Fonterra Shareholders Fund

[Joshuatree]

Hi macduffy, thanks for that; its a weird stock to be invested in with its structure etc. Some shares sit in our estate uncomfortably and I'm wondering if they really don't fit.The exposure to dairy doesn't seem to be enough as we are not going to benefit excepting fot a small trickledown. Are you in and if so why and do you see beneficial changes longterm for us shareholders? cheers JT

[macduffy]

Hi macduffy, thanks for that; its a weird stock to be invested in with its structure etc. Some shares sit in our estate uncomfortably and I'm wondering if they really don't fit.The exposure to dairy doesn't seem to be enough as we are not going to benefit excepting fot a small trickledown. Are you in and if so why and do you see beneficial changes longterm for us shareholders? cheers JT

I liked the idea of being able to participate in the dairy industry in a small way so was in for the IPO - but never completely comfortable about the structure - the power rests with the dairy farmers and their priority is to maximise the milk payout with whatever's left providing a dividend! At least, that's the way I saw things so I sold out some time ago. Patrick Smellie's article highlights the problems with the way the FGMP is calculated and it may be that some change might come there. I wouldn't be optimistic enough to buy back in at this stage, though.

[Joshuatree]

Originally Posted by SparkyTheClown
Not far removed from the Belgian dentists are the Belgian psychiatrists who came to New Zealand around 10 years ago for a conference, and were stunned at the high level of openly flaunted prostitution. Everywhere they looked they saw prostitutes congregating in parks, outside the front of office towers etc.

A Flemish shrink raised the courage to ask a NZer about the widespread prostitute issue. Much mirth ensued when the Belgians were told that in New Zealand, it was illegal to smoke inside your business premises, and so if you wanted a puff, you had to exit the building. Thus the young women dressed in nice skirts smoking outside buildings and in nearby parks were not on the game, but merely indulging in their filthy habit without breaking the anti-smoking laws.

Still the odd Sparky post hiding in the threads. This one a goody

Anyone who took up Fonterra shares still in.? Im trying to brainstorm ahead any reason to stay invested i.e. what changes in the future ' structural or otherwise tolift the s/p and div for us non dairy farmers, i can't think of any scenarios other than milk prices being ballistic for decades.

[OldRider]

Snapiti,
the older still one grows, the more one's views change till the conclusion is reached that nothing is as it seems,
which reminds me of a quote, by whom I don't know, that the world is not as I see it, but that I am how I see the world.

[arc]

Fonterra

http://www.3news.co.nz/Fonterra-want...0/Default.aspx

[winner69]

Chalkie not too impressed with latest China moves.

Love the phrase 'heroic assumptions'

http://www.stuff.co.nz/business/opin...by-food-future

[Tevita]

Snapiti,
the older still one grows, the more one's views change till the conclusion is reached that nothing is as it seems,
which reminds me of a quote, by whom I don't know, that the world is not as I see it, but that I am how I see the world.

Now you are talking my language

"Some of us have a particular love of the ocean. The sight of endless acres of blue interrupted perhaps by tossing caps of white foam seems to capture for us our longing for transcendence. As few other visions can.


In it`s vastness the sea is a metaphor for infinity and in the ceaseless surging of it`s breakers ever rising and ever dying a simile for the shortness of life. The ocean recalls our origins far back in the remoteness of time.


Our pre-human selves slumbered, quickened but not yet consciousin the salt waters which are remembered to this day in the chemical composition of our blood. I am 15,000 million years old .


I experienced each and every phase of the long journey from the Big Bang to now except I was not human in those early moments - Cosmos and Man are one being" (Darryl Reanney - Music of the Mind).

[Onion]

FSF is a very strange beast. In any other industry if the price of the raw commodity that it trades in has just fallen through the floor there would be a severe drop in fortunes for the shareholders and the SP would drop. But Fonterra is different...

Falling milk prices create fatter margins for Fonterra, while the fund's units give holders access to Fonterra's dividend stream. (Suze Metherell, NBR, 6 Aug 14)

I don't hold FSF -- mainly because I cannot get my head around the real value of the units. There is also a mystery surrounding the balance that is made between the farmgate payout and the dividend, the board seemingly able to adjust the balance [at least partially] arbitrarily; a situation that doesn't affect farmers (they get a return either way) as much as outside investors in FSF.

[Silverlight]

FSF is a very strange beast. In any other industry if the price of the raw commodity that it trades in has just fallen through the floor there would be a severe drop in fortunes for the shareholders and the SP would drop. But Fonterra is different...



I don't hold FSF -- mainly because I cannot get my head around the real value of the units. There is also a mystery surrounding the balance that is made between the farmgate payout and the dividend, the board seemingly able to adjust the balance [at least partially] arbitrarily; a situation that doesn't affect farmers (they get a return either way) as much as outside investors in FSF.

Onion, in the simplest of terms, Fonterra is a middle man, it predominantly doesn't own cows, so it doesn't make money from the price of milk. Milk is its biggest cost. Its output is milk powder, cheese, butter etc. It makes money on more efficient processing of milk into powder, as the final sale price of powder is tied to the purchase price (FGM Calculation). It does make money on the margins of other dairy products, but this is not a huge piece of the pie... yet.

Like a sawmill is between the forest and the builder, so Fonterra is between the farmer and Nestle.

[macduffy]

But it's not quite as simple as that, is it. In this case, the forest (farmer) also owns and controls the "middle" entity - Fonterra - and the cost of its input is controlled by the owner, admittedly within some parameters.

I've held in the past but there's not enough transparency in the process to tempt me in again.