SML - Synlait Milk Ltd

[FarmerHamilton]

I have perhaps also overlooked smaller holders who have sold down part and of course there may also be staggers wanting out.
It is interesting to compare the sell down of Synlait Milk and Synlait Farms holders. My rough mental arithmetic suggests a sell down in excess of 11% in Synlait Milk but since Synlait Farms arrived on Unlisted in May there have been sales of less than 1% in Farms shares. And Synlait Farms has generally lacked sellers more than buyers. Does this suggest that the original shareholders are happier staying in the farms than the processor and do not have the same confidence on Synlait Milk projections?
Discl. bought Synlait Farms but do not have allocation of Synlait Milk

No doubt a lot of the Synlait Ltd / Farms shareholders are thru and thru classic kiwi dairy farmers who bought into the equity partnership model when Synlait was just 4 or 5 separate large scale irrigated Canterbury dairy farms ( one of them called Robindale was alone milking 3100 cows ). Many of them were diversifying from their own un-irrigated Waikato farms. In a dozen years they have abandoned Fonterra, built $250m worth of stainless steel including the best infant formula plant in the southern hemisphere, a consumer products business selling to all four corners of the globe with three major shareholders from Holland,China & Japan , and now have a stake in a corporate dairy farming venture with 5000ha and 15,000 cows. Huge change and a far cry from their initial investment thesis !! and many will be more comfortable with the farming side of their investment , Synlait Milk has been a huge dollop of cream on the cake ( pun intended ! ) which has been a spectacular success. Many will have sold enough SM to recoup their whole initial investment , and still have a stake in Farms and Milk worth hundreds of thousands of dollars.

I invested in a single Synlait managed farm in 2003 , and on 23 July at $2.20 for SML and assuming Farms is trading at $1.25 will have sold enough shares in each to have returned 1.5 times my initial stake ( $400,000 ) and our remaining holding combined in both will be worth $690,000. It's been a great ride, with quite a few bumps in the road ( 2008/9 ) but a real fun journey. Hopefully the Synlait Milk story is in its infancy and we will keep a decent slug of those for many years.

[Balance]

Competition is good - Fonterra has become arrogant and inward looking.

No forward planning - could have got into infant formula business a long time ago but preferred to stay a commodity player.

So all power to Synlait.

[FarmerHamilton]

Problem for Fonterra was that to get into infant formula they would have needed to be in "boots and all" to move the needle. When you are selling millions of tonnes of basic skim and whole milk powder , 10,000 or 20,000 tonnes of infant formula is a drop in the bucket , is it really worth the effort ... they have now been forced to compete by all the smaller players like Synlait who are getting "more from milk" ( Synlait's corporate moto ) and are a very attractive alternative destination for the milk of forward thinking cow cockies.

[FarmerHamilton]

GDT Auction tomorrow night ... GMT1200

[Scottman]

They would have had a broker bidding in the institutional book build on their behalf. No different than if a fund wanted to take a big bite.

thanks for that CJ

[Major von Tempsky]

I shall wait for the listing and after the price has inevitably declined after that I shall look at the gross dividend yield and if it compares well with other candidates I shall buy some.

Any other course of action is myopic stupidity.

[FarmerHamilton]

I shall wait for the listing and after the price has inevitably declined after that I shall look at the gross dividend yield and if it compares well with other candidates I shall buy some.

Any other course of action is myopic stupidity.

There is no dividend , and I wouldn't be expecting one until Drier3 is up and running and chucking off huge dollops of cash. Revisit in 2016/17 MvT !!

[percy]

I shall wait for the listing and after the price has inevitably declined after that I shall look at the gross dividend yield and if it compares well with other candidates I shall buy some.

Any other course of action is myopic stupidity.

Yeah Right>!!!!!!

[zigzag]

I shall wait for the listing and after the price has inevitably declined after that I shall look at the gross dividend yield and if it compares well with other candidates I shall buy some.

Any other course of action is myopic stupidity.

Are you even on the right page?

[FarmerHamilton]

Are you even on the right page?

I wonder how many people gave XERO a wide berth because there is no dividend in the forseeable future ..... AAPL, GOOG, AMZN anyone ?? No thanks , no divi ... urgghhh !!

( nb. AAPL does now pay dividend )

My best performing share in my US portfolio ( by a country mile ) pays no dividend . Celgene ( CELG:US )