When you own Australia’s biggest small share portfolio – 160 stocks worth just $100,000 – one thing you notice is the way a takeover can boost the share prices of all stocks in a sector.
After writing a story about the various interests and potential conflicts of interest of former National Party Transport Minister John Sharp last year, I decided to buy the mandatory $500 worth shares in Regional Express at $1 a pop on 5 July.
Sure, oil prices have come off a bit but the stock edged up from 99c in July to $1.11 on November 14 and has since rocketed to today’s record high of $1.89 on the back of the Qantas takeover.
I’m very happy with the $460 profit in six months and John Sharp must be equally pleased given that he’s made a quickfire $130,000 on his 150,000 shares.
Sharp first joined the Regional Express board for the 2005 float and he’s now a very contented deputy chairman who is juggling myriad transport interests as explained in his Rex CV:
Mr Sharp retired from the House of Representatives in 1998 and established his own high level aviation and transport consulting company, Thenford Consulting. Mr Sharp is currently Chairman of the Aviation Safety Foundation of Australia, a director of Australian Aerospace, a wholly owned subsidiary of European Aeronautics Defence and Space (EADS) representing Airbus (the aircraft manufacturer of ATR, CASA, Eurocopter and Astrium satellites) and a director of Skytraders, an air freight and aerial work operation providing services for Australia’s Antarctic Division.
The market clearly thinks that a debt-laden private equity Qantas takeover will be great for Rex, which has a heritage including Kendall Airlines and Hazelton, as it will probably face less competition servicing regional routes from Melbourne, Sydney and Adelaide.
But is that what rural Australians want to see? As Treasurer of the National Party, John Sharp should be pondering that question whilst the lobbying about the takeover continues.
Virgin Blue has also enjoyed spin off benefits and its stock rose another 2c to $2.46 today to what would have been a record high if Chris Corrigan hadn’t ripped out that 25c special dividend during the Toll takeover battle in late 2005.
Virgin Blue was wallowing at $1.90 before the $5.60-a-share Qantas bid lobbed so Richard Branson and Toll boss Paul Little are just loving the work of these barbarians.