Question: What are your thoughts on Bellamy’s share price? It’s had a great run over the last 12 months.
Answer (by Paul Rickard): Bellamy (BAL) has been an outstanding performer.
I note that the broker Morgans recently lifted its target price from $8.70 to $13.90 – apart from that I can’t find anything else responsible for its latest run up.
While I would be inclined to take a little off the table, it might just be one of those stocks that you hang onto for the ride.
Question: I have noted the price of oil dropping yet the price of our fuel stays well over the dollar. Is there such a thing as a graph showing the comparison of the barrel cost vs the pump price say over the last 10 years.
Answer (by Paul Rickard): I don’t have immediate access to such a graph.
You are right in that the price at the bowser is currently too high, and no doubt, will come down in time (after Christmas?).
That said, the relationship between the oil price and the bowser price will never be linear due to these other factors:
- The oil price is in US dollars, while we pay in Australian dollars. As the Australian dollar has fallen, this reduces some of the impact of a falling oil price;
- The Federal Government takes a fixed excise of about 38.6c per litre – this doesn’t vary as the oil price changes; and
- Distributor margins (and profit margins for the retailer) don’t change materially as the oil price changes.
As you can see from the above, the price of oil is just one factor (but obviously, a very important factor) in determining the price we pay at the bowser.
Question: Our special purpose corporate trustee holds real estate for our super fund. The titles are in the name of the trustee and no money is owed on the properties. Do we still need to set up bare trust?
Answer (by Tony Negline): If there is no debt on the property then there is no need for a bare trust. This is only needed for Limited Recourse Borrowing Arrangements.
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