Sunday, May 1, 2016

MIGHTY RIVER POWER

It is perhaps worth reminding ourselves of the economic sabotage practiced by Labour and the Greens when they worked to undermine the issue price of MRP shares by announcing that any shares taken up would be compulsorily re-acquired (read stolen) at their issue price on a change of government.  

That policy clearly scared off a number of potential investors and has been assessed to have cost the taxpayer tens of millions of dollars by depressing demand for the stock.

So, what has happened since Labour's Clayton Cosgrove (now designed as their Business Outreach Spokesman ... translated 'I'm on the way out and looking for a job') famously declared the shares to be "a dog" investment.  

Delighted to note (as a modest shareholder in MRP) that, in addition to a maintained dividend stream (averaging 14 cents fully amputated) and bonus (loyalty) shares, the share price has now hit over the three dollar mark ($3.02 on Friday).   So, thank you Clayton Cosgrove.   Any other 'dog' shares advice gratefully received.

p.s.   I note too that Labour has gone silent on the compulsory re-acquisition of the shares .... wonder why?

17 comments:

Psycho Milt said...

Delighted to note (as a modest shareholder in MRP) that, in addition to a maintained dividend stream (averaging 14 cents fully amputated) and bonus (loyalty) shares, the share price has now hit over the three dollar mark ($3.02 on Friday).

I'm glad to hear it's going well. However, it does nicely illustrate how this project was really about directing public wealth into private hands. That is of course what National stands for, so it's not surprising that they've done it. The thing is, it's also not surprising if parties that stand against shifting public wealth into private hands should have opposed the move, nor that they should commit to bringing it back into public ownership when they next take power.

The Veteran said...

PM ... that's one take. Another might be the selling down raised capital to be invested in infrastructure thus avoiding having to borrow from o'seas (read China and Japan).

As for Labour's pledge to re-nationalise the company. Seems to have disappeared off the radar completely. Perhaps they either (1) believe their own rhetoric that it's 'a dog' investment or (2) the realization they would have to borrow in order to achieve that provoked a rethink.

Adolf Fiinkensein said...

Vet,there might be a third reason.

Maybe they woke up and realised it's not a good idea to remind voters, just before an election,what a pack of pricks they are.

After all, how many miles of four lane expressway could have been built with the proceeds they wiped out?

Howie said...

"how many miles of four lane expressway could have been built with the proceeds they wiped out?"

None. They use that money to subsidise dairy farmers by throwing irrigation schemes at them, remember? How's that working out btw?

The Veteran said...

Howie ... please reference your ascertain. Not just a general statement either. A specific reference pointing to the money gained from asset sales going to the dairy industry ... won't bother waiting for your response because you can't.

But think for a moment how much more could have been achieved if your mob had't worked actively to sabotage the float issue.

Good luck in defending the indefensible.

Noel said...

"The function of SOEs is to operate successfully as a business, as profitable as those not owned by the Crown. The section of the Act defining this is usually interpreted as meaning that SOEs are expected to ready themselves for privatization."

Remind me...which Government introduced that Act in 1986?

I bet the architects didn't envisage that they would have to appoint an Administrator to try to get something for the failed Solid Energy.

Psycho Milt said...

But think for a moment how much more could have been achieved if your mob had't worked actively to sabotage the float issue.

Meh - every NZ government could have achieved a lot more if it hadn't had all those Opposition MPs opposing it. But that wouldn't be a good thing.

The Veteran said...

PM ... there is a deal of difference between opposing something and working actively to undermine the outcome thus diminishing the return to the government/taxpayer.

Noel ... it is an interesting philosophical debate. Should government be involved in a business? There is no absolute answer but I tend to the view that it shouldn't for the simple reason that the imperatives the drive commercial decision making in the private sector aren't there in a business backed by the government. That the government business model tends to put off making hard decisions until it is too late. There are exceptions to any rule and Landcorp is one of those farming marginal land.

For Howie ... don't know what you have against the dairy farming industry unless you are one of those farm workers identified by the industry as not up to the job. You know, the ones defended to the hilt by that poor little rich boy MP from Palmerston North better known for his reputed serial shagging of the parliamentary stenographer's pool.

Howie said...

"There is a deal of difference between opposing something and working actively to undermine the outcome thus diminishing the return to the government/taxpayer."

They announced a policy. They're allowed to do that believe it or not. The government proceeded with the fire sale.

"For Howie ... don't know what you have against the dairy farming industry"

Nothing much. They pollute the waterways without paying for it, employ a foreign workforce on poor terms and then whine there are no New Zealanders prepared to work hideous hours on minimum wages, appropriate massive amounts of water for private gain, and get the government to pay for their irrigation schemes by privatising state assets. Other than that they're OK-ish.

Anonymous said...

I doubt at this time we have any SOE's where the majority shareholding is not the Government.

Stand corrected if anyone can offer evidence.

Nookin said...

"Fully amputated"? I thought that applied to the oppositions' ethics - not the dividend. I think you mean "imputated".

Noel said...

Anon 4.02 said
"I doubt at this time we have any SOE's where the majority shareholding is not the Government."

And that is a very good point.

"Crown entities are bodies established by law in which the Government has a controlling interest - for example, by owning a majority of the voting shares or through having the power to appoint and replace a majority of the governing members - but which are legally separate from the Crown."

Mighty River fits that criteria.

"The Crown role for each SOE is to protect its (the taxpayers) investment on behalf of the people of New Zealand."

And therein lies the money question.

Has the partial sales of those SOE's protected the taxpayers investment?




Adolf Fiinkensein said...

Noel

A reasonable person would say 'yes' Price (i.e the one a willing buyer is prepared to pay) is a great way to measure an investment's 'protection.'

Before the partial sale there was no protection.

pdm said...

Adolf - the fact that the Government retains the controlling interest of 51% ownership probably also fits Noels idea of protection.

Psycho Milt said...

I doubt at this time we have any SOE's where the majority shareholding is not the Government.

So? Public wealth was shifted into private hands - that doesn't necessarily mean full privatisation.

Has the partial sales of those SOE's protected the taxpayers investment?

I don't know about you, but if I lost 49% of my shares and the future dividends from them because the guys protecting my investment needed the cash, I wouldn't regard them as particularly useful protectors of my investment.

gravedodger said...

So Milt sell your now apparently unattractive shares.

I read somewhere the government dividends are comparable to pre float levels when it was just another cash cow for pillaging, at least the power companies are under the scrutiny of many more than a few pollies and public servants.

Adolf Fiinkensein said...

Oh no! GD. You don't mean to say the gummint gets the same amount of money from just half the shares? Could it be that for the first time these businesses are being run properly?