Friday, 24 April 2009

MIS fallout

Discussion of MIS companies like Timbercorp (which hasn’t invested in Tasmania) as well as the local exploiters like Great Southern, Gunns and Forest Enterprises assumes continued MIS investment in plantation trees.

But MIS investment has shrunk over the last 6 months and the next few months doesn’t look promising. A lot of MIS Companies have stopped spruiking. Some are in serious trouble.

Tuesday, 7 April 2009

Hobart airport sale


The Airport sale continues to attract sporadic comments. After reviewing the deal, there doesn’t appear to have been any gross breaches as has been alleged by some.  Just a series of events that were beyond the usual experiences of most of the participants. The Govt did ok, by default rather than good management although they’ve been terribly evasive.  Lennon’s legacy. Some of the proceeds may eventually return to RBF should the airport investment disappoint and lead to an increase in the unfunded superannuation amount required to be paid by the Government. Parliament provided little scrutiny, the Libs dithered and the Greens went searching for the sensational headline. RBF probably paid way too much and have been too defensive as if trying to hide something. The paper shufflers did handsomely out of the deal.

What is interesting is it provides a good example of how privatisation works and how the Macquarie model operates. At a macro level Governments may receive a cash boost, but from an overall social viewpoint, total debt simply increases. And that is what has brought the world to its knees.

Super funds’ investing in heavily geared entities is a recent phenomenon. Fortunately the glory days for such behaviour appear to have come to an abrupt end. Trustees were under pressure to emulate their peers whose performance was boosted by forays into unlisted geared entities.

Trustees although not bound by the continuous disclosure requirements of listed Companies, nevertheless owe it to their Members to keep them informed. It is not evident that RBF has done this with unlisted investments. By their nature unlisted entities tend to be a little more secretive.