mbl<alh<fgl<bhp: ferrets reports

  1. blt
    164 Posts.
    RWE News
    7:49:020 14/11/2003

    Sydney - Friday - November 14:(RWE)
    ***********************************

    Was BHP BILLITON chairman Don Argus's speech to the annual
    meeting a tip for punters?
    He said it was gratifying to see the shares strengthen but "we
    believe the increase in the share price does reflect to some degree the
    market's confidence in our performance".
    Some degree?
    Is more justified?
    Mr Argus pointed out that a shareholder who invested $1,000 in
    BHP in 1998 would now have BHP Billiton worth $2,475 and if the value
    transferred to shareholders in the OneSteel and BHP Steel spinouts were
    included, it would be $2,791.
    Well, it sure beats Foster's and its spinoffs.
    BHP rose a further 27c to $11.48 yesterday.

    *****

    Small shareholders in FOSTER's (FGL) must be feeling like victims
    of the pea and thimble trick.
    Back in August they had shares worth $4.43 and their company
    owned a string of pubs, chock-a-block with money-making poker machines,
    worth a total $1.5 billion.
    Today their shares are worth $4.36 (down 4c yesterday), and the
    pubs and pokies are gone.
    The losses are even worse for the 30,000 shareholders who
    participated in the pubs and pokies spin-off, AUSTRALIAN LEISURE and
    HOSPITALITY GROUP (ALH).
    They were cut back to 1,000 shares each at $2.40 a throw, and
    allocated a total 30 million shares.
    These suckers are down to $2.26 (although up 3c yesterday).
    Stockbrokers' clients got 105 million shares at $2.40 and the
    institutions 101 million at $2.50.
    What the poor mug, loyal mum and dad shareholders in Foster's may
    not have known was that 115 million shares went to favoured institutions
    for only $2 each.
    Naturally these institution dumped the shares with front end
    loaders after ALH listed, hence the plunge to as low as $2.22.
    Since listing last Friday 104 million shares have been dumped,
    which is not far short of the favoured instos' total holdings.

    *****

    A lot of the 30,000 Foster's shareholders would probably not have
    bought ALH if the prospectus had clearly shown - say up the front where
    the size of the issue is revealed, in big letters - that 115 million
    shares had already been issued to instos at $2.
    You had to plough through to page 21 to find this phrase, "The
    institutional firm offer is open only to certain institutional investors
    that committed prior to the lodgment of this prospectus to take shares at
    the floor price under this prospectus."
    An unsophisticated investor could have been excused for thinking
    this would be the bookbuild price, which would have been 10c higher than
    what the small investors would have had to pay anyway.
    But no, what they had to know was that they had to go to the
    Glossary at the end of the prospectus, on page 108, where the floor price
    was defined as - "$2 per share".
    Foster's says the $2 issue was due to a reward/risk equation.
    But we wonder where's the risk in floating a well-established and
    profitable pubs and pokies operation in Australia?
    The eventual rush for the shares was proof.
    The truly worrying thing is that Foster's must have known that,
    with favoured instos loaded to the gills with cheap shares at $2, its
    30,000 shareholders were doomed after happily lining up to pay $2.40.
    The price had to go down.

    *****

    While we're flogging a dead horse, the Macquarie Dictionary (not
    related to Macquarie Bank, the ALH underwriter) says a glossary is "a
    list of technical, dialectical and difficult terms in a subject or field,
    or in a particular text, with definitions".
    This means "$2 a share" is not a definition.
    ` "Floor price", the dictionary says, is "the price at which goods
    are bought, as of wool at an auction, electrical equipment in a showroom
    etc, without allowing for additional costs as for transport, installation
    etc".
    Ah, the 40c and 50c was for transport, installation etc.

    *****

    At least Foster's shareholders have received first-hand
    experience why MACQUARIE BANK (MBL) is called the millionaire factory.
    The bank yesterday exceeded expectations with a 32 per cent jump
    in first half net profit to $242 million.
    EPS rose from 91.3c to 116.2c.
    The shares, up 85c on Wednesday, rose 55c more to $35.35
    yesterday.
    And how's this for a positive outlook.
    CEO Allan Moss said domestic market conditions were
    "exceptionally favourable" and international "favourable".
    "We are also experiencing markedly improved investor confidence,
    improving corporate confidence and continuing good credit quality," he
    said.
    "In the current year we expect to continue to benefit from these
    positive conditions and anticipate the second half will be significantly
    up on the prior corresponding period, but, as usual, below the first half
    due to the timing of performance fees.
    "Over the medium term we expect to benefit from growth
    initiatives across our businesses and we expect international growth to
    continue," Mr Moss said.
    He must have thought he was going a bit over the top at this
    point because he then cooled things down with this ... "However, we will
    continue to be influenced by market conditions and therefore caution
    should be exercised in extrapolating from the current year."
    ENDS
    !END
 
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