Punter treads warily through the woods

Punter treads warily through the woods

Business
The Punter was encouraged by the fact all five directors of Kangaroo Island Plantations have increased their shareholdings significantly.

The Punter was encouraged by the fact all five directors of Kangaroo Island Plantations have increased their shareholdings significantly.

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Punter decided to increase his holding in Kangaroo Island Plantations by applying for 500 shares at $2 each under the company's share offer.

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Every so often the Punter goes into a state of funk, convinced the bottom is about to fall out of the stock market, taking his portfolio with it.

There's plenty of evidence to support a glass half empty view: falling house prices, car sales and retail sales generally, the impact of drought, floods and bushfires at home and the US/China trade war. In the circumstances, the stock market has been remarkably resilient, but it does feel like a time to tread warily.

Nevertheless, the Punter decided to increase his holding in Kangaroo Island Plantations (ASX code KPT) by applying for 500 shares at $2 each under the company's share offer, which closed on Tuesday. This will not give him a quick profit - the shares have been very close to the offer price since the fundraising drive was announced. However, KPT has now firmed up its agreement for Mitsui to build and operate a state-of-the-art woodchip receiving and screening plant at KPT's proposed seaport at Smith Bay. That is expected to become a binding agreement later this year.

In October, the Punter wisely sold the Food Revolution Group (FOD) at 14.5c. News of a half-year loss subsequently slashed the price to 7c. Last week, however, Australian Chinese businessman Dr Norman Li and his Careline Group confirmed their effective takeover of the company by providing $1.89m in bridging finance, interest-free, pending the formal approval by shareholders of his proposed $20m investment in FOD. The bridging cash will enable the upgrade of the company's Mill Park facility in Victoria to continue. Moreover, the Food Revolution Group has now formalised its agreement with Careline for substantial exports to China, and has confirmed its sales target of between $100-$500m in the next three to five years.

Treading less warily, perhaps, the Punter has bought 20,000 FOD at 10c each.

  • The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
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