its trading price of 68c.

The capital raising was combined with a move to the main board of the stock exchange on December 7.

Since then A2 shares have recovered some of the ground they lost through the placement trading up 3c to 53c.

One market source said A2 was well overdue its move to the main board. The company had a market capitalisation of $438 million before the placement.

It was the largest company on the NZAX by a long shot with the next largest, Burger Fuel Worldwide, worth just under $70 million.

Shares in A2 closed up 1c yesterday at 54c.

SELLING DOWN

Hugh Fletcher has sold a small portion of his beneficial interest in Fletcher Building, netting just under $169,000.

Fletcher stepped down from the board of the construction firm in September ending his family's more than 100-year link with the company.

A notice to the stock exchange shows five entities with interests held by an associated person of Fletcher sold 20,000 shares on Wednesday.

The sale was just a tiny portion of Fletcher's total beneficial interest. The company's annual report shows as of June 30 persons associated with Fletcher owned 1,013,395 shares and 1,632,500 capital notes.

Fletcher Building shares have been doing very well of late. Since July 25 they have risen from $5.77 to a recent high of $8.45.

Yesterday Fletcher Building closed up 1c at $8.29.

OLDIES WIN

Retirement village builders and operators Metlifecare and Summerset have ousted the New Zealand Refining Company and Goodman Fielder from the NZX 50.

Apparently New Zealand investors believe more in the ageing population story than bread and petrol as Goodman Fielder and NZ Refining failed to meet new liquidity requirements over the last two quarters.

Shares in NZ Refining have fallen of late while both Metlifecare and Summerset have had strong performances this year. Stock Takes would expect to see some rebalancing of portfolios ahead of the changeover on December 24.

SEE BUFFETT

Boutique fund manager Pie Funds is running a stock-picking competition with the winner receiving flights, accommodation and a guest pass to the 2014 annual general meeting of Berkshire Hathaway where Warren Buffett will be speaking.

Entrants need to pick three stocks, one of which has to be currently owned by Pie Funds, before February 1 although the company has asked for no resource or biotech stocks to be put forward.

The winner will be announced in December 2013.

Rules of the competition and how to enter will be made available at www.piefunds.co.nz in early January.