I've been thinking about the share market

[Winston001]

Is anyone considering buying shares in Tardme?

I have what I'd consider a small/modest share portfolio. I also have mortgages and business loans. Hindsight tells me I'd have been better off putting the money towards reducing these loans but I'm hesitant to 'realise' any losses I have made over the last few years. As long as I hang on to the shares, the losses remain paper losses.

BUT the thing I realised was that buying shares invests your money into someone else's business. If you're a business owner, why would you invest your money in someone else's business when you could be investing in your own?

You are correct. The best form of saving is to pay your own debt off.

On the other hand, if you invest in shares/bonds you are spreading your risk. The shares may rebound while your business remains flat.

Still, you should back yourself which means concentrating on repaying your loans. Personally I wouldn't sell the shares today because they will be undervalued, just be patient. Or sell those companies which haven't improved over the last 5 years.

[Winston001]

Maybe I misunderstood when successive Governments (by this I mean Treasury, Reserve Bank etc) have made comments to the effect that Kiwis need to save more. I'm pretty sure the Thatcher Government in the UK was definitely looking to increase domestic participation in the share market, perhaps I just imagined that our current Government shared this philosophy.

No, you are right the government does encourage share investing. Not trading - there is a big difference. For example, all of the Kiwisaver funds buy shares. The Cullen Fund (NZ Superannuation Fund) buys shares. Each of us should own some shares as part of our own savings plan, the easiest way being to use an investment fund rather than buying individual stocks.

...if the Government wants to "liquidize" their own assets,... But even the floats they are proposing are simply the speculative type of investment I was trying to define in earlier posts.

NO. WRONG. FAIL.

Buying 49% shares in electricity companies is about as far from speculative investment as you can get. Energy companies are regarded as dead boring, safe, and solid investments. The type of share investors you keep thinking about - the speculators - do not have the faintest interest in utility stocks.

As for new investment - earlier I mentioned Contact Energy issuing new shares to pay for a wind farm. If Contact was still govt owned then they'd have had to borrow the money and increased govt debt. So we might see a part-privatised Meridian do the same.

[avgas]

Is anyone considering buying shares in Tardme?

At $700(+!)m for a company that only really trades in NZ. I would consider them overvalued.

Simple maths really 4 million people. A valuation of 700m over 3 year repayment period (tech firms) = $116m year / 4m people = $29 made off every person in NZ per year. How many people in NZ don't have computers, trademe accounts, the ability to use their own hands........ drags that average made off each person closer to the $100 figure.

But then again is has been the stablemate on online trading in NZ for 10 years now.......But I doubt they will sell for less than $800m.......which makes it more crazy.

[Banditbandit]

At $700(+!)m for a company that only really trades in NZ. I would consider them overvalued.

Simple maths really 4 million people. A valuation of 700m over 3 year repayment period (tech firms) = $116m year / 4m people = $29 made off every person in NZ per year. How many people in NZ don't have computers, trademe accounts, the ability to use their own hands........ drags that average made off each person closer to the $100 figure.

But then again is has been the stablemate on online trading in NZ for 10 years now.......But I doubt they will sell for less than $800m.......which makes it more crazy.

It's not that simple - Trademe also sell advertising space ... so there is another income stream .. when I look now I can see AA Insurance and Rugby World Cup ads on screen ... this is possibly the more lucrative income stream ..

Trademe is owned by Fairfax, a newspaper company that is well aware of the balance .. a newspaper basically gets 20% of its income from paper sales (subscriptions and counter sales) and 80% of its income from selling advertisements ... I have no idea what the Trademe balance is .. but I bet Fairfax knows ... and makes a profit. In fact a quick look around the net tells me that Trademe is Fairfax's only profitable endevour ...

If you go the other way and say that a $700m company should be making at least bank interest rates (otherwise why have a company? - just put your money in the bank because you'll earn more) then a $700m company should be earning $35m per annum at say 5% return.

Trademe has 5.5 million auctions per month (phenominal) ... or 66million auctions per year (5.5 X 12). At earnings of $1 per auction that makes $66million - now the cost of a Trademe aution is more than than $1 ... then there is Trademe's percentage of any sale ... So you have that income, and when you add the income from advertising then take out the costs, $35million states to look realistic.

So no, I don't think the company is over valued.

[steve_t]

Fairfax Media slumps to $490m loss

http://www.nzherald.co.nz/business/n...ectid=10747544

[Clockwork]

The benefits are simple.
Local control. Not govt control, not overseas control but local control.

You could argue that the govt answer to the people and selling the assets on the market will mean the average person gains nothing.

But how much are you paying for rego now?
The govt stopped listening a long time ago.

People don't just buy shares on speculation. They buy because they want to invest in a companies ideas. Or they buy to get some form of control over the company.

Wouldn't you like a bit more control over your power bill? That can be arranged. Simply buy some shares and you then get invited to a shareholders meeting. Then just take a loud voice.

Unfortunately it works like this in most situations:

- Shareholders

then

- Management

then

- Stakeholder concerns (customers etc)

So if you don't have investment, its very hard to get a point across to many companies. Not impossible, just hard.

I wish this were true but I'm less than convinced. I understand that some shares carry no voting rights whatsoever. This must be true 'cus I have shares in my employer and I aint never been invited to an AGM or asked to vote on any matter yet!.

I've also seen the news reports of (notably) Contact AGMs.... where the board have all given themselves nice fat pay rises and the "Ma & Pa" shareholders have fronted up to tell them what they think of it. The smug look on those pricks faces as they sit there and let the anger wash over them knowing that hey have the support of their brethren institutional investors "So who gives a fuck what you suckers think" is burned indelibly into my psyche.

[Banditbandit]

Fairfax Media slumps to $490m loss

http://www.nzherald.co.nz/business/n...ectid=10747544

Yes .. if you look at other pieces tho' TradeMe is their only profitable division ..

Read this one

http://www.guide2.co.nz/money/news/b...fit-up/11/5793

[steve_t]

Yes .. if you look at other pieces tho' TradeMe is their only profitable division ..

Read this one

http://www.guide2.co.nz/money/news/b...fit-up/11/5793

Another noob question but is a publicly listed company normally worth 20x EBITDA?

[avgas]

I wish this were true but I'm less than convinced. I understand that some shares carry no voting rights whatsoever. This must be true 'cus I have shares in my employer and I aint never been invited to an AGM or asked to vote on any matter yet!.

If that is the case talk to the other shareholders. Its lack of notification like that that gets CEO's fired. I have seen it happen many times before. Soon as the shareholders get smart the pigs get sent to slaughter.

I've also seen the news reports of (notably) Contact AGMs.... where the board have all given themselves nice fat pay rises and the "Ma & Pa" shareholders have fronted up to tell them what they think of it. The smug look on those pricks faces as they sit there and let the anger wash over them knowing that hey have the support of their brethren institutional investors "So who gives a fuck what you suckers think" is burned indelibly into my psyche.

That simple pull money out. Like power, money is often given and rarely taken.
The weakest thing a ma&pa can do is not pay attention to their investment and sit on the hands.

Investment is more than just money.

[avgas]

Another noob question but is a publicly listed company normally worth 20x EBITDA?

Short term (volatile or tech stocks) - no.
Long term strong growers - yes.

People make money in tech stocks if they fly. 90% flop.

Most safe investments look for a payback rate (i.e. 100% ROI) around 3 years for tech stocks and around 5-10 years on non-volatile ones.

[avgas]

Yes .. if you look at other pieces tho' TradeMe is their only profitable division ..
Read this one
http://www.guide2.co.nz/money/news/b...fit-up/11/5793

At 5.2%.......

[Banditbandit]

At 5.2%.......

Yeah ... I'm no good at maths .. which is why I used 5% in the post above instead of 5.2% .. it's still better than bank interest rates ..

[Winston001]

I've also seen the news reports of (notably) Contact AGMs.... where the board have all given themselves nice fat pay rises.... they have the support of their brethren institutional investors "So who gives a fuck what you suckers think" is burned indelibly into my psyche.

There is a strong movement internationally by "ma and pa" investors to restrict directors fees and massive CEO salaries. So you are right and many people agree with you. The institutional investors are hardnosed too.

The thing about Contact is that its a successful company so it is hard to deny increased directors fees. Origin holds a big chunk so if they thought the directors weren't doing their job, they'd have restricted the fees or dumped the board.

Another noob question but is a publicly listed company normally worth 20x EBITDA?

Fisher and Paykell Healthcare trades on a PE of 22. Raykon on 17.


From what I've read the average PE over decades is 15. So a price above that suggests anticipated growth. A price below that suggests a company with flat or deteriorating prospects.

As for Tardme, its hard to see further growth in a limited market of 4 million people. Mind you, I thought that when it sold for $700m!

[avgas]

Yeah ... I'm no good at maths .. which is why I used 5% in the post above instead of 5.2% .. it's still better than bank interest rates ..

That return rate is along the bottom end of investments on the NZX. The risk is not worth it. Though I would have to admit I would love to know what the beta speculation figure is.

Not saying I wouldn't invest in Trademe if they IPO it.........but it would be a very small part of the portfolio. Not life savings.

[avgas]

Rakon

Fixed it for you.
Having worked for them I wouldn't touch their shares.........but that is the horrible thing about companies you work for......very rarely do you see the good sides lol

Out of interest did anyone buy burger fuel stocks when they did the IPO. Apparently they are doing ok - friend said she had Burger Fuel in Dubai or Abu Dhabi (having never been there they both merge in my mind). She said it was always packed.
I wish I did buy some, but the $1000 bucks helped me buy my first 1L bike.........god I miss that bike.

Also anyone invest in Hulme? When I looked at the portfolio I thought he was crazy. No dividends for 5 years or something?