Air NZ debacle catches out stockwatchers

Air New Zealand's crash landing was the biggest business event of last year, but when the year started many top brokers were picking the airline to fly high.

The 12 broking firms who gave the Business Herald their picks for stocks to watch at this time last year achieved an average return of only 1.92 per cent - and their support for the national carrier was one of the reasons for that result.



Top place went to ABN Amro, which managed a combined total return of 40.97 per cent on the five companies it chose - Auckland Airport, Contact Energy, Fletcher Building, Sky City and Telecom.

ABN Amro was the only firm to choose companies that all returned a positive total return - but only just. Telecom crept into positive territory at 0.74 per cent.

Sky City and Fletcher Building really won the day for ABN Amro, with respective total returns of 68.86 per cent and 62.26 per cent.

In second place, with a combined total return of 22.25 per cent, was Deutsche Bank.

It chose Fisher & Paykel, Fletcher Forests, Sky TV, Tranz Rail and Wellington Drive as the stocks to watch.

Fisher & Paykel, with a total return of 115.61 per cent, was definitely a winner, but Fletcher Forests and Wellington Drive, on negative returns of 20.69 per cent and 32.86 per cent respectively, dragged the final number down.

Forsyth Barr was third with Fletcher Forests, IT Capital, Nuplex, Tasman Agriculture and Wrightson netting a combined total return of 13.86 per cent.

Wrightson and Tasman Agriculture (on 95.43 per cent and 65.44 per cent total returns) were the winners for Forsyth Barr, propping up its other choices of IT Capital, Fletcher Forests and Nuplex, which all had negative total returns.

JBWere also recorded a positive combined total return of 10.92 per cent on its companies.

It chose Air New Zealand A (so did lots of others), Fletcher Building, Montana, Sky TV and The Warehouse.

Aside from Air New Zealand, which weighed heavily on its final result, JBWere's companies returned 62.26 per cent, 24.67 per cent, 30.0 per cent and 16.02 per cent respectively.



Of the other seven companies, CS First Boston, which chose Air New Zealand A, Fisher & Paykel, Fletcher Forests, GDC Communications and Sky City, returned 7.54 per cent. Good performances by Fisher & Paykel and Sky City balanced the less successful other three.

ASB Securities, with Carter Holt, RMG, Sky TV, The Warehouse and Tourism Holdings, totalled 4.8 per cent.

Craig & Co's choices - Auckland Airport, GDC Communications, Telecom, The Warehouse and Vending Technologies - returned 2.26 per cent.

Salomon Smith Barney scraped into the black with a combined total return of 0.99 per cent from Air New Zealand A, Baycorp, Frucor, Ports of Auckland and Tranz Rail.

Coming in under the bar was Cavill White with minus 1.32 per cent, courtesy of Affco, Air New Zealand B, Contact Energy, Fletcher Building and Fletcher Forests.

Ord Minnett returned minus 7.14 per cent on Advantage, Carter Holt, Fletcher Forests, Sky TV and The Warehouse.



UBS Warburg chose Commsoft, Genesis, Medical Care and Fletcher Forests. On the bright side, it chose The Warehouse.

DF Mainland can blame its result on Air New Zealand B, Genesis, and Tourism Holdings.

The total returns for the companies were calculated by Forsyth Barr for the period from December 18, 2000, to December 19 last year.

Aside from the patchy results, it was a turbulent year for New Zealand's brokers. Cavill White was subsumed into Forsyth Barr, Ord Minnett was sold to JP Morgan and thence to Macquarie Equities, Craig & Co is now half of ABN Amro Craigs, and Deutsche Bank's broking operation decamped to Australia.