AIR - Air NZ.

[James108]

@PT sure is an interesting model, so the only thing propping up the value is the dividend? Like buying a property that doesn't increase in value but is fully leased, generating a modest (albeit desirable) yield with no capital growth despite underlying deterioration in earnings. Notwithstanding the incalculable cyclical gyrations in the share price, which clearly have little correlation to fundamental value, that will invariably screw any analysts FA model.

What else would give you (the shareholder value)? The only things that give a company value to a shareholder is

a) the dividend
and
b) the ability to pay future dividends

The reason growth is desirable is because in the future greater dividends will be received. It looks like PT has used a cyclical average cash flow after 2020 increasing at a modest rate of growth.

Cyclical variations in share price have nothing to do with the value of the company and therefore will not "screw up" FA models and will provide an opportunity to sell when SP exceeds value or buy when SP is less than value.

[Baa_Baa]

@James good points, except a lot of shareholders look for capital growth as well. Arguably most (but not all) do.

To buy a share that fluctuates +/- 30% or more in capital value for the reward of a dividend seems isolated to just a few around here, though they argue a good rationale for their decisions as well.

It seems the FA inclined are generally not willing to do what you suggest to buy/sell the over/under SP performance in value. I accept that some are so loaded that buying or selling a whole holding is cumbersome and expensive, which is a problem I can only wish for some day.

So far on here we've had a no FA's who have foreseen the current share price decline, let alone predicted the current SP, yet many still hold and hope, though two TA's who have generously shared with us, have picked the share price as of Friday within a few cents, and might be bang on next week.

FA seems to mean bugger all when it comes to wildly fluctuating share prices. Though it doesn't work for those who have and can justify a focus on capital management.

[James108]

@James good points, except a lot of shareholders look for capital growth as well. Arguably most (but not all) do.

This is an important distinction. As as I discussed earlier the only way a company can have value to a shareholder is by returning cash to the shareholder over its life (discounted appropriately). When the share price exceeds the expected discounted dividend flow (i.e. the value) it is probably a good time to realise a capital gain. As you can see investors also like to make capital gains.

I agree that no analysis is very useful when predicting short term share price movements as evidenced by the chart you posted with a lot of lines drawn on it a few pages ago. However short term shareprice movements certainly give the agile investor opportunity to profit.

[Hectorplains]

This is an important distinction. As as I discussed earlier the only way a company can have value to a shareholder is by returning cash to the shareholder over its life (discounted appropriately). When the share price exceeds the expected discounted dividend flow (i.e. the value) it is probably a good time to realise a capital gain. As you can see investors also like to make capital gains.

I agree that no analysis is very useful when predicting short term share price movements as evidenced by the chart you posted with a lot of lines drawn on it a few pages ago. However short term shareprice movements certainly give the agile investor opportunity to profit.

This is looking like deja vu. The hard ramping of a stock by a few, based mostly on dividend levels, even in the face of falling share price and ever more difficult trading conditions for the stock. Only for the main player to much later admit they'd bailed out - apparently long ago - from said share. Check PGW thread.

[James108]

You have completely misinterpreted my post.

I have not made any analysis of AIR and I do not think I have the skills or knowledge to put a value on AIR, therefore I do not have a holding in AIR. Generally I try and be the smartest guy in an empty room and avoid any company in the NZX10. However any share that has 25% drop in SP over such a short time is interesting.

From what I have seen PT has made a decent attempt to value the company, based on his analysis AIR may be trading at a small discount to value.

Also I agree with you, the ramping on here is pretty ridiculous.

[Snow Leopard]

@PT sure is an interesting model, so the only thing propping up the value is the dividend? Like buying a property that doesn't increase in value but is fully leased, generating a modest (albeit desirable) yield with no capital growth despite underlying deterioration in earnings. Notwithstanding the incalculable cyclical gyrations in the share price, which clearly have little correlation to fundamental value, that will invariably screw any analysts FA model.

@James good points, except a lot of shareholders look for capital growth as well. Arguably most (but not all) do.

To buy a share that fluctuates +/- 30% or more in capital value for the reward of a dividend seems isolated to just a few around here, though they argue a good rationale for their decisions as well.

It seems the FA inclined are generally not willing to do what you suggest to buy/sell the over/under SP performance in value. I accept that some are so loaded that buying or selling a whole holding is cumbersome and expensive, which is a problem I can only wish for some day.

So far on here we've had a no FA's who have foreseen the current share price decline, let alone predicted the current SP, yet many still hold and hope, though two TA's who have generously shared with us, have picked the share price as of Friday within a few cents, and might be bang on next week.

FA seems to mean bugger all when it comes to wildly fluctuating share prices. Though it doesn't work for those who have and can justify a focus on capital management.

Firstly the sarcastically amusing bit:

Typical TA attitude basically caused by the fact that they are rather upset that despite spending all day pouring over data, turning charts sideways, searching for hidden tea-cup patterns and drawing lines all over their multi-thousand dollar computer screens they have for the umpteenth time just had to buy back at a much higher price something they got whip-sawed out of a few days ago and they not be able to admit that what is really really annoying them is that their neighbour bought the same damn stock years ago, as never ever sold any, and not only spends his days walking the beach with his family and dog whilst they plan where they are going to go on holiday with all the dividends they get but also the b*****d has just replaced his three year old Porsche for a new one.

Secondly a serious bit:

I am sure that there are a large number of people who genuinely will buy AIR because the current price appears to provide a good discount to fair value and be perfect happy to then completely ignore the price going up and down and just take the dividends. They may well sell if the fundamentals of the company change or if they need/want some cash and AIR strikes them as the most overvalued item in the basket at that time.

But fascinatingly enough buying and holding a diverse portfolio is a usually as valid and successful investment strategy as any other over time, and fits some people like a glove.

Thirdly another serious bit:

Despite it being a $2.90 value on special at $2.26 I will not buy it. Not only is the share price all over the place (in a way that neither fundamental or technical analysis predict) but fundamentals & fundamental valuations can and do change drastically, on a too frequent basis and too often to the down size.
Add in that I do not see this as a long term growth stock.
That does not suit this investor.

Best Wishes
Paper Tiger

[Snow Leopard]

This is looking like deja vu. The hard ramping of a stock by a few, based mostly on dividend levels, even in the face of falling share price and ever more difficult trading conditions for the stock. Only for the main player to much later admit they'd bailed out - apparently long ago - from said share. Check PGW thread.

We were having such a nice discussion...

Grrrhhh & Best Wishes
Paper Tiger

[Beagle]

It doesn't really matter what valuation methodology one uses its extremely hard to predict the future other than death, taxes, the sun coming up tomorrow morning and the fact that some people will always be argumentative...the rest is almost pure conjecture and speculation. The company itself cannot give guidance beyond FY17 so estimates out past that date are at very best an educated guess and often a lot worse.

I am happy to stick with the professionals consensus valuation from here which I feel is very conservative at $2.82. That said its interesting to note that despite QAN growing at a slower pace than AIR and presently earning at ostensibly the same rate their consensus valuation is presently $4.49. Speculation on what is a sustainable EDITDA margin beyond the current analysts projection horizon is almost a meaningless exercise as nobody can reliably predict the operating environment in FY19 let alone FY20 or beyond. That said I remain of the view that the effects of the GFC in terms of its impact on margins and demand since 2007 will not last forever despite the present flow on effect of very low worldwide economic growth and I remain of the view that with an average fleet age of only 6.2 years projected by the company in FY19, AIR are extremely well positioned to compete and the resulting efficiencies from such a modern fleet auger well for margins going forward from there.

AIR's response to the recent e.mail I sent through and possible subsequent follow up with the NZX and FMA is what I am presently focusing my attention on. I feel it is far more productive and useful to other shareholders that I expend my energy on that than trade blows with those making personal attacks on here.

[OldGuy]

I wouldn't let the haters bother you, Roger.

I, for one, highly value your posts.

[Beagle]

I wouldn't let the haters bother you, Roger.

I, for one, highly value your posts.

Thanks mate, I believe Taylor Swift says it well, wonder which airline she flies when downunder ? https://www.youtube.com/watch?v=nfWlot6h_JM

Had an interesting chat with the owner of one of the leading boat manufacturing companies based in Napier while at the boat show on Friday. Got onto the topic of how Jetstar has been performing with it flights too and from Napier. Completely unacceptable reliability (and punctuality when they do fly) was the gist of his comments.