Posts by Angus Robertson
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Hard News: Strange days for journalism, in reply to Russell Brown,
I think we’re going to have to strongly disagree on that one, Angus. I think dumping 20% of the company would see the stock tank.
We're both saying it is going to crash. You are saying it is going to happen because Rinehart is selling her shares. I am saying it is going to be lower because it is worth a lot less than Gina Rinehart has been prepared to pay for it and will potentially be valued so low it is destined to be dismembered.
When GM sold 20% of Subaru in 2005 (during an economic boom) it got USD315million, when Toyota acquired 7.8% of Subaru in Oct-2008 (during a global recession) it paid USD311million. The share price of Subaru more than doubled after 20% of it was dumped.
I’m still not clear on exactly what magic Rinehart is supposed to bring here. She’s buying shares 90% off their peak for reasons which appear to have nothing at all to do with the good of the company. That actually does nothing for Fairfax’s bottom line.
Presently she is elevating the equity price well above anything a sane investor would pay, this allows Fairfax to have more access to borrowed capital with which to restructure and potentially survive.
Furthermore she wants Fairfax intact as a sort of ultimate vanity project shoving her crazy down the throats of Australaisa. People at Fairfax get to keep working at their unprofitable jobs, the bottom line is still crap - but it doesn't matter because Rinehart can cover the losses.
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Hard News: Strange days for journalism, in reply to Craig Ranapia,
Don’t piss on my leg and tell me it’s raining, Angus. There are many adjectives I’d apply to Rinehart but “so stupid she has no idea of the effect of dumping almost 20% of Fairfax shares on the market unless she gets everything her own way”? Defies belief.
If a company doesn't make any money and has a declining year on year customer base - they cut costs or attract new investors or a combination of both. If these things can't happen it goes bust.
If Gina Rinehart dumps 20% of Fairfax the price will fall, but not because Gina Rinehart is dumping 20% of Fairfax stock. The price will fall because Fairfax probably can't cut costs fast enough to avoid it going bust without some investment. The price will fall because no one is willing to buy a company that is going bust.
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But institutional investors don't agree. They're concerned that turning Fairfax into Rinehart's vanity publishing house would destroy their equity.
Well yeah.
Their equity has declined 90% in 5 years and apparently is still massively overvalued at its current trading price. If Rinehart sells off the price will fall, because no one thinks that Fairfax is worth the current price.
They stand to lose equity either way.
The institutional investors are probably hoping Rinehart can be goaded into making a full blown takeover bid, so they can bail on their worthless shareholdings at an inflated price.
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Hard News: Strange days for journalism, in reply to Russell Brown,
That would certainly happen if she dumped her shares, yes. That’s the basis of the threat.
So you agree Fairfax is basically worthless in its current state. That is is unprofitable and unlikely to become viable.
And you seriously think Fairfax losing money year after year is a sustainable model? Okay ...
Oh, for god’s sake Angus. Rinehart wants to do away with Fairfax’s charter of editorial independence.
She is a right wing nut job flush with $millions in loose change who wants a soapbox from which to espouse her views - I agree.
However Rinehart wants a BIG soapbox and Fairfax is a big unprofitable soapbox that needs lots of her cash. She wants to employ lots of journalists to espouse her views. She, and almost she alone, is in the position to save the jobs of Fairfax employees.
This is a dilemma. But instead of presenting this as a dilemma, you are portraying everything as being the fault of Rinehart.
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To press her case, Rinehart has now threatened to sell off her holding if she does not get her way -- which would undoubtedly see Fairfax shares tank.
Without Rinehart the shares would be worthless. Fairfax don't make any money. The shares would become so worthless the company would probably be asset stripped and sold off piecemeal with thousands more people losing their jobs.
The damage is building. Yesterday, the Sydney Morning Herald's editor Amanda Wilson and editor-in-chief Peter Fray announced to their staff that they were leaving their roles. The editor of the Melbourne Age, Paul Ramadge, announced that he was leaving too.
This "damage" has nothing to do with Rinehart. She does not control seats on the board that made the decision to downsize Fairfax operations.
And these are strange days for journalism.
They are indeed, but don't worry about that - because a scapegoat has been found. She is Australian, a mining magnate, has disagreeable politics, resembles a fat interstellar slug creature and apparently its her fault.
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The mayor has formed a taskforce to deal with it and, creditably, headed out with several members of the force to confront the task.
Whilst Mayor Len Brown takes a high profile stance to micro-manage a non-problem with youths in the central city.
Are increased rates bills arriving in letterboxes in the suburbs?
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Plus introducing more drug choices allows governments to say "Hello, unrealised taxation stream". All the positive effects and none of the negative of raising the rate of GST.
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Speaker: The Voyage: Dutch Disease –…, in reply to Kumara Republic,
And I've said it before, but the property bubble seems to be NZ's equivalent of the Common Agricultural Policy.
On the upside, until 2009 you were totally correct.
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Speaker: The Voyage: Dutch Disease –…, in reply to Matthew Poole,
The other bidders were looking to pay a fair value for the properties, not to win the bidding at any cost, but now that someone’s set a new benchmark (no matter how ludicrous) it feeds through to the rest of the market.
It doesn't. The rural property bubble burst here in 2008 - 09, its not going back up. Chinese billionaires and Hollywood directors do not exist in sufficient numbers to drive up prices.
On the current (high) milk price a dairy farmer can make a reasonable return from farming at current land value. Farm values will rise and fall on the basis of profitability. Not on the basis of expected capital gain, because the rural property bubble is over.
And that 20% figure I was offering earlier, apparently I was being uncharacteristically optimistic. Real figure decline was closer to 40%.
Want to buy property? Hey, how much can we lend you?
Our housing bubble OTOH hasn't ended. The same shit lending practices occured in America and their bubble burst (covering the whole world). Same thing happened in Spain and in Ireland, those bubbles burst. It might possibly burst here?
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Speaker: The Voyage: Dutch Disease –…, in reply to Matthew Poole,
For most of the rest, they hang in there for a couple more years and wait for the market to resume its climb.
It will resume climbing?
The Crafar Farms were sold to the Chinese at about twice as much as the next highest bidder was willing to pay. Property has crashed in Japan and America and Britain and Spain and France and Italy and its probably about to fall over in China.
But in New Zealand you think property can only go up.