upward creep

Yesterday morning I was tempted to write that TGA's SP would move to $2.05, hover there to mop up a bunch of sellers at that level, then head for $2.10, but I decided that I should stint my proclivity to write about TGA, because I have little to write that I have not written before, and predicting SP movements is not my forté. The hastier than expected SP move to $2.10 has, however, goaded my Schreibensdrang Syndrome (I have just invented that term, so it may not be in any dictionary - but "furor scribendi" describes the same self-indulgent condition). I'll venture into non-FA territory though, and suggest that once the SP hits the level where John Hughes last sold a percentage of his holdings (about $2.20 from memory), the SP will move to new highs above $2.30, and not retreat below $2.30.

I am unsure why John Hughes gave his recent presentation in New York, other than it gave him an excuse to go to the USA at shareholders' expense. The presentation was substantially a rehash of his presentation in Australia to cover the half year ended 30/9/2012. If I were to opine on TGA as a business, I too would have nought to write that I have not written before. The only thing I can add from an SP perspective is that I have increased the time that I spend looking for investment targets for my SMSF portfolio, and I have not found a single stock, or even alternative investment, that I think is on par with TGA. The four-fold use of the first-person personal pronoun in the previous sentence empasises that this is peculiar to my thinking pattern and knowledge repository - there are gems out there, but they are beyond my ken.

Recently my need to find alternative-to-TGA investments has increased, because as I sell out of other investments that have become “toppy”, I find I have cash in my SMSF, and no obvious place wherein to invest it. My personal portfolio, where I am happy to take risks, now only has TGA, 312,125 of them, and I sleep easily at night. I cannot increase my personal holding, because the free cash sits in the SMSF, and the co-trustee and the SMSF trust deed disallow me to increase the size of the TGA holding in the SMSF portfolio, which holds 187,875 TGA shares. As an aside, in absolute SP dollar terms, I always regarded SGH to be roughly equal to TGA – I have recently exited SGH at $2.65, which gives some idea of the fair-value price I have for TGA.

Fair-value SP, which is not the same thing as one's buy-in SP and sell-out SP, is a relative concept (alternative investment options create it), and a subjective one (peculiar to each investor's perceptions of many things, and their situation). As the alternatives to TGA become expensive, TGA's fair-value SP should rise, other things being equal. Other things are not equal, and one of these is the knowledge-comfort-level peculiar to each investor, and it changes with change, which has a bearing on risk perceptions, and hence the risk-adjusted required rate of return that lurks below each investor's decisions to buy, hold or sell. My knowledge-cum-comfort level in respect to TGA vis-a-vis alternative stocks biases me to favour TGA, notwithstanding its warts. In a weird way I am not that keen for the SP to shoot above my fair-value SP, because then I would have to consider selling TGA, and be lumbered with the task of re-investing the proceeds in an overheated market. TGA is substantially an income play for me, and I focus on its EPS and DPS trajectories, rather than its SP. Writing about TGA in forums like HC is an attempt to keep my pro-TGA bias in check, and I am still waiting for somebody of the calibre of Camden55 to advance cogent argument that would alter my views