Well done, Pierre.
PTC is definitely the best contrary buy or sell signal you can get now.
Cheers!
Printable View
Balance maybe Stiassny is allready starting to liquidate this company.
Happy to catch the "double" today, since I hold both TWR and NHF:ASX - and, on the day, NHF has risen more... :)
Kind of odd though? All they are really doing is making the business smaller.
It was earning $10m NPAT and they sold it on a 10% yield. Back to square one with the investment brokers all the richer
I would rather have seen them keep it and having a go at actually managing the business for growth for a change.
What happened to gold old fashioned lets get out there and compete and be as good as we can be?
Instead we get the good old kiwi "we are rubbish at managing businesses so let us sell our business to Aussies as clearly they will be able to do better"
Must agree with you Michael..
Heard Hugh Fletcher being interviewed a few weeks ago and he made a statement ... ( That I think ) went something like this..
The four major Aussie banks took more out of this country in dividends..
THAN THE ENTIRE PROFIT OF THE COMPANIES ON THE NZX..
I stand to be corrected..
Do we not have any one that can manage our own Banks ??..
Why do we not support our own Banks ??
Apart from John .. Well past his use by date ..
Agree as well.
My issue is that GPG is trying to liquidate its holdings. It cant find a seller for its TWR shareholding so it forces the TWR to liquidate its businesses.
So we are going to lose TWR from the NZX just because GPG cant find a buyer.
So after telling shareholders absolutely nothing about its 'strategic review' they then start selling down the businesses without even informing shareholders. it wasn't so long ago they were raising money to expand.
I will take note of the directors in the TWR board and will stay away from companies associated with them, except for the last addition! They are not worth their words! Shame on them!
It's prob that last addition that is driving this self liquidation ...and prob not just for the sake of GPG
Sam's division the next to go and then a few other little bits and then the general insurance be of interest to somebody
Shareholders getting a better price at the end of the day this way
So the whole demutualisation process been a waste of time .....and not just Tower
Wonderful result from TWR .... I'll beat Belg to saying 'just quickly crunched the numbers and worth at least 250'
Maybe even more if they get prices as they self liquidate
Anyone done the Maths on the capital payment, I assessed about 44c?
$50m+ for Tower Investments....
Fisher tipped as $50m Tower-bidder while banks circle
My money is still on BNZ but interesting to hear that ASB are interested too.
Market don't seem too impressed how this voluntary liquidation going ....many will be disappointed share price down to 183
Pretty close to breaking the uptrend lines .....if so hoop would say 160 and 140 next stops down
Will TWR still be listed this time next year?
nah...I'm not that harsh a guy Winner 1.82 gap support 1.75 and 1.70 supports...its fired a few short/medium sell signals though ...MA50 DMI RSI momentum.
I did something incredibly dumb today I broke discipline and bought some at 1.84.....down with a loss already...see what happens when you break discipline.
News out from the NZ Herald report that Carmel and some banks are sniffing around Tower's Kiwisaver management business. (est 20c/share?)
http://www.nzherald.co.nz/business/n...ectid=10851668
As 777 points out, old news but I think there will be a bit of competition though.
FUM and the quality of the members is much better than Huljich and they got $20m.
I also point out that it was nice of GPG to decide on behalf of all shareholders that TWR will be sold off in parts and liquidated.
Huh !!! :huh::huh::blink::blink:...oh yeah ...
http://i458.photobucket.com/albums/q...psa484aefe.gif
It appears to me that Fishers Kiwisaver performance has dropped away since the takeover of Huljich fund. Whether it was poor performing parts inherited or simply a function of increased size it could repeat the exercise if successful with Tower. Funds become a bit lethargic as they get bigger.
When I say performance has dropped away I mean in comparison with other funds in the growth group of funds.They used to be ahead of everybody else and a month or two ago were last.
Another Tower "breakup" rumour.
http://www.nzherald.co.nz/business/n...ectid=10859543
Now there are three ........ bidders ............apparently.
http://www.nzherald.co.nz/business/n...ectid=10860457
:confused:
So life insurance and wealth going soon ......won't leave much left eh
Probably nothing when they pay X dollars back to shareholders when they hock off general
How much is X
Sad eh ..another one bits the dust
x = lets hope its more than $1.45 given theres approx 45c per share for Health division sold recently.
In the comments under an article in Stuff here is somebody who doesn't like Tower methinks
http://www.nzherald.co.nz/personal-f...ectid=10859543
Love it when people use words like rort and low life .... means they really are pissed off
I took out a life insurance policy with the old Government Life when I was 15. Later, when I was looking at a superannuation scheme, the agent who was going to sell me that scheme, wanted me to "cancel" my life insurance. What we do know, those agents then on-sell those policies for a nice big fat fee !!
So I kept my life insurance policy, and looked elsewhere for a super scheme.
Then Government Life morphed into Tower, and it was decided that it was 'best' for everyone that it list on the stock exchange. Shares, we were told would 'rise' to at least $5.00 a share - like the Tui ad., yeah right !!
The only ones who have benefitted are the filthy rich, as we have seen bonuses depreciate, while they rort the share holders. Thieves, liars and cheats have been at the heart of this once fine institution, now we see it about to be flogged off, the same as every asset that falls into the hands of ther low lifes who proport to be 'working in the best interests of New Zealand'.
26 likes
They did get past $5.00 as I recall, may have even been issued at more than that?
Can someone please explain why tower resorted to complex capital repayment process/structure? 3 of every 13 shares will be cancelled and for each cancelled share they will pay $1.92! Surely the capital repayment could be done in a much simpler way!
Everybody to be treated the same and to be given the same amount ..... 3 out of 13 is the lowest ratio with whole numbers that works to give 120 mill back ....tax free
Just giving everybody 44 cents would prob be deemed to be a divie ......with tax implications
At least something like that
Next question for you .....after cancelling the 3 shares what are the remaining 10 worth?
It's probably a case of finding an equitable way to divvy up the $ amount of capital that the company wishes to repay, whilst cancelling a realistic number of shares. Other companies have done similar exercises in the past with similarly "complex" arrangements.
The short answer is - about the same as 10 shares are worth now.Quote:
Next question for you .....after cancelling the 3 shares what are the remaining 10 worth?
13 shares @ $1.88 = $24.44
minus 3 @ $1.92 $ 5.76
= $18.68 or $1.868ps
Theoretical value only, of course.
:cool:
Agree only if the NTA is $1.88 at the moment..but is it??...........................They say it was $1.85 as at 30/09/2012....so that close enough not to affect Macduffy's calcs.
Quote Winner69..."Next question for you .....after cancelling the 3 shares what are the remaining 10 worth?..."
Why would Winner ask such a seemingly simple question?? I sense a trap.......
Ahhh Haaa... I see..... the Tangible Assets per share is $1.67...;):D
Hmmm..which NTA do you use for market price adjustment ...:(
every broker has a little book of formulae to use for such things .... need to get an adjustment factor to keep all the charts up to date eh
Answer yes no maybe
There I've covered all my arguments :)
It depends on which camp you in with.
Efficient market theory ?/ hypothesis? says yes the market is efficient because has reflected all information been received in its shareprice....and we have all been told about TWR's plans
TA deals with investor behaviour and argues that No the market is not efficient because its seldom "normal" (par value) ....its always overvalued or undervalued due bias emotions buying/selling pressures and momentums, etc.
Maybe....because market theories and TA disciplines always seem to be questioned during the practicial world of the "now" but over a period of time they usually shown to be correct...If time proved they weren't mostly correct then they are not called Theories.
If we want to really tie ourselves up in knots how are we going to define "worth"?
But it doesn't really matter. The market seldom "values" stocks solely on the NTA - tangible or otherwise - of a company.
But it was a nice teaser, winner!
:t_up:
Has anyone done the math on what total value will be unlocked if everything is sold?
To me it looks like roughly the current share price.
Instead of getting a listed company @ $1.90 paying dividends - they give you your money back.
I still do not get why the breaking the business up if they cannot even sell things at higher multiples than the business is trading on (notwithstanding the Investment business which is WORTH a premium as Kiwisaver as at the infancy of a long term multi-decade structural growth outlook.
What happened to plans to leverage the data of the component businesses to build one stronger business? How come they raised capital that they never used?
Have to say am extremely disappointed with the management of TWR.
they should have had a decent go at AMI - they missed a trick on that one!
[QUOTEI still do not get why the breaking the business up if they cannot even sell things at higher multiples than the business is trading on (notwithstanding the Investment business which is WORTH a premium as Kiwisaver as at the infancy of a long term multi-decade structural growth outlook.
][/QUOTE]
There is a theory that they don't have critical mass in any of their businesses and therefore become merely price-takers. There's something in this perhaps in that IAG dominate general insurance; the banks and AMP have the bulk of the funds management sector; Southern Cross the big player in health insurance, I think, although Tower are now out of this.
The other theory is that GPG want their money out and can't find a buyer for their stake in TWR, so.......
There may be other reasons/theories.
GPG is driving this decision without a doubt. They are liqidating their holdings and they told TWR to split up as it would be too hard to flick the shares.
Fisher Funds has announced it has joined up with TSB bank and bought Tower's investment business for $79m.
Well...it was more than $50M but not the "possibly as high as" tip of $100M
Why would you want to guess the share price on a day to day basis? Sorry no pun intended. TWR is selling out bit by bit. Too difficult for most retail investors to figure out how much they will get for their bits and pieces unless you are an insider or have intricate knowledge about liquidating such businesses.
I must admit I got fooled here by the management - I didn't know that their meaning of strategic review was liquidation!
Have you forgotten your Alice in Wonderland, RRR?
Humpty Dumpty: "It means whatever I choose it to mean - neither more than less."
:cool:
Forced a wry smile as I read today's mail from Tower which seeks shareholders' approval to a return of capital at the AGM. Not much option, I guess, now that big chunks of the business have been sold. That didn't need shareholders' approval, of course.
:(
Totally
What raised my eyebrows was that the CEO and directors of TWR have less shares than me.... combined!!
So all those millions Flanagan has made taking the company round in circles and back to square one, and he did not think it worth investning more that two grand in shares of TWR
Astonishing. Oh well I guess as poor management and directors they at least have the good sense not to back themselves!:eek2:
After this latest sale of TWR's life insurance arm can someone out there tell me what do they have left apart from a pile fo cash?
Tower was born out of Government Life so now it can be said there is no life left in Government! There was no need for the Greens and Labour to knock the stuffing out of this privatisation.
exactly what GPG want... cash
Trying to work out what TWR is worth...
1) Sold divisions
Shares on issue after 13:10 reduction - 207m
Sale of Life - 189m - 70cps
Sale of Invest - 79m - 38cps
2) General insurance business
This is all that's left and I expect they'll sell it too.
Made 12.9m last year
Est if sold - 130m = 63cps
3) Cash + whatever else is left
Anyone's guess.
Guesses anyone?
GPG seem to think TWR is undervalued and they ought to know.
Net asset backing given as $2.04 after health was sold - includes intangible assets - but maybe TWR will realise these during the sales.
I reckon the final return of cash will be more than $2.04.
Think theres roughly another 30 mil of value left in Life according to release today?
Q. Will TOWER sell the general insurance business as well?
There are no plans to sell the General Business.TOWER has a lot of cash on call. http://www.tower.co.nz/company/investor-centre/
Does anyone know why the share price shot up from 180 to 187 right on the close...seems rather out of the ordinary behaviour
VWAP was 1.806, low 1.80 high 1.87. closing price bid 1.79 offer 1.87.
Looks like almost all sales were at 1.80, and somebody bought a very small parcel at $1.87 near the close.
If it doesn't completely liquidate itself, does it become a takeover target for its remaining businesses?
I am a holder but it is now completely different to what I originally invested in. Haven't worked out if that is good or bad yet; or whether I should hold or sell.
Anyone got thoughts on this? It is only a small holding for me so would be good to have a starting position to prove/disprove.
With $1.08 in repayments or share cancellations in the offing the price shouldn't go down too much. Also there's the prospect of the general insurance business returning to pre-earthquake levels.
More chance of the price going up than down I think, but probably not much either way.
It wasn't a small parcel..if it was I would know that could be an attempt to produce a fake out.......
This was a series of 5 figure trades all happening at the close ....and all at 87 ..not a series of buying up the sellers up to 87....It seem the buyer has vanished this morning and the selling asking price has fallen back..
It could be a settlement order of some sort but the behaviour of that is strange ..... All seems rather bizarre to me as I fail to see any logical reason why .....
Well ...I will wait and see .....
Wasn't the last buy back price set by the average something or other days before or after the announcement, could be an attempt to influence that?
Just as an aside i bought into this as i thought the market was undervaluing the residual F&G business with a plan to reinvest the proceeds of each payout back into additional shares. I'm intrigued that Devon and ACC seem to have the same plan, both have increased their overall percentage holding post the health cancellation/payout.
Well... if the VWAP was 1.806, the low 1.8 and the last sale 1.87, that would be consistent with 91% of sales at 1.80 and 9% at 1.87.
If there were also sales at any other price in the range, the % of sales at 1.87 would be less than 9%.
So in percent terms it's a small sale. Wonder if it will happen again today.
Result must be due soon?
Devons still buying, good to see a Fund manager putting their (or more correctly someone elses) money where there mouth is. They have commented in the press a few weeks back they thought TWR could be a takeover target now.
maybe GPG will takeover and manage Coats pension liabilities from within :p
TWR will be much smaller and will be expelled from NZ50 club I think if they remain listed - I am not sure.
According to today's half year results announcement, post-divestments and further share cancellations (as hinted-at in the results), TWR should pay a div of 18-20cps from 2014, being 90-100 % of NPAT.
Didn't say if that is or isn't imputed.
A div (or earnings) of 20cps should be enough to fund a takeover at $2.60, so, yeah...
Im wondering how they can pay this div going forward when their only remaining business is making a loss?
The general insurance segment result included $19m of 'one-off' provisions for extra Christchurch earthquake costs.
Adjust for that and the result is a profit.
The directors seem to think that the remaining business (general insurance) will make a NPAT of 18-20cps from here on after share cancellations and debt repayment.
If that's fully imputed then the gross div yield is in the range 13.4% to 14.9% based on current share price of 1.87.
Christchurch has hammered TWR's results for 3 years now. Any chance this will be the last year? Still only settled 46% of claims by value. The can't last for ever.....surely!
The all singing all dancing IT system they have been working on for years has obviously been an unmitigated disaster. Who knows what the opportunity cost has been. Written off $34.5m this year and they are moving to a new system, Insurance Faces. Lets hope it's compatible with potential acquirers!
Reducing corporate overheads from $7.1m to $2.2m is at least some evidence this strategic review will deliver something positive.
Stumbled across this article from a few days ago on Stuff.co.nz. Just the stuff a small shareholder likes to read :-)
--------------------
Sweet time for Tower shares?
Some people have been thinking the sharemarket looks a bit toppy.
A glance at the NZX50 index shows a peak of 4671 on May 13, having gained relentlessly since late June last year. It also shows a noticeable drop in the past three weeks of about 4 per cent.
In this environment bargains can be scarce, so it's worth paying attention when a professional investor starts talking about a company being ridiculously undervalued.
The company in question is Tower, a household name in insurance that has been going through major pruning by divesting its life, health and investment businesses. The professional investor is Devon Funds, whose position in Tower is now about 8.6 per cent, worth $33 million or so at current prices.
For a fund manager that's a relatively big stake and it suggests Devon is highly confident in its view, having first disclosed a holding of 5 per cent a year ago.
The rationale goes something like this.
When Devon bought its last chunk of shares, Tower had a market value of about $368m, which will fall to about $254m after it pays out $114.5m of cash proceeds from the sale of its life insurance arm, probably in July.
At its interim results briefing last week, Tower said its remaining general insurance business had average profits over the past three years of about $24.7m.
A bit of arithmetic produces an implied price to earnings multiple of 10. You can tweak that a bit further using Tower's most recent pro forma figures, which indicate what Tower would have earned last year if it had looked then the way it does today.
On that score Tower thinks its net profit would have been $28.7m, implying a p/e ratio of nine.
Given the New Zealand market average multiple of about 15, Tower's much lower figure attracts attention as a potential buy. However, it doesn't in itself mean the company is undervalued because what matters more is how it will perform in future.
This is difficult to get a handle on - who knows how the business will go after lopping off so many branches?
Tower also has significant exposure to Christchurch and although the costs should be predictable by now, they could still turn up a surprise - the company last week said it had increased its provisions for the February 2011 earthquake by $14m citing, "higher levels of inflation, the difficulty and delays in obtaining EQC data and new claims".
Meanwhile, a chunky amount of Tower's business comes from the Pacific Islands, which accounts for 14 per cent of its customers and about 20 per cent of its gross written premiums.
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The company says its Pacific business is high margin, but the region is known to get the odd cyclone so the margin presumably just reflects risk.
In addition to the usual imponderables, a low p/e multiple can mean the business has a poor outlook.
In this case though, Tower thinks its position is good, despite a single-figure market share - describing itself as a "strong independent participant in a growth market".
One reason the company thinks it's in good shape is the amount of surplus capital sloshing around. Having piled up $307m from selling businesses, Tower has already shovelled $119.2m back to shareholders and should shovel a further $114.5m out in a month or two.
Even after paying down debt and covering sale costs, there's still $20m left over to add to general insurance capital.
The amount of capital Tower must have is determined by the Reserve Bank as insurance regulator and the ongoing business is expected to require a minimum of $72m.
Being a prudent type, Tower aims to have 175 per cent of the minimum, which brings the requirement up to $132m.
However, Tower's cash pile-up means it will have insurance capital of $200m - $68m more than its self-imposed minimum and $128m more than the legal minimum.
This capital is what Warren Buffett, a keen investor in insurance, calls float. It has several advantages for shareholders: One, you can make money from investing in the float; two, a bigger float means the business can insure more customers; and three, excess float can be paid out to shareholders at some point.
The first point isn't a great benefit right now as interest rates are so low, but the second and third are right in the mix - Tower itself says the extra money will support growth or enable a future release and distribution of capital.
But to another well capitalised insurer the $128m surplus makes Tower an attractive takeover target, because the money can be taken out straight away. So to an acquirer Tower's effective market value of about $254m looks like 265 minus 128, or about $126m, or a p/e of about 4.
I've only done a back-of-the-envelope version, but the inference from these numbers is that to the right buyer Tower could be worth a lot more than it is now.
Add in that Tower's 33.6 per cent shareholder GPG is committed to sell, probably within the year, and you have an ideal morsel for a potential buyer. A price above $3 a share is not out of the question.
Of course, most retail investors would not want to buy shares in reliance on a takeover premium. The backup in this case is that Tower expects to be a good dividend payer once its reorganisation is complete.
Last week it said 18-20c a share was on the cards in future years, which, after a bit more arithmetic, implies a dividend yield of about 10 per cent.
That, in a nutshell, is the "buy" case for Tower shares.
I should stress that not everyone agrees with it. Forsyth Barr analyst John Cairns, for example, has a "hold" recommendation, saying he is "unconvinced about the economic merits of a capital intensive, sub-scale, general insurance business" and sees a limited pool of buyers in a takeover scenario.
Still, it gives investors something to think about.
Tim Hunter is deputy editor of the Fairfax Business Bureau.
- © Fairfax NZ News
Recent developments felt like a garage sale:mad ;:. But can't sell the last remaining bit of the business:D. What a sorry tale:t_down:
anyone think the recent price fall is an over reaction ?
Things on the radar at the moment are the well earthquakes which are looking like a nothing at the moment. There is the reserve bank capital minimums review but tower was always way over the minimum anyway. There is a capital return which will likely be a buy and cancel like the last one.
Devon did the buy and jaw bone a few months back but seem to be back buying again which can't be a bad sign.
I think the parts were worth more than the whole when I got in at 180ish ....haven't seen anything to change my mine.
On the www.scoop.co.nz today:
It looks that Tower has to increase its minimum solvency margin by $41m. Would it be equivalent of a reduction of capital return to share holders of the same amount?
-----------------------------------------------------------
Tower shares fall to 2-month low as licensing requirements may weigh on capital returns
By Paul McBeth
Aug 7 (BusinessDesk) - Shares in Tower fell to a two-month low after the insurer gave more guidance on its licensing requirements, raising concerns it may have to hold more cash on its balance sheet.
The stock fell 3.2 percent to $1.79 after the Auckland-based company yesterday said it needs a minimum solvency margin of $80 million above minimum solvency capital from Aug. 16 to meet the terms of its insurance licence under new prudential supervision laws.
Chief executive David Hancock said the insurer has the funds available to meet the minimum margin due to the sale of most of its life insurance to Fidelity Life Assurance, and is now reassessing its capital management plan.
“The feedback is that they have to hold more capital on the balance sheet,” said Rickey Ward, head of equities at Tyndall Asset Management. “They’ve sold a number of assets and most investors expected the proceeds to come back to shareholders, so it’s created another level of uncertainty.”
Tower made the statement after the close of trading yesterday after concluding discussions with the Reserve Bank over its licensing conditions.
In its first-half report, Tower said it will have more than $127 million in capital above minimum solvency requirements after repaying its bonds and making a capital return. As at Sept. 30 last year, Tower Insurance had a solvency margin of $39 million, according the company’s annual report.
Guinness Peat Group is looking to sell its third-stake in the insurer as the investment firm liquidates its portfolio, and rebrands as UK threadmaker Coats, its biggest asset. GPG shares rose 0.9 percent to 56.5 cents.
NOt to sure - will have to investigate in more detail.
I assume it is a return on equity issue. If your return is the same but you have more equity, then your RoE as a % is lower. I dont expect Tower to be any more profitable just because it has to keep an extra $50m in the bank.
More on the proposed capital return to shareholders.
http://www.stuff.co.nz/business/indu...areholders-70m
How many shares are there on issue, CJ? The last annual report mentioned 269m as at 30 November 2012 which would work out at about 26cps..
Snrs.
NZX.com shows 207 millions shares. 55c each for our share ? yes?
Thanks, brucey. I'd forgotten the last return of capital.
:blush:
Already spent!
But about 33cps as CJ mentioned.
Snr Cj
114.5 / 207 = 55 ?
correcto?
But only $70m being returned at this stage. The balance may be required in the company meanwhile.
Si Snr. Macduffy
More coming again.
Gracias
did gpg sell their stake?
Looks like they sold 19.9% who NZFC are offloading to clients - at $1.70
Edit 1: I believe they held 33% so still 13% to go.
Edit 2: They have sold their full holding so not sure who the other 13% went to. https://www.nzx.com/companies/GPG/announcements/241759
A few were buying at $1.83 this morning as their was no announcement re TWR will 10.25 - GPG made theirs at 10.05.
Its been above $2 this year so that is a big discount and will take a while for that overhang to clear out.
In the end, it is postive. GPG has made TWR gut themselves over the past few years - if only they had sold earlier, then TWR wouldn't look so anorexic now.
I see that Milford Asset Management have reduced their holding from 8.16% to 6.83%.
I must say I find it hard to believe that the "slimmed-down" version will have the necessary scale to make a success of being a general - only insurance business, up against the majors.
I think they will be a takeover target in the future
actually the general insurance business is doing quite well, a lot of last results were one offs so if you add those back in not to bad , there market shares alright but probably hard to grow in nz by much there growth will come from the pacific islands so the value to someone is probably a big player already in the market who wants a little more market share and less players
Share buy back papers arrived in the mail yesterday.
Whats is everyones thoughts on this. Shareprice is hovering around 1.80 so the offer of $1.81 doens't look that appealing. Given the offer is for only part of your holding, is the $1.81 offer price keeping the price up or pushing the price down (or is it true value?)?
At this stage, I think I might decline the offer and see if it goes up once it closes.
I forgot about the dividend. I ended up accepting the offer.
Looks like 70% of shareholders took up the offer as 14% of shares will be cancelled.
It closed at 1.77 so the 1.81 is a small premium and no brokerage. Will be interesting to see if it just drifts in the 1.70-1.80 range from now or if we will see more action.
Brian Gaynor poses a few questions for shareholders to ask at next Wednesday's Annual Meeting.
http://www.nzherald.co.nz/business/n...ectid=11195066