Feltex IPO opens well below issue price

[biker]

Another sucessful IPO. -As long as you didn't buy any.:(:(:(

[willy_wonker]

Told you guys is a DOG.

What was the issue price?

[Nimble]

Issue price: NZ$1.70 per Share
Currently $1.64, -6, -3.5%

[Gryffyn]

Isn't there a divvy coming almost straight away?

[Lawso]

If FTX, with its substance and solid history, can't IPO successfully, what hope for the novice start-ups. In today's climate the Stag is an Endangered (if not Extinct) Species, IMO

[Gryffyn]

Good! It means stags will have to buy on the general market and hopefully chase a variety of shares.

[Nimble]

First dividend due in October for the second half of the June 2004 financial year.

[OldRider]

The stags are still there I suspect, but maybe found better pickings, for myself I haven't applied for an NZ IPO for some time, to me the prices mostly appear too steep.

Compare to ASX SPP's, I have bought four of these this year,HDR,CSL,AUO,ENV, maximum $A5000 per offer, always a known coy with a trading history, usually at a discount,and today everyone in the money. CSL is the best - up close to 40% in just a few months.

I have an Australian aquaintance who has developed a system for picking companies who might raise money this way,he then buys a minimum parcel of shares in a lot of these companies and waits, he is showing rather good returns.

Unless something changes I can't see any reason alter my policy, it's working better for me
than NZ IPO's presently.

[skinny]

Oldrider, congrats on you success with the OZ IPOs !

It illustrates what looks like an interesting contrast between the NZ v. OZ IPO market [}:)]

Do you have any idea why in Oz the IPOs seem to have been better for the investor? E.g. because the Oz investing public isn't as gullible and issues prices are more realistic, or because the regulatory environment is more protective of shareholder's interest, or just plain good luck....

[mikescott]

How this be true when Oz IPOs they be listing badly too? Like be Just Group, Pacific Brands, Ziniflex, The Reject Shop, AHL be examples? I thinking some peoples they need to be more caring of truth when be talking.

[OldRider]

SKINNY: Not IPO's, SPP's, ASX IPO's don't seem to be much better. On the ASX, companies are permitted to make an SPP to existing shareholders,usually several levels,probably $S1000 - $A2000 - $A5000 , no rights attached and equally to all shareholders, but maximum of $A5000.Mostly they are discounted to the current shareprice,but are attractive because they are from a company one already owns and probably understands,with a shareprice already set by the market. They mostly seem to be well supported by investors with scaling back sometimes for those that apply for the full $5000.

ENV for example,which I have mentioned on the forum before,without attention,has made an offer regularly each year at $1-00, whilst share price was round $1-07,and has reached over $1-10 during the year, this year already the shareprice is back to this level after an initial dip.

With a dividend return of close to 10%,most of which is a capital return from the stapled loan, making an investment of $1000, then taking up the SPP for $5000,gives an after tax return of $900 to $1000, not bad for a utility, and probably as predictable as anything can get.

Other companies are not so regular,but after watching and monitoring for a while you can find the pattern.

Certainly my friend who outlined the practice to me does well. Holding a small amount of many companies can be a nuisance,but he finds it maneagable,and profitble. OMP is another that has been the same,though not so recently.

I can spend more on these SPP's than the available new cash I have each year for investment,though can always sell down headshares if I wish.Why apply for IPO's?

[foodee]

Old Rider - well done on your very effective strategy. Have used similar SPP like FUN (good gain) and others. More recently have missed out on a couple because of very tight time line. If you have encountered these situations I would be keen to hear how you deal with them.

TIA and a good weekend to all

cheers

[Lawso]

Yes, OldRider. I took part in the very successful Nufarm SPP in February. After completing a A$40m institutional placement to help pay for an acquisition, NUF offered each existing shareholder up to $5000 worth of new shares at A$5.20, a healthy discount to the then market price. NUF aimed to raise $10m through this SPP but everyone, incl. yours truly, leapt in, so they extended the total take to $18m, but still scaled us back by about 18%.

NUF currently A595 :)

This method is far preferable to what happens too often here (e.g. KIP), where they make a generous placement with selected instos only leaving the rest of us worse off.

On the FTX float, which is disappointing but perhaps not surprising, I'm not too unhappy, having paid 161.5c for the shares in exchange for bonds. What puzzles me is: Who are these people selling 5 million shares yesterday at well below the issue price? Not all ex-bondholders surely. [?]

In answer to an earlier query, letter received today from chairman says a div of approx 6cps will be paid in October.

[belgarion]

Given:

a) the tenuous state of the NZ and Oz housing markets,
b) the fact that many were saying 1.70 was overvalued,
c) only 20% was floated leaving 'control' where it currently is

... I can only ask ... Why! ...

[whatsup]

Lawso, when a issue is "underwriten" the underwriter places all shares NOT taken up by PUNTERS into a entity and once the trading starts (like yesterday for Feltex) the underwriter then sells those shares in the entity into the market -even at a slight loss as they have a agreement back with the vendor to the mitigate any loss.Thats why that on float days and shortly after there is BIG volumn which tapers off very quickly once those shares are sold/cleared out.

[Lawso]

Many thanks for that, whatsup. Live & learn. So I guess the interesting thing will be to see how the price holds up once the underwritten shares are out of the reckoning.

With the issue price fixed at the bottom of the range, that should mean a gross div yield for FY'05 of 9.6%, which must be attractive to many punters.

[Lawso]

quote:
quote from Belgarion
only 20% was floated leaving 'control' where it currently is

How do you work that out, Belg?

IPO fact sheet stated the following:

Total shares on issue upon completion of the offer: 145.6m - 149.4m
Made up of -
113.5m being sold by the vendor as part of the offer
6.47m being sold by the vendor outside of the offer
Up to 29.4m new shares being issued by Feltex
By my reckoning that adds up to a max 149.4m = the total number on issue.

So where do you get your 20%?

[winner69]

Maybe Belg was only thinking the 29.4m new shares to get his 20%

[winner69]

See Hunter Hall took 9% - good aussie 'value' investor

[winner69]

quote:Originally posted by Lawso

On the FTX float, which is disappointing but perhaps not surprising, I'm not too unhappy, having paid 161.5c for the shares in exchange for bonds. What puzzles me is: Who are these people selling 5 million shares yesterday at well below the issue price? Not all ex-bondholders surely. [?]



i sale of close on 4 ml shares at 160

Wjatsup - how many did the underwriter have to take?

[OldRider]

FOODEE: I have always had sufficient time,from memory the last OMP issue was very tight on timing, but the company made a special time extension for NZ,even so I was in without this.

Usually I am aware of an upcoming issue from general news or ASX notices, I have an Australian cheque account to collect ASX dividends etc,so don't have to go to bank,and have decided what I will do before documentation arrives, so I look at it immediately and post with cheque on same day. So far have always beaten closing time without a problem.

Perhaps more of a problem if not resident in NZ or Aust, or in country town.

[whatsup]

Lawso yes agree thats why if one is really patient one can pick up shares after listing at a higher yield than is offered through the listing (IPO) on Feltex I think that there is further down side yet maybe .10-.15 before reality kicks in which will make the yield even more attractive.

Whatsup if you are really patient you will probally save 50 cents on FTX.

[skinny]

Oldrider, thanks for another very informative post !
Unfortunately I am not in the position where I can keep track of lots of small Oz holdings being on the other side of the world and all but will certainly keep it in mind for the future.

Cheers

[Lawso]

Signs of life in FTX today. Price held steady for a few days at 164 and today it's up 1c on sales of 97k so far. Nothing to get too excited about, but I figure the overhang from the IPO has been cleared away and smaller investors are starting to see value in FTX at this level. We know what cynical old Enigma thinks. How about others?

[willy_wonker]

Willy is not buying FTX.

Prefer polished remu floors.

[Nimble]

Lawso this may support your theory however the share still does not interest me.
The struggle to sell the Feltex float was illustrated by Macquarie Equities' dumping nearly four million shares at 10 cents each below the issue price of $1.70 on the day of listing. The sharebroking firm, a member of the float syndicate, seemed to have misjudged by taking on a bigger allocation of shares than it could sell to its clients.

[mikescott]

Great opportunity to buy in cheaper missed by many ...:D:D:D:D:D:D

So much for being different to fund managers - most posters here are worst than them! [^][^][^][^]

[biker]

quote:Originally posted by minder


Great opportunity to buy in cheaper missed by many ...:D:D:D:D:D:D

So much for being different to fund managers - most posters here are worst than them! [^][^][^][^]


Thank you for that insight oh great one. However not buying at its lowest of 1.63 would hardly be a great opportunity lost I would have thought with a shareprice now of 1.75 and still only 5 cents above issue price.

[Futurz]

quote:Originally posted by biker


quote:Originally posted by minder


Great opportunity to buy in cheaper missed by many ...:D:D:D:D:D:D

So much for being different to fund managers - most posters here are worst than them! [^][^][^][^]


Thank you for that insight oh great one. However not buying at its lowest of 1.63 would hardly be a great opportunity lost I would have thought with a shareprice now of 1.75 and still only 5 cents above issue price.


I would have thought most people would have been happy buying these at 163 now that there trading 175. 7.4% gain in 2 months is pretty good in my books ;)

[Lawso]

I'm not one to gloat :) but . . .
Since minder has revived this topic, bear with me while I boast about my experience with FTX. In April '03 I bought $10k worth of their 10.25% bonds. Up to the time of listing, I'd received $1886 in interest incl an $800 gross payment for early redemption. Then the bonds were swopped for 6192 shares, issued to former bondholders at $161.5 each.
Now with today's price of 175 I figure that from my $10k investment 15 months ago I'm showing a gain (actual + paper) of $2723, or 27.23%.
Win some, lose some ;)

[mikescott]

Well done, Lawso. ;)

Biker - refer threads : Feltex - Ramp & Feltex - Ramp #2. Can't say that the opportunity to buy at $1.63 etc wasn't highlighted for everybody's benefit.

Like I wrote, many posters on this site behave exactly ilke the fund managers they despise so much. No - they are worse because they blindly follow the short-term sentiment on the market.[xx(]

Check out the threads on Pumpkin Patch and CanWest too - plenty many who wrote about prevailing market sentiment rather than what the stocks are about.:D:D:D