around the traps ... with the ferret

  1. 4,756 Posts.
    Around the Traps ... with THE FERRET
    08:05, Monday, 24 January 2005

    Sydney - Monday - January 24: (RWE Australian Business News) -
    *****************************

    When Ferret was young and foolish he was a punter on the horses
    (dogs and trots as well, for that matter) and can still remember one
    hapless hack going around at the time with the odd name of Moto Moto.

    Ferret thinks of the hayburner every time MOTO GOLDMINES (MTO)
    pops up on the news list.

    After Friday's announcement he will also remember Moto for its
    contribution to the language of scale in the sharemarket.

    Moto said that following the previous "significant" intercept
    reported on January 13 for the Mengu Hill Prospect of 42m at 2.83g/t
    gold, from 0 to 42m depth, the company had received further
    "exceptional" results from this mineralised zone.

    Our ears pricked up like any good steed on race day and
    concentrated on learning at what stage merely "significant" becomes
    "exceptional".

    "Hole MRC124 located 40m along strike from MRC123 intersected
    26m at 3.65 g/t gold from 0 to 26m downhole. Holes MRC127 to MRC130
    inclusive (all vertical holes and located on 40m drill centres), on an
    east-west drill traverse 200m to the north intersected the mineralised
    zone with best intercepts of 40m at 8.95 g/t from 20m to the end of hole
    in MRC128 and 24m at 7.57 g/t gold from 36m to the end of hole in
    MRC129," the company said.

    So, "exceptional" is 3.65 g/t if it starts at 0m or 7.57 g/t and
    8.9 g/t when it's deeper?

    In situations like these we like to consider a bit of
    perspective and refer to the backmarker in this race of the
    superlatives.

    On September 20 HIGHLANDS PACIFIC (HIG) reported 2.3m at 1,960
    g/t gold at 50.7m at Kora in Papua New Guinea - an intercept it
    described as "high-grade".

    When the numbers are that big we suppose a company can afford to
    be modest.

    But, in light of the latest Moto terminology, "extremely
    exceptional" may have been a more apt description.

    The sharemarket was surprisingly unmoved by Moto's assays and
    the shares lost an early 1c rise to close down 1c at 43c.

    *****

    Someone at SKYWEST (SKW) must have woken up bright-eyed and
    bushytailed on Friday and thought "let's make an announcement".

    So it said it was pleased to advise shareholders that directors
    had confirmed an intention to pay 80 per cent of net profit as dividend,
    which was a "restatement of a policy that was earlier adopted by the
    board".

    Well, why say it again?

    The company further advised it intended to consider ways to
    enhance shareholder value (hey, that's what companies are there for -
    it's a given).

    "Typical initiatives that would be open to the company to
    consider, as a means of enhancing shareholder value, include share
    buybacks and return of capital as and when appropriate having regard to
    the company's financial position," it said.

    Well, duh!

    *****

    PLATINUM CAPITAL's (PMC) quarterly report is riddled with
    cautionary comment about the state of the market, including this
    interesting observation which has relevance to the local scene:

    "It is equally revealing to observe the huge surge of activity
    in the private equity market. Data compiled by Bloomberg show that
    buyout firms like Blackstone, Warburg Pincus and Carlyle have spent a
    record $US180 billion on deals in 2004, way outpacing the global
    IPO raisings estimated at $US128 billion.

    "Like the hedge fund industry, this was formerly the domain of
    wealthy families but success has attracted many new players, notably
    less affluent investors and less experienced equity specialists. Returns
    have fallen as bidders compete in an ever more crowded pool.

    "Several long established private players have said they can
    make no sense of prevailing prices, so are suspending their activity,
    but those operating with OPM (other people's money) are snatching at
    every morsel.

    "Some are even doing a fine trade in taking listed companies
    private, sheltering them for long enough to enhance their indebtedness
    and little else, and within 12 months offering them to the public again
    at a considerably higher gross price.

    "No logical explanation seems necessary for the 'now listed; now
    delisted; now listed again' trick in the IPO offer documents!

    "Easy money has, however, had a highly beneficial effect on
    corporate profitability and balance sheets. Companies have engaged in
    massive refinancing exercises and, unlike householders, have generally
    reduced their financial leverage, thereby reducing the risk to
    shareholders.

    "Also enterprise profits are at record levels in the principal
    markets or back to peak levels in the case of Japan."

    *****

    One of the papers has lined up five asset managers to select
    five stocks each to ride the sharemarket with over the coming year.

    It's interesting that only one stock was picked twice - PATRICK
    CORP (PRK).

    The stock has been on the skids in recent sessions, sliding from
    a record $6.88 on January 11 to as low as $6.07 last week before ending
    the session at $6.16.

    The other selections were Macquarie Bank, James Hardie,
    Corporate Express, Primary Health Care, Macquarie Airport, Newcrest,
    Paperlinx, SP Telecom, Medical Development, Bluescope, Caltex, Metcash,
    Prime Infrastrucure, Vision Systems, Adsteam, Amcor, ConnectEast,
    Ridley, AGL, Redflex, News Corp, NAB and Telstra.

    Now there's a grab bag of 24 stocks for punters to ponder over.

    You may note no-one selected Aristocrat.

    But someone sure is buying it as if there's no tomorrow.

    It took off like a scalded cat with a 64c rise to yet another
    record $10.79 at one stage on Friday.

    Buyers haven't been put off by founder Len Ainsworth hinting in
    a newspaper interview that the share are overpriced.

    *****

    The weekend paper asked Aussie Homes Loans boss John Symond when
    he planned to retire - "Never. My business and property investments are
    too much fun to walk away from."

    How's your super looking? - "Like many other Australians, I am
    not relying on my superannuation funds for retirement planning. I am
    trying to build up other dividend-paying assets to fund my retirement,
    which hopefully is a long way off."

    If John is "never" going to retire, why is he building up
    dividend-paying assets for "my retirement"?

    Why does he say "like many" he is not relying on super ... when
    he is worth hundreds of millions of dollars and is UN-like many?

    Why does he keep on getting so much free publicity?


    (Comments and complaints to [email protected] - no requests for
    advice please.)

    ENDS

    Copyright © 2005 RWE Australian Business News. All rights reserved.
 
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