SHV - Select Harvests

[niknah]

Nickah, are you trying to find the bottom....my understanding is that they have forecast about flat earnings so if its going down as it is, it either indicates the insiders know of a future downgrade or its just cyclical trading....either way, all you can do is put your own value on the thing and I think its worth a lot more than 8$

That's what I thought when I brought them last year for $13.6

Is the share price plummetting just because there's a big seller? It wouldn't seem probable that the downward trend would continue so consistently if it were panic/trader selling. In any case SHV is hardly a volatile stock.

Any inside info?

That's a good question, they only have about 4 share holders that are large enough to need to announce their changes in holdings, and only 2 of them look like they're funds.

CEOs, Chairman, directors buying is a good inside indicator.

 

[Rainmaker2000]

I would not worry too much about $13.60..I bought Repco for $2.20 (it bottomed at 60 cents hehe)...Commander round $1.20 and the list could go on ..SHV is probably worth something in that range and unlike the two above, shv actually has a pretty sound business.....even though I do work on the belief that daily market prices are real......To be honest, I think SHV is declining just in light trade..the market hates uncertainty...and SHV throws off a lot of free cash for dividends and buyback

 

[brilliantmichael]

I would not worry too much about $13.60..I bought Repco for $2.20 (it bottomed at 60 cents hehe)...Commander round $1.20 and the list could go on ..SHV is probably worth something in that range and unlike the two above, shv actually has a pretty sound business.....even though I do work on the belief that daily market prices are real......To be honest, I think SHV is declining just in light trade..the market hates uncertainty...and SHV throws off a lot of free cash for dividends and buyback

Wow Rainmaker you really put things in perspective! I hope you have better luck with your other/long term holdings : and I hope your mentioning of Repco and Commander aren't any indication of what the fate of SHV will be!

I'm sure that there will be plenty of other eyes on SHV waiting to snap it up... At the moment it's just being a bit of a wall flower. I doubt it can maintain its previous exponential growth rate - but it is still, from what can be gathered from the financials at least, a very safe long term bet. In every way imaginable it is financially sound (and on the face of it cheap!) by the looks of it. It's just its business model is being called into question atm. Uncertainty is the key. But most great opportunities arise out of uncertainty!

In terms of picking a bottom, your guess is as good as mine, and my guess is as good as person X's - and person X's person Y's and so on (unless an institution is openly selling and indicating how many they've got left to sell ala Commander CDR [btw SHV is an infinitely superior business in accounting terms to CDR!]). Fear/boredom/disgust will weed out the traders... But SHV will make it back someday imo (even at $13 thereabouts for those who bought then!).

Obviously my being so articulate about this one stock highlights something pretty obvious by now! Disclosure: I now own this stock!

 

[Rainmaker2000]

I like to share the freakshows of stocks cause you learn so much more from them.......For example, the buy of Repco and CDR were pretty sound decisions at the time, although not that prudent.. funny as it sounds......Repco is a great retailer which with the gearing was made just too susceptible to short term market conditions...CDR was probably a worse call but not unjustifiable......ironically, I ended up making a few trinkets as I got it on the way up too on Repco and voted against the takeover at 1.75 and CDR, if it remains solvent..hehe it is certainly worth a lot more than 40cents.....hehe....The last two years in the market have been absolutely unbelievable so I don't mind at all chatting about 'slight errors of judgement'..heh

 

[Brengun]

Still appears to be dropping. Is it my imagination or is the fall slowing? There still seems to be more sellers than buyers. Maybe they just want out so they can ride resource stocks up atm.

 

[brilliantmichael]

Still appears to be dropping. Is it my imagination or is the fall slowing? There still seems to be more sellers than buyers. Maybe they just want out so they can ride resource stocks up atm.

Big drop today (56 cents).

I suspect it's an institutional/large shareholder sell-off. Possible reasons for bailing out:
- Flat forecasts/drought fears/risk-repricing.
- Portfolio reshuffle to resources, financials etc (as you mentioned)

Plus, the traders who are kicking themselves for not selling sooner/have shorted SHV and are making sure it goes down.

But before you start kicking yourself, just remember:
- If your strategy was to trade this, well yeah you probably better go kick yourself.
- If your strategy was value-based, and based on the empirical evidence that this issue was decent financially (which is an understatement), and that you bought in at a time of uncertainty, then share price falling shouldn't cause you to really give a damn. You obviously saw value in SHV, so those are based on your terms and not the market's. Remember for fundamental investors, all that matters is at what price to buy in (without the risk of missing the boat).

In all credit to technical players, and a lesson I've learned from this experience is, the technician's cardinal rule: follow the trend. One lesson I've learned here is not to try to pick the bottom - when the trend flattens you'll have plenty of time to buy in. At the moment it's all freefall from here (possibly on par recent apocalypses like CDR and RHG).

I started buying in at around $8.62 - could go down to $0.001 for all I know... (Just wish I coulda bought that 15% or so of extra shares if I had just waited 2 weeks!)

When the trend levels out, and it will, should be an interesting opportunity for the cashed-up.

Hope that makes other people feel a little better.

To each his own!

 

[brilliantmichael]

Looks like another brutal day today - opening indicative price around $7 or thereabouts.

Definitely not a buyer atm

Been in freefall for 4 weeks now, not a flat day.....

 

[Rainmaker2000]

I would not beat yourself up, I picked a small entry parcel up round high single digits..The recent falls have been quite peculiar, but not too concerning....just further discount to its real value..I'm going to do some more intensive analysis of its financial ratios and some more thorough analysis of its long term performance and drivers of profitablility......I may load up heavily on this baby but only after a few days of research....I'm a big fan of distressed share prices and not so distressed businesses....I wouldn't care about 'picking bottom', it can happen when you least expect it....picking bottom or not does not guarantee an outstanding investment but then it can't hurt either..hehe.....experience tells me that with situations of a declining share price and no business news.....it's often better to wait for the next major news...sure you may lose a little upside on that day but the market rarely prices in annoucements till days and weeks afterwards..eg. once the brokers digest and tell the instos and clients to buy/sell

 

[robert toms]

I have no solid information on this one (or Timbercorp) but heard that these types of companies are buying water on the market ,for up to $2000 a megalitre to ensure the survival of their young plantings.If this is true ,the perception is that it will impact their bottom line.Have Select Harvests informed the market as to how they are performing ?They may have taken all of this into account.

 

[Rainmaker2000]

I would not doubt they are paying a bit for water.....this drought may be just enough to knock out all the farmer Joes and open the market up to monopoly pricing when conditions return to normal........their market guidance was pretty upbeat in the context but who knows whether they will grow earnings in the next few uncertain years....all I know is they are on a P/E of their last few years earnings of about 10.....and much of that is free cash flow for dividends and buyback...that seems pretty dahn cheap........come to think of it, what incentive does the company have to 'talk itself' up right now......directors are buying in, the companies buying its own stock back from the 'nervous nellies' like a drunken sailor....why exactly would they want the stock going up?..hehehe ..(as I reach for the option issues)

 

[brilliantmichael]

I would not doubt they are paying a bit for water.....this drought may be just enough to knock out all the farmer Joes and open the market up to monopoly pricing when conditions return to normal........their market guidance was pretty upbeat in the context but who knows whether they will grow earnings in the next few uncertain years....all I know is they are on a P/E of their last few years earnings of about 10.....and much of that is free cash flow for dividends and buyback...that seems pretty dahn cheap........come to think of it, what incentive does the company have to 'talk itself' up right now......directors are buying in, the companies buying its own stock back from the 'nervous nellies' like a drunken sailor....why exactly would they want the stock going up?..hehehe ..(as I reach for the option issues)

Hmmm never saw it from that angle.. You know Rain my man you just might be right!

Your contrarian exhuberance reassures me!

 

[brilliantmichael]

I posted this on a General Chat thread and am just reproducing it here.

"I do not claim to know much about the agricultural industry, or how the drought is affecting the separate microeconomies in the Murray-Darling. What I can say about SHV (and which anybody can just tell by reading their website) is that they are one of the strongest (financially at least) players in the agricultural sector. But here's the catch: SHV isn't really a farm or produce owner - it's a produce harvester and processor. Timbercorp outsources some of their operations and plantations management to Select Harvests, which is responsible for managing things like logistics and water supply. Plus it has diversified into other 'non-farming' activities like food processing (dried fruit, nuts etc) and food marketing (which is a little out of their depth imo). Of course they're still ultimately based on the survival of the agricultural industry. But they're certainly one of the strongest in my opinion.

More recent factors regarding SHV:
- Director purchases/options exercises recently have been encouraging.
- Share buyback program has been going on for about a year now and has taken more than 1 million shares off the market, leaving the outstanding shares at less than 38 million from last count.
- Share price plummetting > helps buybacks even more.
- Strong dividend record.
- Flat forecasts (short-medium term, due to drought. Longer term more positive)
- Drought won't last forever. And when it breaks, will you be there to catch the wave?

There's my speculative (Or sales pitch depending on your perspective )"

 

[Rainmaker2000]

Just on your post brilliantmichael, its true that shv does just 'commercialise' the assets of others to extent, particularly TIM.......that's probably why I've preferred TIM exposure to date which I'm a little behind on but that was when shv was twise the price!!! The fact remains that TIM needs SHV and vice versa....and just from memory TIM owns over 10% of SHV so it looks like they will keep working together......Recent price developments are a little surpising as when the MIS rulings first came out, the 'experts' and brokers said SHV would be unaffected because 'almonds will be grown with MIS or not'.......I thought that was a flippant attitude at the time but now it seems like the opposite has happened...TIM has not slid while SHV has lost half its value.......no matter what anyone says, both these companies will be printing substantial amounts of money next year and years to come

 

[Brengun]

Based on a shareprice of $7.11 they are paying dividends of around 8% plus 100% fully franked. My interest rate is 7.69% so I must be in front there somewhere.

 

[Rainmaker2000]

I just picked up some more of these puppies and will look to get more as news is released.........a profit 'update' for example.....I'm guessing we would get early warning of SHV by tracking TIMs pretty regular sales updates

 

[Brengun]

I just picked up some more of these puppies and will look to get more as news is released.........a profit 'update' for example.....I'm guessing we would get early warning of SHV by tracking TIMs pretty regular sales updates

LOL, you probably bought the ones I was just thinking of grabbing. Next thing, whoops they are gone already.

 

[Rainmaker2000]

Sweet, how about, you Brengun and I and maybe we can get BrilliantMichael in our consortium get together to launch a takeover....we'll all keep chipping away individual accumulating below 5% stakes and then we'll ask nicely for some seats on the board......just for info.......I currently hold 0.0001 percent of the company

 

[brilliantmichael]

Sweet, how about, you Brengun and I and maybe we can get BrilliantMichael in our consortium get together to launch a takeover....we'll all keep chipping away individual accumulating below 5% stakes and then we'll ask nicely for some seats on the board......just for info.......I currently hold 0.0001 percent of the company

Hahaha I wish! If they knew my age...

At this rate I'm only "half way" towards working my way towards being one of the 329 people with 5,001 - 10,000 shares!

 

[Rainmaker2000]

Who knows, if you keep participating in the DRP and they keep buying their own stock, it's a mathmatical fact that one day 'whatever the light touches' Simba, it will all be yours..........hopefully the polar ice caps don't melt over first........

 

[Brengun]

Sweet, how about, you Brengun and I and maybe we can get BrilliantMichael in our consortium get together to launch a takeover....we'll all keep chipping away individual accumulating below 5% stakes and then we'll ask nicely for some seats on the board......just for info.......I currently hold 0.0001 percent of the company

Based on your calculations I hold 0.001 percent of the company. Might take a looong time to get to 5% of the company between us.