IFT - Infratil

[Footsie]

Again i believe the buyer is fisher...... i note its just been added to their list of stocks they hold......

give these guys another 10 years and they will control all the growth stocks in NZ !!!

[CJ]

quote:Originally posted by Footsie

Again i believe the buyer is fisher...... i note its just been added to their list of stocks they hold......

An investment company holding and investment company? mmm

The purchase of the new energy company looks like a good move.

[Rif-Raf]

Energy assets are doing extremely well, TPW now over $8 - pretty tidy gain for IFT in only 6 months.

However their airport investments which have underperformed a bit in recent times are set for a good run with the falls in oil. Purchase of Kent set to be a stellar long term investment.

In short all current investments looking good with no duds

[Toddy]

The technical boys out there will be keeping a close eye on the IFT SP today. Will the current buyers be prepared to test the $6 mark.

[Caesius]

Wow, the buyers have really cleared out on the warrants, the highest bidder is at 2.36 with a market price of 2.65.

[COLIN]

quote:Originally posted by Caesius

Wow, the buyers have really cleared out on the warrants, the highest bidder is at 2.36 with a market price of 2.65.

Their closing price of 2.50 means a premium of only 20c above the heads, which means the market is saying that IFT share price will increase by only 3.4% over the next two and a half years! That rate of growth would be well out of line with the progress of IFT over the years. Either the share price is too high or the warrant price is too low.
Maybe the market has become unsettled about the Stagecoach investment, after IFT's recently expressed concerns about the Government's attitude to public passenger transport policy?

[Rif-Raf]

quote:Originally posted by COLIN

quote:Originally posted by Caesius

Wow, the buyers have really cleared out on the warrants, the highest bidder is at 2.36 with a market price of 2.65.

Their closing price of 2.50 means a premium of only 20c above the heads, which means the market is saying that IFT share price will increase by only 3.4% over the next two and a half years! That rate of growth would be well out of line with the progress of IFT over the years. Either the share price is too high or the warrant price is too low.
Maybe the market has become unsettled about the Stagecoach investment, after IFT's recently expressed concerns about the Government's attitude to public passenger transport policy?

The warrants often move in the opposite direction of the heads and the variance jumps around.

I wouldn't read too much into the stagecoach talk, IFT are outstanding at lobbying government

[gisborne_gold]

quote:Originally posted by COLIN
Interesting, GG. I am not really au fait with the way the Black-Scholes methodology works but I am a little surprised that it doesn't place the value of the warrants at a greater margin above the heads, given (a) that the warrants have two and a half years to run, (b) the rate of increase in the market price of the heads, and (c) the fact that the dilutionary effect of the warrants should already be built into the market price of the heads. (Even allowing for the divs on the heads).

Colin you make a good point regarding whether or not the price of the head shares takes into account the dilutionary effect of the outstanding warrants.

I've re-run my Black-Scholes calculations with yesterday's closing prices (IFT $5.80 IFTWB $2.50).

Adjusting for dilution I calculate a warrant value of $2.19.
Not adjusting for dilution I calculate a warrant value of $2.56.

I see several possible conclusions.
1. The prices for IFT and IFTWB are in balance, more or less, and the head share price already incorporates a discount for the warrants' dilutionary effect already.
2. The warrants are overpriced because buyers have forgotten to allow for the dilutionary effect.
3. Black-Scholes isn't a very useful valuation method.

We can't use Infratil's balance sheet to confirm (1) because the shares are trading at well above the $3.22 NTA per share. But it would be nice to think that the market is working and that my earlier IFTWB valuation was incorrect because I needn't have discounted for the dilutionary effect.

[Caesius]

What does anyone make of the latest email update?

[Caesius]

Never mind the update, we're now looking at this: Infratil profits up nearly 4x, meets council about bus problems.

http://www.sharechat.co.nz/news/scne...e.php/c68f0e66