News came through yesterday that Abu Dhabi’s Etihad Airways has more than doubled its stake in Virgin Australia, to a maximum 19.9 percent.
The stronger alliance between the pair is likely to help them compete against Emirates and Qantas, which launched its alliance in March and is viewed as a strong strategic partnership.
Etihad, which originally owned 9 percent, has been buying up Virgin shares on the Australian Stock Exchange in recent weeks and now holds more than 515m.
Nobody known's whether any of those shares were held by Virgin Group CEO Richard Branson, who has previously hinted he would potentially sell his remaining 13 percent stake. This came after he sold 10 percent to Singapore Airlines. This took Singapore's holding to and overall maximum of 19.9 percent.
Air New Zealand also now owns 19.99 percent of the Australian airline, meaning Etihad’s influence in the company had been significantly diluted since it first invested in it in June 2011.
At 19.9 per cent, the airline has reached the threshold approved by Australia’s Foreign Investment Review Board in June 2013.
So this begs the question, is Virgin now a good share to buy? I have followed this stock for the last 4 years and there have been several point where I believed it was going to take off.....pardon the pun. However, it has never reached the height's many investors hoped for.
Airlines are notoriously volatile and if you are searching more a more secure Australia share tips then the banks might be for you. Given the significant holdings on Air NZ, Etihad and Singapore which should dry up a large glut of shares there could now be value in VAH, but if you invest watch it link a hawk.
Thursday 10 October 2013
Back To The Blog - Speculative Shares
Have been away from the blog for a while now and it is all the fault of the footy finals. Evey August and September my attention turns from calculated gambling on the share market to gambling on the footy.....calculated of course.
So with that theme in mind I thought it pertinent to talk about small caps and speculative stocks. The average investors like you and me simply cannot resist the prospect of massive gains in a small time frame.We ignore the plentiful advice to avoid using anything other than excess disposable cash to gamble on this kind of investment, and that's what it is gambling.
Since Australia’s resources boom began it has been a major source for penny stock hunters. The companies in this sector are typically very small and are engaged solely in exploring for minerals. A single find or even something as little as a positive geological report can send the share price soaring in the expectation it could be the next big winner.
A great example came a few years ago in 2007 when Minemakers – a Perth based phosphate exploration mining company that was around twenty cents a share, hit pay dirt. What happened to drive the price to around $2.50 by the close of the first quarter of 2008 may be a matter of historical interest, what matters to investors is the 1400% increase.
These success stories are few and far between and there are better strategies than to score big with penny stocks. There is definitely a place for these shares in your portfolio but if you want to avoid getting burned you need to do your homework, perhaps even more so than with the shares of larger companies.
Before you buy make sure you look at all the factors you normally would with a big boy and even more so try and find out the reputation of those leading the business. These stocks could make big money, but only use cash you can afford to loose and have them as part of a balanced portfolio.
So with that theme in mind I thought it pertinent to talk about small caps and speculative stocks. The average investors like you and me simply cannot resist the prospect of massive gains in a small time frame.We ignore the plentiful advice to avoid using anything other than excess disposable cash to gamble on this kind of investment, and that's what it is gambling.
Since Australia’s resources boom began it has been a major source for penny stock hunters. The companies in this sector are typically very small and are engaged solely in exploring for minerals. A single find or even something as little as a positive geological report can send the share price soaring in the expectation it could be the next big winner.
A great example came a few years ago in 2007 when Minemakers – a Perth based phosphate exploration mining company that was around twenty cents a share, hit pay dirt. What happened to drive the price to around $2.50 by the close of the first quarter of 2008 may be a matter of historical interest, what matters to investors is the 1400% increase.
These success stories are few and far between and there are better strategies than to score big with penny stocks. There is definitely a place for these shares in your portfolio but if you want to avoid getting burned you need to do your homework, perhaps even more so than with the shares of larger companies.
Before you buy make sure you look at all the factors you normally would with a big boy and even more so try and find out the reputation of those leading the business. These stocks could make big money, but only use cash you can afford to loose and have them as part of a balanced portfolio.
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