If one is a Benjamin Graham type investor, then the current SP...

If one is a Benjamin Graham type investor, then the current SP is not so important. If a stock delivers, in loose terms, an estimated:

• EPS of 96c;
• DPS of 48c;
• ROE of 20%, (which has the potential to deliver 20% x ((1-(96c-48c)/96c)) = 10% growth, and has done so for a number of years,

then you could reasonably value CCP at a P/E ratio of 15. I would tend to hold CCP as long as its P/E ratio is below 14, and then I would revisit that before making a decision to sell.

In fact, if one considers that Australian-based investors can add back the franking credits, and a P/E ratio of 15 is rather ordinary for a company that will probably grow at 10% for years, then that ratio is conservative. I read only yesterday that the Platinum Japan Fund considers investing in Japanese companies that grow by 10% per annum at P/E ratios of 20.

On the other hand, if the SP has a history of being undervalued, then small shareholders could consider skipping in and out in the manner of a stock trader, and large holders could do likewise with a percentage of their holdings. The chairman, Donald McLay, seems to occasionally play this in-and-out game with about 5% of his total holding, although his reasons for selling may be more a liquidity issue than a profit-taking one. Also, although Don McLay has an interest in the shares traded, he is not the sole owner of those interests, and somebody else may initiate the buy and sell decisions for various liquidity reasons, including funding opportunistic bargains elsewhere.