Qantas: How come nine analysts had ‘buy’ ratings?

Qantas Limited (ASX: QAN) yesterday announced a surprise profit downgrade – well a surprise to many, but not me. As I mentioned a few weeks ago, “Airlines are notoriously bad investments – In aggregate airlines globally lose billions most years.”  The share price subsequently dropped 18.7% to close at $1.155.

What was most surprising to me was that nine out of 13 analysts had a ‘buy’ or ‘strong buy’ rating on the stock before the announcement. How did they get it so wrong? I have several possible explanations for that.

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Hastie Group – The writing was on the wall

In today’s Australian Financial Review, Hastie Group Limited (ASX: HST) director Harry Boon blames three of the company’s seven banks yesterday for refusing to take a write-down on their debt s th reason for the collapse of Hastie Group.  He said that directors had tried hard to budge the banks, after the company had found two willing financiers, but according to Mr Boon, the banks were acting unreasonably.

Well, I beg to differ. The collapse of Hastie Group and the loss of 2,000 jobs had nothing to do with how the banks acted. Hastie Group was an ordinary business, with low profit margins, poor returns on equity, and constant capital raisings and new debt financing, it was always going to struggle. Directors are the ones to blame for the collapse of the company. If they had concentrated on making the business profitable, and not gone on a spending spree, acquiring companies at ridiculously high prices, Hastie may have survived. Read more of this post

Vocus Communications – New Post on Motley Fool site

Vocus Communications Limited (ASX:VOC) recently updated the market with its expected half year results. I wrote an in-depth article for the Motley Fool, which you can view here.

Billabong International Limited (ASX:BBG) – Capital raising on the cards

Billabong released a trading update on Monday 19th December, announcing a profit downgrade, an operational review and a strategic capital structure review. Billabong’s share price subsequently fell by 40%.

The company said that sales in Europe have been affected by “Sovereign debt issues and fears of a global recession, impacting consumer spending patterns significantly”. Europe is also being affected by bad weather due to limited snowfalls.

Sales in Australia have been significantly affected by unseasonably cold summer weather, despite the November rate cut by the RBA. Read more of this post

A review of Skaffold.com – Yet another black box trading system

You may or may not be aware of Roger Montgomery’s site www.skaffold.com. It’s basically Roger’s ideas on rating and valuing ASX listed companies in a web application. You can think of it as a black box that indicates which companies are cheap/expensive and which are good/bad/average. And that’s the issue. There is no insight into how those ratings and values are arrived at. This is where Skaffold fails, and becomes yet another black box stock system. Read more of this post

Austock portfolio versus my model portfolio update 9 Sep 2011

My model portfolio continues to outperform the Austock portfolio. It’s now over two months since I started tracking these two portfolios, and the model portfolio continues to increase its outperformance over the Austock portfolio, beating it by more than 4%, as well as outperforming the ASX200 Accumulation index by 3%, as you can see below.

Austock share portfolio versus my model share portfolio

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A review of the top 50 Australian stocks (S&P 50 Index) – Part II

In a previous post, I reviewed several stocks in the ASX Top 50 and found 21 stocks that I wasn’t interested in. So, what about the rest of the stocks? Well, let’s go through the list and have a brief look at each of them.

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