SKT Sky Network Television Limited.

[Ogg]

Why are ACC not allowed to hold SKT? Just curious but I do not see SKT as a sin stock or a fossil fuel stock.

Cause it doesn't fit their investment strategy. Which is, to my understanding, to invest in stable companies that provide regular income for them to pay for injuries.

https://www.acc.co.nz/about-us/our-investments/

We favour long-term investments that can deliver relatively certain income streams over long periods of time. These investments match our long-term cash flow requirements, and also help offset the risk of declines in interest rates.

They'll be dumping more soon. I'll have my pan ready.

[blackcap]

Cause it doesn't fit their investment strategy. Which is, to my understanding, to invest in stable companies that provide regular income for them to pay for injuries.

https://www.acc.co.nz/about-us/our-investments/

We favour long-term investments that can deliver relatively certain income streams over long periods of time. These investments match our long-term cash flow requirements, and also help offset the risk of declines in interest rates.

They'll be dumping more soon. I'll have my pan ready.

Not so sure I agree with you on that one. ACC pretty much has holdings in every NZ company (the larger ones). I do know that the govt has legislated that they are not allowed in fossil fuel companies ie NZO and have to exit them. But I think they are ok to invest in SKT. They may have been selling some recently but I do not think it is because of the mandate. Probably more because they though the prospects were looking bleak.

[Ogg]

Not so sure I agree with you on that one. ACC pretty much has holdings in every NZ company (the larger ones). I do know that the govt has legislated that they are not allowed in fossil fuel companies ie NZO and have to exit them. But I think they are ok to invest in SKT. They may have been selling some recently but I do not think it is because of the mandate. Probably more because they though the prospects were looking bleak.

Perhaps. The point is that it's a defensive fund with an appetite for low risk.

They'll selling so they can reallocate the cash and rebalance the funds exposure to risk.

It's like a passive fund. I don't think an analyst sat down and looked into Sky's future and thought it was bleak.

They just take the loss and move on.

[mistaTea]

I think the biggest learning I have taken from investing in Sky over the last couple of years is to pay much more focus to debt.

Obviously debt is something on my checklist that I look at for all potential investments.

However, I think if I viewed Sky more through an EV lens earlier in the piece I probably wouldn’t have bought in so early. I think the first shares I purchased was a parcel of about 5000 shares for around $2.

I believe this might end up being a case where my general understanding of the business and most-likely future prospects are correct (or close enough anyway) but I got my timing wrong with the initial shares I purchased. I paid too much initially given the challenges the business was clearly going to need to face.

I probably would have only started paying sub $1 if I did that - and my average price would now probably be around 40- 50c per share by now.

Whereas right now I am on the table for $1.06 overall. And $1.06 fees like a hell of a long way from $0.27!!

[Grimy]

Whereas right now I am on the table for $1.06 overall. And $1.06 fees like a hell of a long way from $0.27!!

Most of us have been there at least once with a less than great share, or timing...…..

[Ogg]

I think the biggest learning I have taken from investing in Sky over the last couple of years is to pay much more focus to debt.

Obviously debt is something on my checklist that I look at for all potential investments.

However, I think if I viewed Sky more through an EV lens earlier in the piece I probably wouldn’t have bought in so early. I think the first shares I purchased was a parcel of about 5000 shares for around $2.

I believe this might end up being a case where my general understanding of the business and most-likely future prospects are correct (or close enough anyway) but I got my timing wrong with the initial shares I purchased. I paid too much initially given the challenges the business was clearly going to need to face.

I probably would have only started paying sub $1 if I did that - and my average price would now probably be around 40- 50c per share by now.

Whereas right now I am on the table for $1.06 overall. And $1.06 fees like a hell of a long way from $0.27!!

I wouldn't beat yourself up because of this. I first looked at this stock when it was at 90c. It looked good back then but I had other things on my horizon so I didn't buy.

From a value prospectus, $1.06 is a good buy. The problem is that the market over the last few years (2015-2019) has been over enthused with growth stocks. We're now seeing a huge shift globally from over priced growth stocks back to value companies with actual good earnings and balance sheets.

Sky has suffered more because the market has wrongly assumed that streaming (Netflix phenomenon) would grow and capture the entire TV market. The truth is that traditional satellite TV still has a future and will never disappear.

One thing I don't like about Sky's new CEO Martin Stewart, is that he's been overly aggressive in thinking that streaming and sport are the only future for Sky. These are important but the focus should be on going back to basics and providing more traditional entertainment in Sky's line up. Over paying for sporting rights or buying dud streaming platforms like Lightbox are mistakes. The focus should be on doing what Sky does best, providing a wide variety of diverse content for all demographics at a reasonable price. The key has always been to "bundle" channels and give the consumer a huge amount of content. This is what keeps them happy and subscribes for life. The sooner they get back to basics, the sooner the dividends will return and then the capital value will reflect that. When the dividends return, so will good quality hedge funds like ACC come back, and low quality vulture funds like "Black Crap" will be gone.

[Ogg]

Just calculated Black Crane's position.

22,356,578 shares for a total consideration of $7,845,246.

Average price of 35c per share.

So they're sitting on a $1,808,969 paper loss as of today's closing price.

Ouch!

Their average was 61c just 3 weeks ago, so they've been averaging down hard.

Will they keep averaging down?

[Stranger_Danger]

Just calculated Black Crane's position.

22,356,578 shares for a total consideration of $7,845,246.

Average price of 35c per share.

So they're sitting on a $1,808,969 paper loss as of today's closing price.

Ouch!

Their average was 61c just 3 weeks ago, so they've been averaging down hard.

Will they keep averaging down?

Black Crane are not idiots, nor are they passive investors. I haven't checked, but it wouldn't surprise me if they have an interest in the bonds. They'll be looking to get actively involved in a debt restructuring, the current price of their 22mil ordinary shares will be of minor interest to them.

[Ogg]

Black Crane are not idiots, nor are they passive investors. I haven't checked, but it wouldn't surprise me if they have an interest in the bonds. They'll be looking to get actively involved in a debt restructuring, the current price of their 22mil ordinary shares will be of minor interest to them.

Why is everyone going on about the debt? Interest rates are zero worldwide. Debt is cheaper now than it has been ever before. Companies are even getting free loans.

Sky isn't a zero revenue oil company or a retail company in full lock down with no revenue. Sky is making money and can service it's debt fine.

I checked, Black Crane don't have an interest in the bonds. Even if they did have an interest, what kind of debt restructure could possibly happen? You can buy the company for almost the same value of the bonds now. So why buy bonds when you can get equity now?

Let's just say the bonds are due next month. As an essential service, the government would likely bail Sky out with a free $100m loan anyway.

You need to think of the debt as a positive, not a negative. Yes, there's a risk of default, but if Sky can come out of this by restructuring the debt on favorable terms, then it leverages the long term value going forward. As it stands now the market cap is ridiculously low, as it's been leveraged by the debt. The stock will bounce hard once this is sorted, hence why Black Crane are buying equity now.

[Snoopy]

Why is everyone going on about the debt? Interest rates are zero worldwide. Debt is cheaper now than it has been ever before. Companies are even getting free loans.

Sky isn't a zero revenue oil company or a retail company in full lock down with no revenue. Sky is making money and can service it's debt fine.

Sky is getting positive cashflow because they have paid for their broadcast rights 'up front' and they are currently collecting revenue from their customers in anticipation of what they thought they had signed up to. But whether Sky are 'making money' (i.e. profit) is another question.

Let's just say the bonds are due next month. As an essential service, the government would likely bail Sky out with a free $100m loan anyway.

I guess we have moved on from the basic food clothing and shelter paradigm which were the traditional measures of 'essential'. But you might consider that long form journalism is an essential service. And with they closing down of Bauer in NZ, and the death of North and South , Metro and The Listener, the government didn't seem too concerned that critical long form journalism is now wiped out in NZ. Sky is in no way essential. There are other providers out there that supply movie and cultural content. Spark can do sport in the future.

You need to think of the debt as a positive, not a negative. Yes, there's a risk of default, but if Sky can come out of this by restructuring the debt on favorable terms, .....

Debt as a "positive"??? I think you still have to be able to service your debt and even with a zero interest rate, that means an ability to pay your capital back. If you aren't making a profit, then you don't have that.

SNOOPY