MVN Methven

[gv1]

My suspicion came true. Who is this guy Rick Fala? I think once a new(better) CEO comes on board, things would improve quickly...

[buns]

Well if you want to put it that way, you are swapping $1 something (price of a share) for about 10c (dividend)? Of course you need to take into account the share price/underlying asset.

If you own a $5m house which returns $500k in rent (10% return), would you be happier if the price of that house dropped to $4m with $450k rent (12% return)? The yield has gone up but you have just lost $1m and another $50k a year which could again be invested and so on.

I also covered this in the TSR calc, that shows that if you purchased the share 4 years ago and then sold this year, you would now have $1.06 cents in your bank account for every $1 invested. If you left that $1 in your bank account (ignored MVN), you would have over $1.10 and could have saved a bunch of time.

Do not agree at all..I'm interested in what it pays into my bank a/c every year and that is well over most other shares on the nzx. If you are after growth in share price thats a different matter. This was referred to as an underperformer so please do it the courtesy of being accurate and specifying what it was and where it was underperforming. Clearly it is NOT underperforming when you look at it as a dividend producer.

[buns]

Just on these guys. They are a good company, however will eventually become chicken feed to China manufacturing at some point in time. They haven't done too much wrong (maybe 1-2 bad decisions overseas), just the mat has been pulled out from under them as this kind of business simply can't survive in a game where the playing field (manufacturing economics in NZ v China) is this skewed.

It's a shame because it is a top notch product (Kiwi bias), they will remain sustainable but not a big growth engine they once aspired to. Chch and Auckland house building will help them in the short term.

[BIRMANBOY]

You are undoubtedly sincere in your opinion but are working off a false premise. This false premise is that underlying share(house) price is of material importance. If you never sell its immaterial and the facts remain that the return is predicated simply on the dividend as a percentage of your buy in price. If you buy as a growth/dividend share as you say the dividend benefits are negated by the share price....IF YOU SELL at a lower amount than you buy in for. Share price recently was 1.50...now at 1.20...I own at 1.11. The trick is to buy dividend producers at low points in the cycles so you are not only getting strong dividends but are also protected from SP erosion. Your vision is impeded by selective interpretation of the facts. It would be akin to me saying....RYM, DIL and XERO are underperformers. To a dividend seeker they are because they produce bugger all to little dividends. Growth stocks they most certainly are and would never be referred to as underperformers by me since I see the big picture. All I am saying is apply the same courtesy in return and recognise that some stocks are good for some and not for others ...but that does not neccessarily make them "underperformers".

Well if you want to put it that way, you are swapping $1 something (price of a share) for about 10c (dividend)? Of course you need to take into account the share price/underlying asset.

If you own a $5m house which returns $500k in rent (10% return), would you be happier if the price of that house dropped to $4m with $450k rent (12% return)? The yield has gone up but you have just lost $1m and another $50k a year which could again be invested and so on.

I also covered this in the TSR calc, that shows that if you purchased the share 4 years ago and then sold this year, you would now have $1.06 cents in your bank account for every $1 invested. If you left that $1 in your bank account (ignored MVN), you would have over $1.10 and could have saved a bunch of time.

[percy]

I had a friend who worked for them twenty years ago.
Hopeless outfit then,so some things stay the same.!
I doubt they will be in a position to keep paying dividends as the business is facing increasing competition and is clearly going backwards.

[BIRMANBOY]

Twenty years ago I had hair, boundless energy and some flexibility...how times change. If they stop paying dividends I'll sell. Meanwhile I'll keep socking away the hefty dividend. If you own it youd be appreciating them too...if you dont I dont know why you are bothering would seem like a waste of energy to me.

I had a friend who worked for them twenty years ago.
Hopeless outfit then,so some things stay the same.!
I doubt they will be in a position to keep paying dividends as the business is facing increasing competition and is clearly going backwards.

[percy]

Twenty years ago I had hair, boundless energy and some flexibility...how times change. If they stop paying dividends I'll sell. Meanwhile I'll keep socking away the hefty dividend. If you own it youd be appreciating them too...if you dont I dont know why you are bothering would seem like a waste of energy to me.

I waste a lot of energy watching a lot of companies in Australia and New Zealand.It is a most enjoyable and profitable hobbie.I am aware that some companies do well,through good management,while other companies are poor performers.Like you, some lose their hair and energy,while others grow hair and find extra energy.Some companies are in the right space at the right time.Energy spent doing good research stops me loosing money in poor companies who are going backwards.

[BIRMANBOY]

IF.......IF......IFFFFF. Thats why they call it a share MARKET Sparky. A market is somewhere where people gather to buy, sell and trade. Everyones trying to make a margin in all sorts of different ways. If you know your area of expertise, stick with what you know and arent too greedy or speculative them you should "beat the averages". No-one gets all their selections right ..thats why I have 22 different shares/bonds. It would be unreasonable for me to expect all of them to continue delivering the way I want. You could be right, Methven may be heading to the dark hole of no return. Everyone makes their own decisions based on available data and their own requirements. At the moment I am very happy with the yield especially given the shrinking pool of other dividend monsters. I have a cushion of protection because of my buy price so for me its all good. Press articles and media reports are always just a small (and possibly misleading) window into an unknown situation so I prefer to wait and see what happens in real life not be swayed by journalists writing pieces for entertainment of the masses.

Two schools of thought.

1) Owning MVN may be a very profitable investment because its dividend more than adequately compensates for potential downsides which may never materialise - meaning profits!
2) Owning MVN may be akin to owning a risky bond or finance company debenture as the market is telling you something by the nature of the yield and risk - IE, owning a slice of the underlying asset is not wise.

The problem is, should the dividends cease or decline, then the share price could easily drop beyond the point where the higher yield is illusory and you lose money.

For example, buying at $1, with a 10% yield means 10c a share dividend.

But if the dividends stop because the company is struggling, and the share drops to 80c, which is possible, then you have lost two years of income. Even if it drops 10%, you have no gain.

It you thought MVN was on the up, then obviously its a good deal. but the recent press release suggests it still has issues.

[gv1]

Very gracious of your STC. I appreciate your opinions and comment. I made some investment few mths ago when I saw other property related co's share spike etc. I have to reassess now and decide, maybe wait for the new CEO. Thanks

[BIRMANBOY]

No need to apologise and no offense taken. Everyone see things through their own set of glasses...some glasses have blinkers ,some are tinted, some are sand blown and some magnify what they see. Some are 20-20 and some are based on prescriptions that are well out of date. The best way of getting optimum vision is to accept that different scenarios require different specs and sure as hell you can guarantee that one set will by virtual guarantee provide very limited perpective. My original point is still worthy of keeping at hand. Judgements based on our own opinions are only valid to ourselves and room should always be left for possibility of other options being worthwhile. I try and remember one thing above all else. Dont get married to an investment...just enjoy its company for as long it makes sense.

I apologise. I didn't mean to offend you by having a negative outlook on Methven , which by proxy might be construed as a criticism of your investment choice and decision-making in Methven.

I merely wanted to point out that the premise for which you invested in, being a superior yield, would become self defeating if the reason for the superior yield was a dividend that was out of sync with the realities the company faced. Clearly if Methven can address their issues and maintain the dividend, you will have cause to be very happy with your choice.

Completely agree that press and media can provide insufficient insight, which is why I like to meet with company management before investing. Though I note in the case of Methven in the last couple of days, it is not media commentary, but actual statements from the company.

Nevertheless, you have conviction in the share, which is excellent. You may well have a competitive advantage over others in this company from your research, in which case, you would then probably be proven right.