Are Forsyth Barr crooks ?

[Cooper]

quote:Originally posted by rocking
It is not about “total accuracy”. It’s about reasonable, honest, and prudent advice. The odd mistake is inevitable. But the scope for oddity should be circumscribed by penalties.

Actually I very much agree with your point here. But having, say, the NZX issue penalties for inaccurate coverage would be a factor which would negatively influence the quality of research we get. I can only see such penalties happening within the brokerage firm itself (the gentleman who researched FTX has his name at the bottom of each research sheet, and I wonder what kind of penalty he will get). But FB had all of the information that was available to the rest of the market and they could argue that the fault lay with FTX's own announcements. So Forbarr could argue that the cost, which was a result of FTX's poor guidance, was incurred by both Forbarr and FTX holders.

[Cooper]

quote:Originally posted by rocking

quote:So, from where I sit we have identified three retail markets...

If there is a god, please save us from students. They get far too much fun out of analysing old age pensioners to death.

That may suit government fiscal policies, but it doesn't suit old age pensioners.

Cooper has convinced me there is an afterlife.

I SHALL HAUNT HIM.

As a yoof I take being serious very seriously. It's only later in life that I'll realise that being earnest is an invitation for a punch in the mouth, and then I'll stop.

[Cooper]

quote:Originally posted by rocking

quote:There is no-one who would be willing to provide the service because it would not be a feasible service to provide.

And, who does that suit?

I would imagine the brokers are actually servicing both customer group two and customer group three. So they are therefore servicing customers for which they incur different costs, for the same price (ignoring such things as private portfolio management). Because the group two is demanding less of a service than group three, but paying for part of group three's extra service, they are over-paying. Group three is demanding extra service, but not paying for it's full value as the costs are standardised over group two and three. Therefore group two is paying too much, group three is not paying the full cost of the services they demand and the brokerage firm is missing the possible extra revenue of tiered pricing whilst also pushing group two clients towards group one services because the prices for group two customers are inflated.

So it suits group one service providers, and group three service demanders.

[Cooper]

quote:Originally posted by rocking

quote:It's only later in life that I'll realise that being earnest is an invitation for a punch in the mouth, and then I'll stop.

Bad call. You'll have got it wrong.

That realisation comes later though... I don't want to get too far ahead of myself.

[Cooper]

A virtue Montgomery had as well, according to Patton... except for that whole Arnhem rigmarole of course.
Perhaps FTX could learn from them... "A cautious approach over an optimistic one means that dissappointments are, if not planned for, at least lessened" (Cooper, 2005). Forbarr could also learn... "Check your intelligence, in fact make sure it is just that and not a contradiction of the word" (Cooper, 2005).

All rights reserved.

Edit: Apologies to anyone who has actually said that before. You probably forgot to reserve all of your rights.

[Bling_Bling]

quote:Originally posted by rocking

quote:Originally posted by Bling_Bling

If these advisors are as good as they say, they will be like some of us on ST, retired with enough cash to play the market and not need to work. Think about it. Anyway, nothing is 100%. Stop moaning. This place is worst then Coronation St.

Confused b*tching. The most profitable kind.

BTW, I just read Coro St is the thinking person's soup.

But my eyesight's not as good as it was.

If I wanted *****ing, I would email my wife and not visit ST.

If all full service brokerage firms are correct in their analysis, then all, if not most investors would be winners and there wont be losers.

[Halebop]

Personally my agrument about full service firms was not that they should always be right in the recommendations. Obviously this can't be achieved. However, when a broker accepts an underwriting arrangement how often does their research subsequently support the valuation with a strong "BUY" recommendation? And yet we know from research that floats in general underperform the market in general.

So is broker research worse than average? I'd be surprised if this was the case - these researchers have a full time job at it. They might definately be average but surely they can't be consistently worse than average?

So if broker research is not worse than average but float performance is then what is going wrong? The logical excercise is to follow the money and this leads us to the fees on underwriting floats. If someone is willing or culpible of matching their glowing numbers & accolades via flawed research to meet their underwriting commitments they should not be entitled to clip my or your money in the process.

Buffett eshews floats for a number of reasons revolving around valuation and history but I would add "Moral Risk" to the mix too.

[Placebo]

I remember having a chat with a Forbarr advisor when I was first looking at investing in the market. He listened to what I had in mind and then talked about a couple of companies I hadn't even considered, Hellaby Holdings (which I had never heard of) and Tranz Rail. At the time TRH had a very murky future, it had announced its intention to focus on freight but Toll were a long way over the horizon. It had terrible PR issues and was being badly run down.

I regret not taking either piece of advice. TRH ended up being one of the best buys of that year (I think 2003); and Hellaby has just gone up and up. I left the meeting thinking the guy was an idiot -- but now regret not taking the advice. So they aren't all bad.

Re comments about changing recommendations (and I'd echo the comment about them being JUST recommendations), I think brokers are no different to normal people (in fact, I suspect some of them might even be normal ). The Forbarr analysts put their names to research papers, so we know who they are, in effect they stake their reputation on what they write. It's hard to admit you are wrong -- that's only human nature -- so I don't expect brokers/analysts to radically alter their thinking on particular companies, even when the writing is well and truly on the wall. Forbarr was particularly slow to change its mind over WHS, this wasn't a good look for them but as they had put so much energy into expressing confidence in it I do understand how they can be slow to turn around.

One other comment. In any IPO (or indeed in any analysis) it's likely the analysts will have access to a lot of information that isn't in the public domain. How they choose to use it (and this includes looking at risks to themselves of the way they use it) ultimately impacts on the investing public's confidence in them. After all, these companies have a reputation to make and protect too. It would be incredibly short-sighted to look to make a few extra dollars on a float at the risk to its long-term business.

Disc: Forsooth Bore is my current brokerage.

[James K]

A lot of people seem to be trotting out the "brokers just give advice" line. If they pretend to be experts, their advice should be subject to quality assessment like that of other experts (like doctors, etc, despite the flaws in the review process). If their advice leads to harm, they should be held to account if their actions were improper, ill-considered etc. Huge legal claims in the UK of financial advisor "mis-selling".

But brokers don't always just "give advice". In some cases, they manage portfolios on behalf of others. They make the buy sell/hold decisions, when what and how. They earn both a management fee and the buy/sell broker commissions.

ForBarr "managed" a sizeable portfolio for a relative of mine. It was a disgrace. I am loathe to call them crooks, but some armed robberies net less, and cause less financial harm, than ForBarr did.

I advised my relative to invest without ForBarr - transfer all the shares to a personal name and sit tight. The results have been massively better, costs were obliterated, and ForBarr presumably went looking for another victim.

Disc. Not a broker, nor am I associated with any broker.

[Cooper]

My sympathies go out to your relative, James K... I'm assuming they went for the "private portfolio management service" which Forbarr offer, which would subsequently mean that they had a fair bit of money involved. I would hesitate to make a judgement based on the info you've passed on but I hope your relative was vocal in their criticism to Forbarr. They need to be accountable when the service offered doesn't match the service delivered.

Rocking: Have only been investing for three years but I guess I was lucky enough to have fiscally ultra-conservative parents who drummed the negatives of sharemarket investment into me. Therefore the basis for my decisions are critical to begin with. I know not to take anything at face value, but apart from that I still make some amazingly stupid mistakes (sometimes despite knowing better) so I would not want to convey the idea of myself being a market savvy investor. I know enough to know that I, or even experts, don't know it all (to modify the point Socrates made). I've also learnt (as Placebo has said) that when Forbarr claim a company is a "buy" it's worth taking a hard look. My broker has also put me onto some gems, as I've mentioned earlier.

Halebop: point taken and well made... there's an obvious conflict of interest and as far as I know Forbarr (or any brokerage) do not either hold back from making recommendations or admit to underwriting the company's IPO in their research or recommendations. Obviously they have an interest in ensuring the stock is taken up. There might also be a bit of moral hazard involved in that they can submit overly optimistic coverage to the market, and then throw their hands up and avoid responsibility for the coverage when it subsequently proves wrong... they can dodge responsibility BECAUSE of their ability to point to the vagaries of the market as a way of deflecting criticism of their coverage. As Placebo says, the analyst is staking the reputation of themselves and the company on the line though. Whether that is enough to dissuade the broker, I really don't know. I would hope that the triple restraints of morality, a desire to maintain the customer base that they rely on for both their brokerage fees and ultimately their underwriting fees, and the possibility of legal trouble would be enough.

Someone from Forbarr might like to step up now and comment on the whole affair, if they are indeed able to make comments on this site.