This is what I call 'macro economic operational issues', its not...

This is what I call 'macro economic operational issues', its not structural.

The market being the market has a tendency to sometimes focus on operational issues rather than structural.

This gives the opportunity for the long term intrinsic value minded investor to acquire positions by focusing on the underlying business (long term profitability) and the price paid for that business (the share price).

Now this doesn't mean that everything will be fine in the next couple of years in terms of SPK profitability. It's profitability could also get hit, probably not could, will. High interest rates (higher than Aus) are absolutely hammering economic conditions in New Zealand. A number of previous labor government policies are also creating headaches (just google 'eggs new zealand ).

These operational issues will take time to play through.

In the mean time the share price could well drop further:


Look how low it has been in the past.

So just because I am starting to acquire a position, doesn't mean its the bottom.

I am buying on the basis of:


Look at the last 10yrs of earnings and cash flow, pretty consistent.
This to me means the business, whilst probably a slow growing, has decent barriers to entry which prevents competitors entering and taking away all their market share.

101 of business: if a business makes decent profit, competitors will try to grab a slice of that profit. That's business principle 101. A businesses 'barrier to entry' or 'economic moat' as Buffet describes it, is the protection that reduces a competitor from doing this.


So for me, given share price weakness, I am now presented with an opportunity to acquire that historical cash flow and earnings, at a share price that is now the cheapest in the last 10 years. Yes it could get cheaper (in the short term the market is a voting machine), and if Mr Market allows the share price to go lower, I can slowly buy more.

And like all my investments, I won't bet the house on this, I could be wrong, so I run a diversified portfolio with no individual position having a significant % of the portfolio.

Anyway my views only, and this position could take time to play out correctly.
In the mean time I am hoping the share price drops to $2