RBD - Restaurant Brands

[Snoopy]

quote:Originally posted by Phaedrus

The aim is to share ideas and try to learn something from other peoples successes and failures.

For example, here are some of one poster's comments - from these you could learn :-

(1) Not to average down.
(2) Not to buy downtrending stocks.
(3) Not to add to losing positions.
(4) Patience is not always a virtue.

Or, alternatively, you could learn nothing at all!

'Bought more today', 'I added to my holding today', 'Added to my stake today', 'Couldn't resist adding a few more', 'I have the patience to simply wait while collecting my well above term deposit rate in the meantime', 'Buying more today'.

Wow! You have to admire that guy's detail of disclosure and tenacity. It is nice to know I have a kindrid spirit out there. In a parallel universe these are the sort of utterances, I could have even made myself! So time to support this 'anonymous guy' with some counterfoil comments.

(1) Not to average down.

Being a foundation shareholder, I first bought into RBD at an equivalent price of $2. So if I hadn't averaged across...

(I don't agree with the term 'averaging down' because if you are doing that you have already lost money. You can only buy more shares at 'present day price'. All shares that you have bought in the past are also only readily tradeable at 'present day price'. There is no choice. So investments can only be judged on whether that share is worth investing in 'today' at present day prices. Thus it is only *ever* possible to 'average across' by buying at present day prices.)

....then I would still have an average entry price of $2, not $1.30! Clearly I would be worse off if I hadn't 'averaged across'.

(2) Not to buy downtrending stocks.

If you ignore the first purchase made during a takeover offer, where generally different buy/sell strategies apply, all the other purchases were actually made at established support levels of $1.25 and $1.30. Certainly not in a medium term downtrend! Furthermore subsequent to these purchases, the share price held at these levels for around nine months. Thus you can hardly describe these purchases as being 'made in a downtrend'. Finally the very last purchase shown, at 96c, is below closing market value, despite the share price fall today. Thus you can hardly say that was a bad decision!

(3) Not to add to losing positions.
(4) Patience is not always a virtue.

I didn't hear the final whistle blow! No doubt RBD is going through a difficult period. Let's wait until 'full time' before we judge the final result shall we :-). It is still 'game on' as far as I am concerned.

SNOOPY

discl: hold RBD

[ratkin]

I didn't hear the final whistle blow! No doubt RBD is going through a difficult period. Let's wait until 'full time' before we judge the final result shall we :-). It is still 'game on' as far as I am concerned.

SNOOPY

I agree with this bit. Cant expect P to take that into account though , he only deals with hindsight

[Snoopy]

quote:Originally posted by marinesalvor

dont try Rugila - if you try and say anything negative about RBD - Snoopy and his mates will arrive and make impassioned pleas about how amazing the company is,

That must be my cue to 'dial up some impassion'. :-)

First off I'm not going to pretend this company is amazing. Plainly it isn't. But I don't have to invest in amazing companies to be a successful investor, provided those companies I *do* invest in are cheap enough to start with.

Today's result was the confirmation of a bad result that had been well signalled. I did note that RBD underpromised and overdelivered for the first time! Perhaps that is the influence of new chairman Van Arkel? Anyway, long may that underpromising/overdelivering reporting style continue. I was getting sick of looking at the RBD 'positive headline sales announcement' always knowing that I would have to dig a bit to find out how bad was the latest deterioration in real profitability!

The reduction in interim dividend from 4.5cps to 2.5cps is about what I expected. I am expecting a similar reduction in final dividend down from 5.5c to 3.0c. At a share price of $1, that gives a gross dividend yield of 8.2%, a reduced figure that nevertheless still compares favourably with other 'income' shares out there.

But RBD is not about 'this year', FY2007. To look at the potential dividend yield for FY2008 and beyond, you need to look at the cashflow. Operating cashflow is $9m per annum, which equates to 9.3cps. Even an FY2008 total dividend of 8cps would mean the new 'clean' Van Arkel RBD is trading on an earnings yield of 12%, which is pretty attractive. I'm going to be keeping a close eye on debt levels as the store redevelopment program rolls out, and the exit costs from Australia are crystallized. But from where I sit now, holding on to this investment at $1 is an easy decision to make.

quote:
always ignoring feedback on actually how bad RBD are at service and delivery, which is why they aren't successful.

This 'aren't successful' bit I can't let go by, as it just isn't true. RBD clearly are successful as they have declared a profit every year since listing. What can't be denied is that RBD have been more successful in the past than they are now. But even if the current six monthly operating profit is annualised at $6.2m for the year, that is still an ROE of 13.7%. Even 13.7% is a relatively efficient use of shareholder funds that many other 'respectable' companies would die to be able to match.

The reason why some people perceive RBD as 'not successful' can be likened to the view of the parent of the A+ student who starts secondary school only to be distracted by girls and sport. By failing to keep his eye on the academic ball, our A+ student (1996 ROE 50%) becomes a B student (2006 ROE 23%). Yes he could have done better. Yes he may need a stern talking to occasionally. But don't write him off. He is still a B student - still well above average, still successful!

SNOOPY

discl: hold RBD

[COLIN]

Snoopy, my dear friend. While I admire your tenacity, your optimism and the sheer hard work you put into detailed analysis to justify your investing/holding decisions, I just shake my head in disbelief that you could still describe RBD and TEL as "good investments". Its not rocket science: Take the present price, add the net dividends you have received, and deduct the purchase price (ignore the decline in the purchasing power of those dollars you outlaid, for the purposes of this exercise). Then compare that net DEBIT figure with the growth in any of the NZX indices over the same period. How on earth could you call that "success"? Believe me when I say that it has taken me many years to acknowledge the absolute folly of clinging to, or buying into, weakening shares. Learn to cut your losses - it is hard to do, I know - and buy into strength.
I'm sure you want your investing activities to enhance your net wealth!

I know this posting will incur your wrath, but I do want to help you!

DISCLOSURE: I bought RBD at $2-20 in the IPO - in 1997 it was! - and sold at $1-27 in 2003.

[Snoopy]

quote:Originally posted by COLIN

Snoopy, my dear friend. While I admire your tenacity, your optimism and the sheer hard work you put into detailed analysis to justify your investing/holding decisions, I just shake my head in disbelief that you could still describe RBD and TEL as "good investments". Its not rocket science: Take the present price, add the net dividends you have received, and deduct the purchase price (ignore the decline in the purchasing power of those dollars you outlaid, for the purposes of this exercise). Then compare that net DEBIT figure with the growth in any of the NZX indices over the same period. How on earth could you call that "success"?

Thanks for the concern Colin, but really I am doing just fine. I'm not quite sure what the fixation with RBD is all about on this forum.
But keep in mind it is one of only eight shares I have in my NZX portfolio (the others being TEL, LPC, SKC, CEN, PGW, TUA (just purchased) and SCT).

You also need to appreciate that as a contrarian investor I tend to look for losers that have a capacity to recover. Uptrend following is an anathema to me as such shares I generally regard as too expensive, and susceptable to the 'torpedo shareprice effect' from earnings disappointments in the future. Contrast this with RBD where the profit halved today yet the shares dropped a mere 2c (2%).

TEL was hit by overnight government regulation, and such hits cannot be predicted with any certainty. I still hold the view that without LLU/naked DSL intervention, TEL was a steal at $6.

It is actually *because* of the problems encountered with RBD and TEL that they have become so relatively safe as investments. Perhaps that is easier to appreciate if you don't look in your rear view investment mirror?

quote:
Believe me when I say that it has taken me many years to acknowledge the absolute folly of clinging to, or buying into, weakening shares. Learn to cut your losses - it is hard to do, I know - and buy into strength.
I'm sure you want your investing activities to enhance your net wealth!

I know this posting will incur your wrath, but I do want to help you!

DISCLOSURE: I bought RBD at $2-20 in the IPO - in 1997 it was! - and sold at $1-27 in 2003.

So you got out of RBD, just as I was getting in (in a significant way - actually it was 2005 when I bought most of my RBD shares, but it makes a good story)! I may have even bought your shares off you Colin! Such is the lot of the contrarian investor.

SNOOPY

[duncan macgregor]

SNOOPY your company selections TEL,LPC,SKC,CEN,PGW,TUA,SCT,RBD, tells me that your method of selection leaves a lot to be desired. You have more dogs than the average kennel club. You are way behind what the monkey and dart board might acheive. How you can keep defending some of those dogs is beyond me. We all make mistakes, and hopefully learn, you make them and i learn. I owe you lot you turned me into a TA investor, with a decent sell system. Bongo still has a lot to say about RBD if you look him up. MACDUNK

[COLIN]

quote:Originally posted by Snoopy

quote:Originally posted by COLIN

Snoopy, my dear friend. While I admire your tenacity, your optimism and the sheer hard work you put into detailed analysis to justify your investing/holding decisions, I just shake my head in disbelief that you could still describe RBD and TEL as "good investments". Its not rocket science: Take the present price, add the net dividends you have received, and deduct the purchase price (ignore the decline in the purchasing power of those dollars you outlaid, for the purposes of this exercise). Then compare that net DEBIT figure with the growth in any of the NZX indices over the same period. How on earth could you call that "success"?

Thanks for the concern Colin, but really I am doing just fine. I'm not quite sure what the fixation with RBD is all about on this forum.
But keep in mind it is one of only eight shares I have in my NZX portfolio (the others being TEL, LPC, SKC, CEN, PGW, TUA (just purchased) and SCT).

You also need to appreciate that as a contrarian investor I tend to look for losers that have a capacity to recover.

SNOOPY

Good on you, Snoopy, for not coming back with all guns blazing.
I must get back to real work, but I just wanted to say that I, too, look for shares that have the capacity to recover, but I wait until there is clear evidence of an upturn in their fortunes and share price. For instance, I was able to make significant gains on the upswings of AMP, TWR, and BCA.
Some of the most valuable contributions to this forum have been made by our friend Phaedrus - he and his charts are worth taking notice of. None of us will get it right all the time, but its the overall result that counts. (As I have admitted on the FTX thread, at one stage I did think I would be smart and hop on the "salvation" wagon there, when Godfrey Hirst first bought in, but I exited as soon as I realised that they had walked away, and I also tried to warn others to bail out as doom approached but, to my great disbelief, some apparently seasoned investors were still trying to "average down" when the bailiffs were knocking on the door.)

[Snoopy]

quote:Originally posted by COLIN


Good on you, Snoopy, for not coming back with all guns blazing.
I must get back to real work, but I just wanted to say that I, too, look for shares that have the capacity to recover, but I wait until there is clear evidence of an upturn in their fortunes and share price. For instance, I was able to make significant gains on the upswings of AMP, TWR, and BCA.

I guess it all depends on what you call 'evidence' Colin.

1/ New Chairman,
2/ New reporting style,
3/ Recognition of the fact that new buildings won't do anything on their own- there is a need to upskill staff as well.
4/ Taking the lead among the fast food brands in moving wages (thus being a proactive rather than a reactive employer).

The evidence that all this is working is the improved earnings from KFC despite the store upgrade closure periods.

Of course none of this has been reflected in the RBD share price because of the Pizza Hut problems, both in NZ and Australia. But don't let that share price trend blind you to the evidence that is already out there Colin!

I'm generally a risk averse sharemarket investor, and that means buying with a large margin of safety. Buying on the premise of a chart confirmation will generally reduce your margin of safety. Particularly so with a lower growth company like RBD.

Good on you with your success in AMP and Tower though Colin. I regard insurance companies as outside my circle of competance at present so don't invest directly in that sector myself.

SNOOPY

[BRICKS]

WHEN your on the bottom floor you dont have to much room to FALL.. [8D]

[duncan macgregor]

quote:Originally posted by BRICKS

WHEN your on the bottom floor you dont have to much room to FALL.. [8D]

The SNOOPY of old our hero of the past should get with it and buy a parachute or eventually will fall pray to the evil market. Absolutely no requirement to go down fast pull the cord then select your landing site. macdunk