Where to invest?

[GTM 3442]

Could I ask why you like IFTHA? I have a truckload of the ords -are the bonds less risky

Probably because you're paying $580 for $1000 worth of capital, effectively giving about 8 1/2% interest rate.

[troyvdh]

...for what it is worth...Ive been investing in the mkt...for a while......(30 years)......Ive got $40k odd ...in CUE......why....well if the Todd family decide to not only own most of CUE..and have their ex boss run the show...then request that they have more say on the board (like they did today) ...then that is good enough for..me....various folk have rated this company at over $1.40.....

..am i ramping...maybe....but I am just reading and conveying what uis being said....

....hold 130K....cheers

[POSSUM THE CAT]

Spread it over a lot of companies (ie spread the risk)Like this 68year old Cat

[HIDDENGEM]

Pl select few areas and do some good research.

Some businesses have business cycles.

When NZ dollar is high import oriented companies will benefitand when NZ dollar is low export oriented companies will benefit.

Think about earnings in the future. In some period commoditycan have volatility.

Remember in good and bad times people can not postponecertain things. They have to eat. Then middle class population in Asia cancreate demand for some products in both New Zealand and Australia in the comingdecade.

Go with companies with less debt. Keep an eye on positiveworking capital, higher ROE and future prospects. Do not buy overvaluedcounters.

NB:

My opinionsare not intended as financial advice. Any hyper-links are not an endorsement& no responsibility is taken for their content. Please do your own research

[macduffy]

....well if the Todd family decide to not only own most of CUE..and have their ex boss run the show...then request that they have more say on the board (like they did today) ...then that is good enough for..me....various folk have rated this company at over $1.40.....

Note also, though, that the Todd family have millions (billions?) invested in other enterprises. I suspect that CUE is a fairly minor part of their diversified fortune.

[modandm]

Probably because you're paying $580 for $1000 worth of capital, effectively giving about 8 1/2% interest rate.

Exactly. Yes they are less risky than the ords since bondholders or hybrid security holders (these) rank ahead of ords. I have ords too.

Basically think of IFTHA as a bank account which pays 3 or 4% greater than the market floating interest rate. As rates go up so does the yield of IFTHA. And as rates go up so does the price of IFTHA. At some point in the future you can sell it and close the 'bank account'. There is no guarentee what the price will be when you do sell but it will likely be higher than it is now.

While most fixed interest investments are fixed at 6% or 6.75% etc and become less valuable as interest rates rise (which they will do at some point) IFTHA becomes more valuable. Infratil of course know this and are buying back on market.

Another of similair ilk in Aussie is NABHA

hope this helps

[mr.needs]

Exactly. Yes they are less risky than the ords since bondholders or hybrid security holders (these) rank ahead of ords. I have ords too.

Basically think of IFTHA as a bank account which pays 3 or 4% greater than the market floating interest rate. As rates go up so does the yield of IFTHA. And as rates go up so does the price of IFTHA. At some point in the future you can sell it and close the 'bank account'. There is no guarentee what the price will be when you do sell but it will likely be higher than it is now.

While most fixed interest investments are fixed at 6% or 6.75% etc and become less valuable as interest rates rise (which they will do at some point) IFTHA becomes more valuable. Infratil of course know this and are buying back on market.

Another of similair ilk in Aussie is NABHA

hope this helps

Can you explain to me why the price will rise when the coupon rate rises?

[modandm]

yep - but bear with me it can be a little hard to grasp. There are 2 reasons - both to do with credit spread. Credit spread = rate on corp bonds minus cash OCR rate (or risk free rate)

1. As rates rise the credit spread (compensation for risk) narrows - this is just how credit spreads behave historically and makes sense - investors percieve less risk and demand less compensation for risk in a boom (a boom is when rates rise).

2. Main reason - thinking again about credit spreads. As rates rise a higher price of IFTHA is required to keep the credit spread the SAME. The best way to understand this is to work it through in excel. You will find if rates rise and the IFTHA price stays constant the spread rises. This is because the interest is paid on the face value of the security ($100) not $58

All round amazing investment really - prolly best on NZX

[percy]

You may care to look at the following.ABA,AWF,EBO,FRE,SKL,and TUA.
Two large cap are POT and RYM.
Sauce has posted some brilliant posts on RYM on Owner's earnings vs retained earnings thread. Paying modest divie but have used retained earnings to great affect.
ABA,if they can get hearing aid clinics in Asia model right, will have huge growth,as very few deaf Asians wear properly fitted hearing aids.
AWF.contract labour supplier.Easy to grow without need of a lot of capital.Have recently moved into supplying rest home staff labour.
EBO.History of very strong growth.Medical supplys.Growth will come from Aussie expansion.
FRE.Courier parcel delivery.Internet sales have to be delivered.
SKL.Specialist rubber moulding,with componant suppliers.Dairying industry supplier.
TUA.Car auctions,importers second hand cars from Japan.Have their own finnance company,so can also clip that ticket.
POT.NZ Hub port.Situated in the right place,doing the right things.Metro inland port in Auckland services tauranga by rail.

Update.All companies on the growth path as expected.POT surprised me with their expectation of "full year net earnings to grow by as much as 15%" Comforting in troubled markets to see these companies performing so well.

[percy]

You may care to look at the following.ABA,AWF,EBO,FRE,SKL,and TUA.
Two large cap are POT and RYM.
Sauce has posted some brilliant posts on RYM on Owner's earnings vs retained earnings thread. Paying modest divie but have used retained earnings to great affect.
ABA,if they can get hearing aid clinics in Asia model right, will have huge growth,as very few deaf Asians wear properly fitted hearing aids.
AWF.contract labour supplier.Easy to grow without need of a lot of capital.Have recently moved into supplying rest home staff labour.
EBO.History of very strong growth.Medical supplys.Growth will come from Aussie expansion.
FRE.Courier parcel delivery.Internet sales have to be delivered.
SKL.Specialist rubber moulding,with componant suppliers.Dairying industry supplier.
TUA.Car auctions,importers second hand cars from Japan.Have their own finnance company,so can also clip that ticket.
POT.NZ Hub port.Situated in the right place,doing the right things.Metro inland port in Auckland services tauranga by rail.

Update.Todays interim from AWF was a cracker.Divie up 31.5%.Nice.