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Fitzpatrick kicks for the boundary

MIKE Fitzpatrick, one-time Subiaco ruck-man and captain-coach of Carlton, runs Hastings Fund Management, which has about $2 billion in assets under management. One of them is the listed Australian Infrastructure Fund (AIF), which owns 25 per cent of Perth Airport, as well as slices of tarmac in Melbourne, Launceston, Darwin and Alice Springs.

The Hastings-AIF consortium was left in the slipstream when Macquarie Bank made that blockbuster $5.6 billion bid for Sydney Airport. The disappointment must have lasted all of a week. Macquarie is now widely regarded as having paid too much for the Kingsford-Smith assets. The fee-hungry ‘millionaire factory’ is on the outer in these austere times. CEO Allan Moss has made a unique apology for sucking billions of dollars in liquidity from the scorched local stock market.

This should have left AIF in the pilot’s seat. Pending the creation of the Macquarie monolith, it is the only publicly listed company offering exposure to airports – which are a natural monopoly and were recently granted price increases. Unfortunately, AIF made unwise excursions into power utilities and telcos – some $30 million in write-downs have been taken against divestments of Epic Energy and Vodaphone Pacific. AIF stapled securities have tumbled from a high of $1.96 last year to $1.37. The company is now back on strategic course. About 59 per cent of its portfolio is in airports, with the balance including stakes in the M4 Sydney motorway and the ports of Geelong and Portland, all of which provide strong stable cash flow. Net profits for the year were $4.1 million and unit holders are to collect a fully franked dividend of 5.5 cents. AIF units might now be expected to clamber closer to their $1.95 asset value.

But there are a couple of uncertainties. A former Rhodes scholar, Mr Fitzpatrick has flagged his intention to sell his controlling stake in Hastings, and the market wants to see who the new owner might be. Westralian Airports Corporation, the operator of Perth Airport, is fighting a $40 million stamp duty assessment from the State Government. There is also the question of the impact on air travel following the global stock market turbulence. Airports only get around a third of their revenue from aeronautical services. They rely on the rents from duty free and other shops, and car park charges, for the gravy. That makes them a retail play. Some of the 3.2 million domestic and 1.6 million international passengers expected through the facilities this year have complained about being zapped with extra charges. It remains to be seen whether recent share losses will affect plans to visit mum in Melbourne or take the kids to Club Med in Bali this year.



Pinstriped pedlars and cracked crystal balls

THE smell of barbecued bear emanating from Wall Street last week wafted across Asia and blew straight up St George’s Terrace.

Short sellers of US shares were incinerated by a buying frenzy that sent the Dow Jones up over 1,000 points. Local share traders did not know whether to scratch their watch or wind their ear. Some decided it was bad news. Come again?

The thinking was that if the rally continued – which is a mighty big if – interest hikes will be back at the top of the Macfarlane menu, and the $A might bounce high enough to further hurt exports.

One of my antidotes to stock market madness is to don hat and coat and take a stroll along Stirling highway.

The traffic is still running to and from Fremantle, the supermarkets open on time, and the cappuccino crew is occupying its usual spots in Claremont.

The news that $15 billion was wiped off Australian stocks in a single day gets bigger headlines than a similar sum being added on again. Either way, life in the real world goes on. Many citizens suspect that pinstriped pedlars, handsomely paid to foretell the future, are equipped with cracked crystal balls.

Predictions about the near-term direction of gold, currencies, interest rates, and share prices have proved of little value. It all seems to be a random walk in the dark.

President George W Bush says America is suffering a hangover from its stock market binge.

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