broker report

RP and I spent a long weekend in Sydney for a wedding and NSW laid on some fine sunshine for the event - the economy may be screwed but the weather certainly isn't.

Yesterday we had some free time so we decided to spend the day in the city being tourists. The original plan was to go and see the Monet exhibition at the NSW Art Gallery but that was soon scuppered when we saw the length of the queue to get in. Bloody tourists.

Has anyone noticed that the market cap of CNP has dropped to just over $52m? Coincidentally, $52m is just slightly less than the $54m failed entrepreneur Alan Bond paid for the 1890 Van Gogh masterpiece "The Irises". Apparently Van Gogh painted it whilst in a mental asylum to stop himself going insane. Maybe we should all get the brushes and canvas out in the lead-up to 15th December debt deadline; who knows, it may do the same for us.

Now, I know there are some sticklers for accuracy on HC so I probably need to expand a bit further. Bondy was the successful bidder for the work, but those of you who remember the event will also know that he didn't have the money to pay for it... so it ended up being re-sold. Oh, and it was in 1987 ... and it was US dollars. In current terms, the painting sold for A$102m... which coincidentally is exactly half of the current $205m market cap of CER.

Useless information I know.

Anyway, next time you are in the J P Getty museum in LA (the current owner of Irises) staring at the masterpiece, think to yourself that the amount paid for it in 1987 is twice what you can currently buy one of the largest shopping centre owners in the world for. It's a sobering lesson in how markets value assets.

Well, enough about art.... It's been a long while coming but here is the latest instalment of the broker report.

CNP

If we look back to 1st August, not a lot has changed for poor old CNP. Comsec, eTrade, Westpac and Andrew West dominate the action. CNP is still, still, still being day-traded to death. Of the ~868m shares traded (which is basically the number in the entire share base), 500m odd went through these three brokers. Retail shareholders net increased their holdings by about 80m shares in the period.

ABN Amro kept buying too - you may remember this has been a long held mystery for me. Since August, they net-bought around 7m shares. If we go back to 1st Jan, ABN have net-bought about 28m CNP shares either for themselves of for a client.

On the sell side, Macquarie offloaded about 36.6m, Goldmans, Credit Suisse and Merrills about 8.5m each.

I would say with a reasonable degree of confidence that CNP is now majority owned by a large number of retail shareholders and is being day-traded by a sub set of these. It does feel to me that since the price has dropped this low, even the day trading activity has dropped off.

CER

Looking back to August 1st, our biggest net buyer of CER was of course Deutsche bank picking up around 144m shares for Orbis. Make no mistake folks, DB are there all day every day buying, buying, buying. Of the 580m shares traded, DB bought one in every 4. If you watch CER every day, realise that a quarter of what you see is DB accumulating more.

Comsec came a very, very distant second with about 24m shares or 1% of the company.

Interestingly though, others have been wading into the action. EL & C Baillieu net-bought 12.7m, CLSA Singapore 12m, Merrills 11.2m, ITG 11m, Findlay & Co. 10.4m. These are not your typical retail brokers so it feels to me like there are some bargain hunters out there.

On the net-sell side, JP Morgan offloaded 33.5m, Citigroup 30m, Credit Suisse 16m and UBS about 10m.

I still believe there is a lot of long-term value in CER. If Orbis keep going, sooner or later the sellers are going to decline. We'll have to see how this plays out.


So, in summary, it looks like retail customers are still hanging in there with CNP and will be huge beneficiaries if the company survives with some value for shareholders. CER remains a value-play (esp at these prices) and from what I can see, Orbis still hasn't let up.