Always interesting to look back on past posts (this one from May).....even if only to remind oneself that AIR is only good for trading .......seeing dividend stripping is a bit dodgyQuote:
Why $3 will never be a sustainable price for AIR
Insight 1: The top 10 or so shareholders are the ones who influence medium to long term price movements. Traders create the short term noise - the day to day ups and downs.
Insight 2: In the NBR article somebody posted last week it mentioned one analyst who pointed out that airlines are a volatile industry where share price appreciation was relatively rare - and suggesting you couldn't begrudge anybody (including management) selling out when the price appears to be at a cyclical high. Those that do so have an appreciation of how cyclical stocks (esp airlines) behave
Insight 3: While walking around Lake Hayes the other day had a chat with a retired fund manager. He made the point that when the government sold a lot at $1.65 the price was probably a bit on the light side but not by much. He went on to say that Air NZ future strategy and plans were well known at that time and these were implicitly priced in to the $1.65 they got. All thats changed since is cheaper fuel which has lead to more competition but net net positive for Air NZ, but not a long term positive meaning that about $1.80 to $2.00 is about the 'right price' today.
He knew of some funds/instos who bought at the $1.65 and have cashed in at the high recent prices. His sage advice was 'winner, airline stocks can be very rewarding but only buy at the bottom of the inevitable cycle and never never buy near the top' (short term trading doesn't count)
So 1 and 2 and 3 together says that AIr NZ share price is heading down to a cyclical low over the next year or so but short term 'traders' will create some dips and spikes upward (we may even see $3 again). It does seem that airline stocks are a different beast than other stocks and medium to long term the price is driven by the sentiment of the larger shareholders (government excluded)
I only been interested in airline stocks recently after ignoring them for decades. I now see why not a good long term investment .....but heck you can have fun doing short term trading (unless caught out holding the day the plane crashes)77