FridayFiled under Agriculture, The Inflationist Challenge 2009, TheInflationist StockPicks
A sea of red as ASX tumbles by 2.9% (at date of writing) as The Inflationist sits back and watches the carnage present us with more opportunities. We bought (more than) some Webster Ltd (WBA) – trading close to 52 week lows. Webster have had a great year, with profits at all time high in 2008. Despite doing all the right things, its share price have been (unfairly in our opinion) punished. A significant portion of its record profit last year, however, include accounting equity profits(which we tend not to get overly excited) in its investment Tassal Group. Webster also acquired a further 7% of Tassal early 2008 pre-crash (on hindsight this could have been better timed). Its CEO Mr Myers have also stepped down (The Inflationist’s gets suspicious whenever CEOs resign – Buffett Rule #1: only buy companies with great management). We were praying for a cyclone to set up the perfect storm to jump in, but could not resist taking a bite (The Inflationist picked up Chiquita at 54c when investors rushed for the exit after its banana operations were wiped out by a cyclone).
So, why then are we buying into Webster?
- High Asset Backing: 35mil shares of TGR alone at $2 is worth $70mil. Even if TGR is at 52 week low ($1.55) during the recent capitulation would value Webster’s holdings at $52 mil. Websters market cap is $42 mil – net debt of $25mil.
- Agriculture – we are bullish in this sector where supplies of everything are all time low
- Near 52 week low
- Chairman and director buying: Rod James Roberts picked up $1mil shares and Former Patrick boss Chris Corrigon picked up $500k off market at $0.60 (A mysterious Peter Joy bought $4 mil worth, now owning 10% of Webster). Another Chiquita-Costa privatization play?
Note: The Inflationist holds shares in Cooper Energy, Giralia, and Webster Ltd. Unless specified otherwise, The Inflationist intends to put his money where his mouth is and will continue to hold actual shares in companies acquired in The Inflationist Challenge.
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