Posts by Dismal Soyanz
Last ←Newer Page 1 2 3 4 5 Older→ First
-
OnPoint: Election 2011: GO!, in reply to Sacha,
That read like she had been at the sherry a little too much.
She is correct in that many of the key players behind the global financial crisis have yet to be held accountable - and may well never be.
But she spoilt it by lapsing back into incoherent rant mode with
What really irks me though, is the righteous rich's bogus pretensions to doing good.
So they should liquidate their holdings and start wearing hairshirts? Or does being successful in business automatically mean that helping others can have no other interpretation than self-adulation?
Someone wearing snob-clogs must have trod on her toes.
-
Hard News: Because it's about time we…, in reply to Emma Hart,
Clearly Danielle didn't forward you the memo.
Until you drink instant you have no right to be left.
Us and them - yeah that's the universal solution.
-
OnPoint: Election 2011: GO!, in reply to Kyle Matthews,
I do wonder about other legal constraints. Isn’t there a rule about companies having to return maximum reasonable return to shareholders? Could a minority sharesholder sue the company board if they tried to do anything other than return as much money as possible to shareholders?
In a nutshell, no.
Much depends on the constitution of the company and shareholders may have the grounds for an action against management/the board if they act ultra vires.
ETA: In effect, if you buy the shares of a company you are agreeing to the constitution. You could try to get the other shareholders to change a constitution to impose a requirement of a payout of some kind.
But as far as the Companies Act goes, there is no statutory requirement for any return (whether it be dividend or capital appreciation). Indeed, some companies are set up with the intention of them being loss making.
-
OnPoint: Election 2011: GO!, in reply to DexterX,
I was trying to simplify because the share price in the dividend yield does not include the funding cost, whereas the return on capital should.
ETA: The share price is not the cost of capital in financial analysis terms. The share price may be a reflection of the market value of the capital but is not its cost especially when attempting to work out a return on capital as per the original question.
-
whereas the cost of capital does
return on capital, that last line should read.
Depends really on the question you are asking. If you were a company looking at what projects to invest in, you would use return on capital. If you were a cashed up investor looking at various equity investments, dividend yield. But neither of these lends itself to analysing the partial sale in terms of answering the question "Is it worth it?"
Part of the problem here is that although we know the types of assets that could be sold, we don't know anything about the assets that are going to be funded. For example, if it is for social infrastructure like schools, how do you measure the return on a school? So while we know what the sale of the assets might do in terms of lost revenue to the consolidated fund (and thus the revenue that goes to the ultimate purchaser), it's very hard to put a value on the benefit of the alternate investment.
If you are asking how much would the asset sale cost then the answer would be along the lines of the sum of expected dividend stream (ETA: obviously times the %age of shares sold), discounted over time.
-
OnPoint: Election 2011: GO!, in reply to Andrew C,
Return on capital and dividend yield are quite different beasties. In one way the easiest way to think about it is that the dividend yield does not take into account the cost of buying the share that generates the dividend stream whereas the cost of capital does.
-
OnPoint: Election 2011: GO!, in reply to Neil Morrison,
If, for arguments sake, there is no gain to be had through a partial sell-off then presumably it would make sense for the govt to buy all the Air NZ shares.
Not really. If this was automatically true then you would never see shareholder structures with significant/controlling minority shareholders as it would be better for them to always have the entire shareholding.
What the partial sell-off does sound like is almost the opposite - trying to push various SOEs into a model that is more typical of publicly traded companies by mimicing a diversified shareholder structure.
-
OnPoint: Election 2011: GO!, in reply to Keith Ng,
Yes there is – when you take something, invest labour and capital in it, make it better and sell it for a profit. That’s how the economy grows. We create value all the time, just not in the act of selling shares.
Selling for a profit to who? Given you said
To get this money, they must sell something in NZ (in which case, who buys *that*?) or they must sell something overseas (in which case, we no longer profit from that overseas asset).
then either they can create an asset in which the value created can be used to purchase the shares or they have to sell an existant asset - which is it?
If you can make a profit to create an asset, then the same source of funds can be used to purchase shares in an existing asset.
I agree that the partial sale does not add anything to the economic picture per se but I disagree that it can only be funded by selling down existant assets.
-
I'm somewhat suspicious that this is a move being made to forestall Labour's plans for the government to get a lower dividend from the power companies (stop Labour from snaffling up the elderly vote).
I would have thought anyone on a relatively low income. One problem though is whether not paying a dividend (or paying a relatively small one) necessarily means that retail prices would fall or at worst stay the same. Seems to me there is enough discretionary power within the generator/retailers to actually view the two issues (prices and dividends) quite separately.
In any case, there's might be little point in talking about the virtues of a partial sell-off when National could well hand off the remaining 51% in short order.
Which is hard to argue against. Given the poor economic rationale for the move, one is naturally drawn to the view that it is ideologically driven and is a means to softening up opposition to asset sales.
-
Ok. Now I think I understand your position. From a static point of view, every asset that exists right now has some form of return, other than money sitting in on-call accounts. [Note that even banks have assets with very low returns e.g. accounts with the RBNZ.]
The problem with this perspective is that there is no way you can ever create (net) assets. What is missing is the dynamic element of agents receiving income from some source (exports, if we are looking at NZ as a whole in the current account context).