SaberX I started buying FRI far too soon, so I have a capital...

SaberX

I started buying FRI far too soon, so I have a capital loss, but I do not fret over that. At worst my four adult offspring will inherit less, and if we catch another boom before the Grim Reaper makes his call, there may well be a capital gain. I hold 193,000 shares in my pension-paying SMSF at an average cost of $1.264, which means I have a circa $75K paper loss. A character-building contretemps, I call it.

The individual purchases were (1.525*30000) +(17250*1.435) +(21234*1.42) +(1516*1.415) +(15000*1.278898) +(30000*1.36) +(35000*1.29) +(25000*0.83 +(12000*0.84) +(6000*0.85). I am unsure what I have received as dividends and franking credits, but without trawling through old records, I would moot about $25K. The dividends and the franking credits are not taxed in pension-paying SMSF, so even 7c is worth a net 10c to me, or 10/126.4 = 8%. I can sit on a yield like that for a long time and be satisfied – long enough for the SP to recover. If a stock that I hold in spades does well, I'll sell a third, and use the funds to rebalance my two portfolios (SMSF + a personal portfolio), so I could buy more FRI later.

I am 75, so I have had a few years to accumulate funds, especially between the age of 60 and about 66 – my best earnings years, which coincided with: a) low expenses due to the adult offspring having left home (each armed with a degree that allowed them to find well-paid work); b) mortgage paid off; and c) becoming a widower. I never learned how to spend money, so it accumulated quickly once I had no assistance spending it, and it has continued to accumulate since I retired, but slowly, and erratically. The erratic nature of my net worth does not bother me (it's fun in a way), but some personality types are not suited to the vagaries of disallowed.

On you upcoming nuptials, invite no more than twenty people, and negotiate to have the bash at a restaurant at a cost of two or three grand. Dispense with all the other low-utility-yeilding expenses. That is what I did.

According to http://www.bloomberg.com/research/stocks/people/person.asp?personId=7993963&privcapId=4483843, John Chan is 68, so he could hang about for a few some years, or retire soon. Darren Pateman is 47 – he could be around for decades.

I had not thought about Gerry Hanssen's shareholding. I am not that concerned what the SP might be due to somebody exiting the share register – its the intrinsic value of the shares that I think about, and if the SP is much lower than the intrinsic value, then beg, borrow and steal to get the funds to buy more. Finbar uses other contractors, so if the relationship with Hanssen deteriorates, or ceases when Gerry retires, or snuffs it, I am sure others would be interested to take his place. The Hanssen relationship is a risk, but not one to cause me to change my opinion on FRI as an investment.

Being a developer of units is a cyclical business, so slowdowns are part of the game. There is nothing one can do to avoid cyclical slowdowns, other than mitigate their affect by winding back expenses, and sitting out the storm – something that FRI, as a virtual company with a strong balance sheet, can do better than most developers. I live in Adelaide, and I do not know Perth well, but John Chan and Darryn Pateman do, so I'll leave it to them to navigate an optimal path for FRI in coming years without my opinion. I agree with you, Perth may be spared the ravages of a serious construction downturn, and FRI may handle such downturn as transpires better than most in the unit-construction sector in WA.

The softening of share buyback activity probably relates to the shift to larger projects that take longer to be wrapped up, coupled with the slowing WA economy. There may be less cash in FRI's coffers struggling to find useful deployment. There is probably a risk in going for larger projects. If the SP rises, and there are projects that can profitably digest more funding, then buybacks should take a back seat.

I think I covered all the things you asked, plus some of the things you mentioned.​