I know Heinz is now permanently suspended, but to answer the...

I know Heinz is now permanently suspended, but to answer the question..

I continue to feel good about CER and CNP. On both a number of shares and a value basis, we have more CER than CNP but this is due to a number of factors. We haven't sold any CNP, just bought more CER.

Both are high risk, there is no doubt about that. CER is a much simpler business and is easier to understand. Even with the upcoming property revaluations, there will still be a good safety margin between the NTA and the current SP. CER went into this mess with a lower LVR than CNP and although this will have increased again this half, it will still be manageable.

When you dive into the depths of the current woes, SuperLLC, the JV between CNP and CER, is the major contributor to the problems. CNP has guaranteed a large chunk of the debt in the vehicle whereas CER has a 'ringfenced' exposure. If SuperLLC falls over it will have a big but limited exposure on CER. This can be estimated (as a number of analysts have done) and factored into the scenarios for the future. Even with a SuperLLC collapse, CER will probably survive.

There are a couple of other factors associated with the CER market that are attractive. We know Orbis has taken a large chunk and continues to add to this. You will notice that every day, hundreds of thousands of shares are being crossed out by Deutsche. Although we have seen the emergence of some insto activity in CNP, there is nowhere near the interest that we are seeing in CER. Over time, the number of CER shares that can come to market for sale is decreasing, albeit slowly. CNP (directly and indirectly) own the majority of the shares and Orbis et al own a large chunk of the rest. Contrast this with CNP which is now owned by a large number of small holders.

The downside of course is potential for the future. CER has limited upside whereas CNP (when it returns to health) has much greater prospects. CNP is a candidate for takeover, whereas CER is a lot less likely because of the current ownership structure.