I have followed the Fletchers closely and welcome any thoughts from other investors. I was attracted to the Fletchers from their low valuations and thought they were good value plays, but am now starting to think the low valuations are justified. First, geographically, New Zealand is an isolated island, so any sales outside of the country (excepting Australia) necessarily entail large shipping costs, or at least comparatively larger costs (even to the Far East countries, which is supposedly the largest market for FFS).
I think that this may be one of the stocks where JD is more closely aligned with the owner rather than the fundamentals of the stock. In the past, he has always commented on how Hugh Fletcher is determined to get his stock up or that Hugh Fletcher (who spoke at my seminar) is a great manager. He has said very little about the worth of the stock based on fundamentals. After all, both FFS and FEG are selling at P/E's below 5. He even said in one of his messages "just think if FEG makes a big oil find, that would really boost the stock price." That doesn't sound like a big boost of confidence. That's like "just think if Motorola discovers a new cellular technology, that would really boost the stock price."
Also, he seems to jump around on his recommendations. First, FLP and FFS were his big touts, then he moved to FEG, now he's pumping FLB as a "steal."
For sake of disclosure, I own FFS and FEG, both with small losses because I got them low, but they keep drifting lower. Any thoughts are welcome -- are these dogs deserving their low valuations or good value plays? Their former high yields have disappeared, at least on FFS, where the directors voted to decrease dividends for the short term. |
