KEY POINTS:
No, not shares in the NSX-listed amphibious boat-maker, the motion sickness pills - all this market volatility is making Stock Takes queasy and the undulations can't all be explained by what's happening on Wall St.
Market watchers have pointed out the curious fact that many of the biggest
share price falls on the NZX have been among companies feted by one or two prominent fund managers.
The negative sentiment from overseas doesn't seem to explain the meteoric falls in some of these firms, and it has been pointed out to Stock Takes that intriguing supply and demand dynamics are likely at work.
Pumpkin Patch is a good example. Yesterday 6.3 million of its shares changed hands at a level not a great deal higher than their $1.25 issue price four years ago. Market meltdown aside, has the company really performed that badly?
Over the last 12 months, against the NZX-50's 15.5 per cent fall, Pumpkin Patch shares have dropped 63 per cent. Dramatic falls can be seen in Rakon, down 56 per cent, Delegat's, down 43 per cent and Freightways, down 32 per cent.
One theory is that this is the downside of the alleged practice of funds being pumped into a few stocks, artificially boosting their price beyond their fundamentals, in order to make fund managers' performance look good.
If those fund managers are forced to liquidate sizeable positions quickly, the stocks come down to earth with a bump.
In many ways it's an opportunity, albeit a dangerous one, for other well informed investors. If they know a particular fund manager will probably be forced to sell out of a stock soon, they can sell out beforehand, secure that they will probably be able to pick the shares up far cheaper within a day or two.
WATER COOLS
Tony Falkenstein's Just Water International has been one of the features of the NZAX since its IPO four years ago.
However, its December-half result last week indicates that like so many New Zealand companies before it, it is finding it hard going establishing itself over the Ditch.
While the water cooler business' New Zealand earnings were up 14.4 per cent at $2.9 million, its operating loss in Australia widened to $1.8 million from $600,000 for the same period a year ago.
That fed through into a bottom line loss of $200,000 against a net profit of $400,000 last year.
Research house Aspect Huntley noted the Australian operating loss was mainly on the back of upfront costs incurred in driving spectacular 67 per cent growth in rentals of its water coolers.
The company's management has indicated that its profits will lag growth in its dispenser base until critical mass is achieved and expects losses to ease in the near future.
Nevertheless, Aspect Huntley points out the company's balance sheet is under pressure as it borrows to fund the Australian losses.
Aspect Huntley is forecasting full year net profit of $340,000 against last year's $2.2 million and rates the stock, which closed untraded at 55c yesterday, as "Reduce".
THE GAME'S UP
The two big fixed interest offerings by ANZ National and Bank of New Zealand are proving more popular than even the two banks expected. BNZ says it has already received $320 million in bids for its offer, not far off the $350 million it was aiming for, well before applications close on March 25.
ANZ National, which was aiming for $400 million, has already received $650 million and its offer doesn't close until April 16. As previously noted, with these issues obviously aimed to a large extent at retail investors, they are bad news for finance companies struggling to raise funds in the debenture market.
What's more, the more unscrupulous and desperate companies, assuming they still exist, will find it hard to resort to the reprehensible trick of offering bigger commissions to financial advisers to steer business their way.
The new adviser disclosure rules, which came into effect at the beginning of the month, mean it is a criminal offence not to disclose all commissions and fees to clients, even if they are not asked for. Stock Takes understands this applies to existing investments through an adviser if the client chooses to, or is persuaded to, roll them over.
PLUS AND MINUS
Plus SMS is no stranger to spectacular ups and downs. Last week Stock Takes noted its NZAX-listed shares had been making big gains, even before it announced it had reeled in a deal with leviathans Microsoft, Vivo and Motorola.
Plus SMS' NZAX listed shares almost doubled in value to 15c before the deal was made public just over a week ago. Yesterday they closed at 10c.
