Whilst I was travelling through Italy recently and scrolling through Facebook for the first time ever (the novelty has worn off), I found many ads promoting such investments as buying wine futures or whiskey kegs.
As I do like wine and whiskey, although not necessarily for investment, I did have a close look at those. As a result, I am pondering whether, for the sheer fun of it, to buy a whiskey keg or a carefully curated collection of fine wines as an investment.
My motives for owning 1000 shares in Treasury Wine Estates are rather similar. I like wine sufficiently that I have always been fond of the idea of owning shares in a wine company. In the distant past, I owned shares in the now long gone Fosters Group, Southcorp, and BRL Hardy at various times. More recently, I owned shares in Australian Vintage Group until they announced that they were not going to be paying a dividend this year, so I sold them and put the cash towards my holiday in Italy.
The announcement on Halloween that TWE is going to buy the American Daou Vineyards for $US 1 billion, mostly though a capital raising, piqued my interest as a shareholder.
I think I vaguely recall the Board hinting at the AGM at the imminent purchase when they said something about being interested in buying significant businesses which would complement the existing wine portfolio.
For me, the immediate impact is that I have the renounceable rights to buy 106 additional shares in TWE at a price (if I recall from the announcement) of $10.83 each. This represents a discount of about a dollar on where the share price is right now.
So… do I want to dig up the $1150 to buy those extra TWE shares?
I have decided NO, for several reasons.
First is that my motive for owning TWE shares is because I simply like owning a small part of a large winemaking business, particularly as it enables me to attend and enjoy the Annual General Meeting (all Bin 28 for me thanks, none of that midstrength Pepperjack!). I do not really see TWE as a core part of my share portfolio – the yield is relatively low and there is not that much diversity or growth compared to one of the LICs or ETFs I own, or to Washington Soul H Pattison (ie my main shareholding).
Second is that adding 106 shares spoils the symmetry of my share portfolio and makes my record keeping for possible sale at some point in the future a little messier. I outgrew dividend reinvestment schemes well over a decade ago (I have invested in the share market for about 27 years), and similarly am not so keen on share entitlement offers.
Third is that I can keep my $1150 for when I need it for some other investment. My Italy trip, my retirement party, and my replacement of my hot water service 6 months ago, all have put a bit of a hole in my bank balance, causing any further investments to be delayed for a while. I am much keener on either topping up one or other of my other share holdings, or to buy something entirely new.
And the fourth reason is that the renounceable rights issue could, depending on the share price during this period, result in a small premium being returned to me – money which I can then put aside for either more investment, or for my next big holiday (and no, I am not returning to Italy for at least another 3 years).
Lost For Words! 