trapped, page-57

Hey buffett, Generally speaking a valuation model for most companies for me personally is r.o.e divide by pre tax required return multiply by equity per share and looking at a 5-10 year pattern on retained earnings.

In Centros case its better that they pay out the majority of their profits in dividend form, compared to companies with high rates of return i.e. 15% or better over a 5-10 year period; there much better off retaining their profits and not paying out a dividend.

Growing the business by retaining their profits is a business that all fund managers,analysts and investors should be looking for;but businesses who have a r.o.e lower than 15% are better off paying out their profits to shareholders i.e dividends.

I consider centro as a Benjamin graham approach and that is by purchasing the shares at a discount to book value and n.t.a backing. Asset values and interest rates also play a role in a companies intrinsic value.

I don't like the idea of buying into mining stocks that don't have an income stream.It's a bit like playing a game of hot potato in a bull market “who’s the last man holding the shares”.Thats why i stick with businesses that have a good history of owner earnings and businesses that are easy to understand.

I have been to just about all the major shopping malls in melbourne i.e.City, southland, eastland , chadstone ,knox ,fountain gate,doncaster, highpoint e.t.c. e.t.c..

The centro vists include:

1. Box hill
2. Brandon Park
3. Croydon
4. Karingal
5. Ringwood
6. The Glen
7. Victoria Gardens 50% join venture
8. Heidelberg
9. Oakleigh

My preferences for the above are 6 & 7...although all of them are quite busy during the day.

Local/Neighborhood type Shopping centres are the ones i favour the most as the majority of shoppers are focused on grocery/food style shopping as apposed to Shopping centres that have a high proportion of discretionary spend like Westfield.

Over the longer haul; Local/Neighborhood type Shopping Centres in general are a good safe investment especially during tough global times where they become a defensive play.

Centro won't have a problem in selling assets to lower their gearing levels.

Banks are supporting G.R at current and if they were smart they should become partners with the shareholders.


Time will heal this company.....

Keep the faith and Keep believing!!

Thanx to guys like buffett , swap, cmwilson, tweetypie who continue to post valuable info thanx guys...