FRI - Finbar Group

robusta · 13 December 2010

So_Cynical said:
That fact that i have money to go into a new position and i didn't have a buy order in the FIN cue today speaks volumes about my uncertainty's with this company...i had a good look at them over the weekend and like alot of stocks favoured by value investors, i came away thinking they have a high ROE because they don't actually own anything.

I see this as a positive, no expensive plant or equiptment, just the ability to allocate capital for a high return

So_Cynical said:
They have a staff of 8 and get fees from doing RE deals mostly with JV partners, all the debt is at project level but there's no real recurring cash flow...they have to keep churning over the deals and developments.

Too right they have been doing this for 26 years and have a heap of deals on the horizon for the future.

So_Cynical said:
Perth is a small city and there's only so many apartments that can realistically be built...15 minutes drive from Perth airport and your driving pass cows in paddocks...there's alot of undeveloped land in Perth but no one wants to live more than 40 minutes from the beach.

And there's only so many Sand-groper's willing to pay $800.000 for a unit.

IMO WA is where the major growth for Australia is, the reserve bank is jacking up interest rates to cool the rest of the economy so we have some spare capacity to deploy for the projected resources boom. A lot of people will move to Perth for employment opportunities but that is only part of the story for Finbar. The Pilbarra is where the real money is to be made. Just look up positions vacant in the mining industry and realestate prices in Karratha or Dampier.

prawn_86 · 13 December 2010

I have only read what is in this thread, so have not done a lot of research. I have to say i share SC's view though.

I have a friend who lives in Karattha, and all it is is mining and O&G. The houses there certianly are not that nice for what you pay. So to me, a property play in these areas is just like going long on the mining boom, because if that falls over, so will the rents/property prices etc.

robusta · 13 December 2010

prawn_86 said:
I have only read what is in this thread, so have not done a lot of research. I have to say i share SC's view though.

I have a friend who lives in Karattha, and all it is is mining and O&G. The houses there certianly are not that nice for what you pay. So to me, a property play in these areas is just like going long on the mining boom, because if that falls over, so will the rents/property prices etc.

Have to agree with you there Prawn, I think China, India and the rest of the world will be buying the stuff we dig up for a while yet.

So_Cynical · 13 December 2010

robusta said:
I think China, India and the rest of the world will be buying the stuff we dig up for a while yet.

I also agree...the thing is with Karratha etc is that the jobs have been there for over 30 years, when i was a kid growing up in Fremantle is was the same then as it is now...every body wants to go north for the big bucks except today there's alot more people and alot more bucks.

My point is...no one actually wants to live there, for the 5 or 6 months of winter its a paradise, perfect weather etc then for the summer months its a hell hole...there's no amenity's, no culture, prices are over inflated and its the middle of no where....everyone wants to do FIFO and live in Perth and Bunbury, and there wife's will refuse to live there anyway.

______________

Besides i really feel uncomfortable putting money into a business that doesn't own anything...i could never be a true "value" investor as i like assets and income way to much...FIN will stay on my watchlist but i have a feeling it will be one of those stocks i watch and think about occasionally but never buy.

robusta · 17 January 2011

Just a question for any traders out there. I thought I might sell part of my FRI holdings @$1.195 as I have the option to buy more @ $1.15 thought this might be a good arbitrage opportunity.

Trying to work out who would be buying 2 shares at a time

17 Jan 2011 13:02:Instruction: New Sell 9020 FRI @ $1.195

17 Jan 2011 13:03:Trade: Sold 2 FRI @ $1.195

17 Jan 2011 13:11:Trade: Sold 2 FRI @ $1.195

17 Jan 2011 13:17:Trade: Sold 2 FRI @ $1.195

17 Jan 2011 13:20:Trade: Sold 2 FRI @ $1.195

17 Jan 2011 13:37:Trade: Sold 1500 FRI @ $1.195

17 Jan 2011 13:48:Trade: Sold 2 FRI @ $1.195

17 Jan 2011 13:48:Trade: Sold 4500 FRI @ $1.195

skc · 17 January 2011

robusta said:
Just a question for any traders out there. I thought I might sell part of my FRI holdings @$1.195 as I have the option to buy more @ $1.15 thought this might be a good arbitrage opportunity.

Trying to work out who would be buying 2 shares at a time

Just some bots doing some buying/selling. Happens all the time with many stocks. Obviously they don't pay retail broker per transaction of those 2 shares.

Any ideas why FRI went from $1.50 to $1.20 since Oct?

robusta · 17 January 2011

skc said:
Just some bots doing some buying/selling. Happens all the time with many stocks. Obviously they don't pay retail broker per transaction of those 2 shares.

Thankyou just have not seen that before. Do you think it is driven by institutions or perhaps Bell Potter the underwriter of spp?

skc said:
Any ideas why FRI went from $1.50 to $1.20 since Oct?

Spp @ $1.15 to fast track development in Pilbarra and take advantage of opportunities in Perth.

skc · 17 January 2011

robusta said:
Thankyou just have not seen that before. Do you think it is driven by institutions or perhaps Bell Potter the underwriter of spp?

I am no expert in bots and what the presence of them means. But even I can use my Interactive broker account to buy shares in small parcels over the course of a day in order to acheve a better price, esp if they stock is quite thin like Fri. They are definitely not uncommon.

robusta said:
Spp @ $1.15 to fast track development in Pilbarra and take advantage of opportunities in Perth.

By the time the cap raising was announced the share price has already fallen to current levels... any better explanation?

robusta · 17 January 2011

skc said:
By the time the cap raising was announced the share price has already fallen to current levels... any better explanation?

The cap raising was at a 12.6% discount to average 5 trading days prior to spp. This is a fair bit below $1.50 however. I have no real plausible explanation except maybe rising interest rates.

Or maybe more people subscribe to this opinion than mine

prawn_86 said:
I have only read what is in this thread, so have not done a lot of research. I have to say i share SC's view though.

I have a friend who lives in Karattha, and all it is is mining and O&G. The houses there certianly are not that nice for what you pay. So to me, a property play in these areas is just like going long on the mining boom, because if that falls over, so will the rents/property prices etc.

...............at the moment.

I still think this is a top quality company trading at a significant discount to iv. I am happy with the fall in the sp and the spp @ $1.15 as it has given me a chance to top up my holdings.

ROE · 17 January 2011

robusta said:
Thankyou just have not seen that before. Do you think it is driven by institutions or perhaps Bell Potter the underwriter of spp?

Spp @ $1.15 to fast track development in Pilbarra and take advantage of opportunities in Perth.

A bit of price manipulation by someone to try and maintain above 1.15 support level for capital raising ... Imagine it goes below 1.15 no-one would take up equity raising....

this sort of things happen often in small cap...for 2 reasons someone want to drive price down low to generate some sort of trigger sell off so they can buy the thing cheap or they want to maintain some sort of supporting level....

that the life of small cap not much liquidity so easy to manipulate...just ignore small parcel trade anything under 10 shares is just pure manipulation...

it happen to CCP when they were around $2- $2.50 dollar mark... lot of parcel in 1-5 shares sell lower and lower price ....

robusta · 17 January 2011

ROE said:
A bit of price manipulation by someone to try and maintain above 1.15 support level for capital raising ... Imagine it goes below 1.15 no-one would take up equity raising....

this sort of things happen often in small cap...for 2 reasons someone want to drive price down low to generate some sort of trigger sell off so they can buy the thing cheap or they want to maintain some sort of supporting level....

that the life of small cap not much liquidity so easy to manipulate...just ignore small parcel trade anything under 10 shares is just pure manipulation...

it happen to CCP when they were around $2- $2.50 dollar mark... lot of parcel in 1-5 shares sell lower and lower price ....

Thankyou for that ROE.

It seems it worked for them today ~250 000 shares traded between 2% and 4.5% above spp @ $1.15

Does not matter to me I sold 9020 shares today @ $1.195 and will take my full entitlement under the spp, 13043 shares @ $1.15 unless spp is oversubscribed.

Noddy · 20 January 2011

Holding shares in FRI.
Price is locked in a narrow band between $1.15 and $1.20.
Motivated sellers keep coming in at $1.20
Hard to see a valuation of $1.80 or $1.90 as posted on this thread.

robusta · 20 January 2011

Noddy said:
View attachment 40964

Holding shares in FRI.
Price is locked in a narrow band between $1.15 and $1.20.
Motivated sellers keep coming in at $1.20
Hard to see a valuation of $1.80 or $1.90 as posted on this thread.

Also holding shares in FRI
I was one of the motivated sellers @$1.195 but only because I have the option to buy $15000.00 worth of shares @ $1.15.
This motivation will cease for a lot of shareholders when the spp closes on the 28/1
I think the company is worth ~$1.80 per share but have no idea what the share price will do in the short to medium term.

Here are a couple of interesting fluff pieces on Perth property prices.

http://www.perthnow.com.au/business...a-rp-data-report/story-e6frg2ru-1225990429472

http://www.watoday.com.au/wa-news/w...al-estate-20110117-19tur.html?from=watoday_sb

Noddy · 20 January 2011

Hopefully the share price will move up after 28/1.
How do you work out the share is worth around $1.80.
Are you using Value-able ?

robusta · 20 January 2011

Noddy said:
Hopefully the share price will move up after 28/1.
How do you work out the share is worth around $1.80.
Are you using Value-able ?

Yes Roger Montgomery's valuation method. But I dont get too scientific about it, depending on the inputs used I come up with a range of $1.50 to $2.16. All I am really sure of is FRI is cheap.

Noddy · 20 January 2011

Have read Montgomery's book, but still sticking with DCF calculations at this stage.
Think that his calculation method produces ridiculously low valuations on many stocks - eg. Woodside, Santos etc. Very hard to find stocks that are discounted to his I/V.

DCF calculation gives a valuation of $1.65 at 3% increase pa. for FRI
$1.78 at 5% increase pa.

Surprised at that actually. Bought the shares because I liked the chart, but they do seem to be good value.

Regards

robusta · 20 January 2011

Noddy said:
Have read Montgomery's book, but still sticking with DCF calculations at this stage.
Think that his calculation method produces ridiculously low valuations on many stocks - eg. Woodside, Santos etc. Very hard to find stocks that are discounted to his I/V.

Have to agree, hard to find good businesses at a discount to IV, then again if it was easy everyone would be doing it.

Noddy said:
DCF calculation gives a valuation of $1.65 at 3% increase pa. for FRI
$1.78 at 5% increase pa.

Surprised at that actually. Bought the shares because I liked the chart, but they do seem to be good value.

Regards

Good luck

robusta · 29 January 2011

Finbar should have a advantage being first in line with development in Karratha.

http://www.pilbaraecho.com.au/echo/content/view/2746/63/

Happy to participate in the spp.

Noddy · 3 February 2011

Still motivated seller/s at $1.195, stock price still can't move above this level.
Have a DCF value $1.65 to $1.78, and intrinsic value (Montgomery) $2.00 to $2.10.
Interesting to see where the price goes.

Should be decided soon when FRI put out their trading update for the six months to December.

kermit345 · 3 February 2011

Noddy said:
Have read Montgomery's book, but still sticking with DCF calculations at this stage.
Think that his calculation method produces ridiculously low valuations on many stocks - eg. Woodside, Santos etc. Very hard to find stocks that are discounted to his I/V.

DCF calculation gives a valuation of $1.65 at 3% increase pa. for FRI
$1.78 at 5% increase pa.

Surprised at that actually. Bought the shares because I liked the chart, but they do seem to be good value.

Regards

I think you'll find the reason Roger's calculation method doesn't work well on those companies is their debt. I've created my own valuation spreadsheet/equation and I know that debt is definately the reason those stocks don't pass through my valuation method with any decent intrinsic values.

Rogers Equation is for the opportunity to identify and value stocks that are of the low debt and high ROE nature. Hence his equation basically excludes companies that have some form of debt because it drives his IV's lower and hence no margin of safety.

Haven't taken a look at this company personally as it didn't pass through my intial value screener, however theres some discussion about it on Roger's blog as well recently.

FRI - Finbar Group

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