GLOBAL brewing giant SABMiller's decision not to put a sharemarket index detonator clause in its $10.8 billion bid for Foster's Group suggests that when you get your pricing right, such protections are less relevant.
It reminded Insider, as another day of price carnage hit almost every other stock except Foster's, that there are some interesting value gaps opening up amid the volatility.
The S&P/ASX 200 Index, in spite of what you might think, is about 26 per cent above where it bottomed in the darkest days of the global crisis in March 2009 before a series of successful emergency equity raisings lifted spirits and prices.
If the index is accepted as a benchmark for roughly where stocks ought to be compared with that time, there are some individual shockers which have fallen above and beyond the call thanks to "special circumstances". BlueScope Steel, for example, touched bottom at $2 billion of market worth in 2009, but is worth almost half that again as it tries to cope with the twin stresses of a carbon-taxed future and the soaring Australian currency.
Insurance Australia Group and its industry fellow QBE Insurance Group have also matched, or "bettered" their lows of 2009 thanks to the series of natural disasters here, in Asia and the northern hemisphere over this year. IAG is, just, holding the line with its market worth finishing at a touch over $6 billion last night, having got down to $5.8 billion back then. QBE, which in 2009 tried to fall as far as $15 billion but did not quite make it, fell through that barrier last month and has kept on going. Yesterday, it finished at $13.2 billion, compared with its market peak of $30.4 billion in 2007.
Flight Centre has been counter-cyclical, as they say, mostly inspired by the rush of currency-enriched Australians to ticket counters. Having stepped down from $3.2 billion to a horrific market capitalisation low of $342 million, it is now $1.7 billion.
That is certainly better than its sort-of competitor Wotif.com, which soared from $570 million in 2009 to a $1.7 billion peak last year but yesterday fell under $800 million in worth.
Lastly, National Australia Bank's break with its rivals is now profoundly evident in its market value, as well as its marketing.
From bottom to now, NAB's market worth is up 54 per cent which sounds creditable in isolation and when you are talking about a company worth almost $50 billion.
The problem is that its three main rivals in the local market are almost double their 2009 values, with Westpac the leader on a 94 per cent gain to $57.3 billion. Commonwealth is bigger in dollar terms, $67 billion, but only 89 per cent higher. Finally ANZ , which was the tiddler of the foursome back in the 2009 doldrums at $25.7 billion, is now holding at around $50 billion bigger than NAB, which has never surpassed its 2007 peak. See what happens when you break with the pack?
Miner's lament
DAY One of base metals miner Kagara's new five-year plan could have worked out a whole lot better for chief Geoff Day.
Sinking global outlook and a dirty sharemarket helped drive Kagara shares down almost 20 per cent, a 9? a share fall to 41?. Less than a fortnight ago they had perked up to 60? each, which means something like $150 million has been knocked off their market value.
Insider's snout at Wednesday's presentation of the Kagara plan, held at Chillagoe west of Cairns, reckons the plans were broadly well received by investors and brokers, although it was recognised that the near-term was less attractive.
About a third of yesterday's turnover in the stock came out of Queensland retail broker Wilson HTM, including one line of just over 2 million shares at 43.5?. Kagara's Day gets a second bite at the sales cherry next week when he is due to do another presentation for investors in a more hospitable, but not necessarily more attractive, part of Queensland on the Gold Coast.
Sniff and tell
DIETERS, the consumer watchdog and stiffed franchisees will no doubt be pleased to know that SensaSlim has not only re-formulated its oral weight-loss spray but was big at the New York fashion week or so its new marketing says.
Apparently SensaSlim, which the Australian Competition and Consumer Commission has alleged is an enterprise of noted conman Peter Foster, has had a "breakthrough in the formulation in its intra oral spray that has seen it withdraw SensaSlim Solution from the market and introduced a new product to be marketed as 'SensaSlim Slimming Spray' in a pleasant vanilla flavour".
Insider can only hope that the description is far more accurate than the article that appeared this week on a site called pitchengine.com, that purports to describe its presence at the Big Apple's fashion show.
"The model, Norwegian Erjana Ala, 16, a rising star for sure, discovered the SENSASLIM spray in her native Norway where it has recently been released," said the article. "The other girls saw me spray it, and now everyone is wanting it."
Apart from the fact her name is actually Erjona, the report also reckons that "Heidi Klum, Alica Keys, Emma Roberts, Jennifer Love Hewitt, Stacy Ferguson, Kanye West, Kelly Osbourne, Kirsten Dunst and Vanessa Hudgens" are queuing up for the stuff. Unfortunately, the description in that story of a sign backstage about eating before strutting, and an accompanying picture, actually date back to a Givenchy show in 2009 and a photo of models backstage is from Milan in 2009.
Great moments
PATS on the back time:
1) To Chris Harris and the Argo Investments board for leaving no mystery in what went into former managing director Rob Patterson's retirement payout.
Whether investors agree or not with the decision, the board has said clearly that it took a decision to reward Patterson's 41 years of service and performance with a $500,000 golden goodbye. The rest of his $628,140 of termination payment was accrued long service leave.
2) To outgoing chairman of McPherson's, Simon Rowell, whose parting gift to his fellow directors has been the appointment of a woman, Amanda Lacaze, to the board.
insider@fairfaxmedia.com.au
There are some interesting value gaps opening up amid the volatility.
Frequently Asked Questions about this Article…
What does the S&P/ASX 200 index tell everyday investors about the market's recovery since 2009?
The article notes the S&P/ASX 200 is about 26% above its March 2009 low, so investors can use the index as a rough benchmark of where overall prices sit versus the depths of the global crisis. That said, the piece also highlights wide divergence among individual stocks — some remain well below past peaks while others have recovered — so index-level recovery doesn't mean every share has bounced back.
Why did SABMiller’s decision not to include a sharemarket ‘detonator’ clause in the Foster’s bid matter to investors?
The article suggests SABMiller didn’t add a detonator clause because when a bidder prices an offer correctly, such protections become less relevant. For investors, that highlights how deal structure and pricing can influence takeover risk and shareholder outcomes when a large bidder targets a company like Foster’s.
Which companies mentioned in the article show noticeable value gaps or underperformance since 2009?
The article highlights several examples: BlueScope Steel touched a $2 billion market low in 2009 and is only modestly higher as it faces carbon-tax and currency pressures; QBE has fallen well below its 2007 peak and was around $13.2 billion recently; some insurers and miners have also been pressured by recent events. These examples show investors that some stocks remain materially below prior highs despite an index-level recovery.
How have travel-related stocks like Flight Centre and Wotif.com fared amid market volatility?
According to the article, Flight Centre has been counter-cyclical: it fell from a $3.2 billion market cap to a low around $342 million and has recovered to roughly $1.7 billion. Wotif.com previously jumped from about $570 million in 2009 to a $1.7 billion peak but has since fallen under $800 million. The takeaway for investors is that travel stocks can swing widely with consumer behaviour and currency moves.
What does the article say about the big Australian banks and their relative recoveries?
The piece points out a split between NAB and its rivals: NAB’s market worth is up about 54% from its bottom but remains smaller than some peers. Westpac led gains (about 94% up to roughly $57.3 billion), Commonwealth Bank was around $67 billion (about an 89% lift), and ANZ grew from being the smallest in 2009 to about $50 billion — now larger than NAB. The article uses this to show how different banks have rebounded unevenly.
What happened with miner Kagara and how did the market react?
The article reports Kagara unveiled a new five-year plan that, while broadly well received by investors and brokers at a presentation, was followed by a sharp share price reaction: shares fell almost 20%, knocking about $150 million off the company’s market value. Management planned another investor presentation the following week to address concerns.
Are there regulatory or marketing red flags around SensaSlim that everyday investors should know?
Yes. The article says SensaSlim withdrew its original oral spray and introduced a reformulated vanilla-flavoured ‘Slimming Spray,’ and that the Australian Competition and Consumer Commission has alleged the business is linked to controversial figure Peter Foster. It also calls out dubious marketing claims — including inaccurate press items and reused photos — which may be a concern for investors watching reputation and regulatory risk.
What examples of corporate governance or board decisions does the article highlight for investors?
Two examples: Argo Investments disclosed a clear retirement payout to former managing director Rob Patterson, including a $500,000 retirement payment and accrued long-service termination amounts, which the article praised for transparency. McPherson’s outgoing chairman Simon Rowell is noted for appointing Amanda Lacaze to the board, an example of board renewal and diversity. These items are useful reminders that payout transparency and board appointments can matter to shareholders.
Call 1300 880 160
Start a chat
Schedule a call
