ValueLine: Transpacific
Transpacific has a near monopoly – usually a recipe for strong profits – yet its returns are on the nose. Roger Montgomery says TPI is one monopoly business that investors would do well to steer clear of. Read Roger’s article at www.eurekareport.com.au.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Richie
:
Hi Roger, I see you have PRY as an A2 business, a substantial improvement from where it was rated last. I wish to know why has the rating improved when it is essentially the same “poor quality” business it has been in the past (and a share price that keeps on falling!)
Roger Montgomery
:
Hi Richie,
Firstly the scores change reflects a probability of what I call a liquidity event – anything from a capital raising to a debt default and liquidation. Secondly, the falling share price is not relevant in the determination. Have a read of Part 1 of my book again.
peter
:
Hello Roger,and thanks for providing us thru Fox Business,some very valuable thoughts and information.I would like some clarification if you had a moment.You mentioned last night a recent float to the name of”” macca ,or MAKA and at the end you said that you thought the code was MDL.In trying to find out ,MDL stands for Mineral deposits.And this does not seem to be a recent float.Its a very old company with price flactuations as low as 23cents.Am I missing something here??
Best Wishes
Peter
Roger Montgomery
:
Hi Peter,
It must have been my nerves on TV! MLD is the code for MCA not MDL. Apologies.
fred
:
HI roger,
MDL are you sure of that code or is it MDL
sorry about repeating a question
Roger Montgomery
:
Hi Fred,
MLD
Greg Mc
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G’day Roger,
I see that CLO quietly filed an announcement after 7pm last night that they had crept up another 3% on FGE, after exercising 3 million options at 35c (thanks very much). I always wonder about late filings. Why wait until everyone has gone home to announce that you’ve increased your stake? Why could you not release it the next morning – I think that would still be in the specified timeframe for disclosure. Are the CLO office staff so busy that they knock off after dark? Do they not know that the little newspaper icon (on comsec and likely others too) comes up anyway the next day with any announcement made after market close the previous day – do they really think they are going to fool anyone?
If something is going on, I hope the board don’t give away the rest of the company like they did the first chunk.
Roger Montgomery
:
Hi Greg,
Forge is cheap and an absurdly so at 35 cents (part of the original deal). I say again that the deal reflects the fact that the FGE board may know how to run a business but they appear to know less about allocating capital and business valuation.
Lloyd Taylor
:
Greg,
I wouldn’t read too much into it.
These were amongst the 50% of unlisted options originally issued to staff and purchased at $1.75/option by CLO at the time of the original deal in which CLO offered to purchase 50% of the existing shares of each shareholder in FGE.
As such they cost CLO a total of $2.10 (the same as the shares) and I suspect (but have not checked) that the timing of the exercise is determined by the pending expiry of the options.
As a result of the deal, CLO have a foot on the throat of FGE and no need to takeover the business in any haste, if at all.
Regards
Lloyd
Roger Montgomery
:
Thanks Lloyd,
Just watch James and Lachlan at ten with much less than a takeover.
fred
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Hi Roger,
Good show on Switzer, MDL has put a spanner in the works for me. Thanks a lot.
See ya & thank’s for all you help always.
Roger Montgomery
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Pleasure Fred.