BBI - Babcock & Brown Infrastructure

[nathanblack]

what about the forms link sent me regarding US withholding tax. do i need to register? after all im australian and BBI arent even giving distributions and dont have many assets in US. i dunno if i should just complete the online registration or ignore it

 

[persistentone]

Sorry to divert the conversation directly from BBI, but who are the best capitalized brokers in Australia who work with foreign accounts? I'm looking for one that is likely to still be standing in 15 years. I know Citigroup is there, but I wouldn't want to promise they will be around in 15 days let alone years. :/

Maybe UBS?

I'd like to stay away from the smaller discount brokers, for now anyway.

 

[persistentone]

what about the forms link sent me regarding US withholding tax. do i need to register? after all im australian and BBI arent even giving distributions and dont have many assets in US. i dunno if i should just complete the online registration or ignore it

I thought that was strange as well. Is BBI a partnership or a corporation?

The only theory I can come up with is their US investment(s) are partnerships, and there must be some pass-through elements to that income.

If BBI is a corporation, then I am perplexed why they would expose their shareholders to a company they invest in. I guess you have to call BBI and ask, and then be sure to share with your friends.

 

[bellenuit]

Sorry to divert the conversation directly from BBI, but who are the best capitalized brokers in Australia who work with foreign accounts? I'm looking for one that is likely to still be standing in 15 years. I know Citigroup is there, but I wouldn't want to promise they will be around in 15 days let alone years. :/

Maybe UBS?

I'd like to stay away from the smaller discount brokers, for now anyway.

Although I don't personally use them, I have heard good things about Interactive Brokers. I believe they are US based, but they allow you to trade many different markets including Australia. I also believe you can set your account up in whatever currency you chose. They frequently have a banner ad running on this site (just under the 2nd menu line above). This is their link to them from the ad displayed a few minutes ago.

http://individuals.interactivebrokers.com/en/main.php

I am very happy with CommSec and they are the largest Australian broker and owned by Commonwealth Bank. I don't know if they allow foreign nationals to open an account with them, but I am sure if you commence the online application, it will be apparent when you get to the section on entering address details.

 

[persistentone]

Although I don't personally use them, I have heard good things about Interactive Brokers. I believe they are US based, but they allow you to trade many different markets including Australia. I also believe you can set your account up in whatever currency you chose. They frequently have a banner ad running on this site (just under the 2nd menu line above). This is their link to them from the ad displayed a few minutes ago.

http://individuals.interactivebrokers.com/en/main.php

I am very happy with CommSec and they are the largest Australian broker and owned by Commonwealth Bank. I don't know if they allow foreign nationals to open an account with them, but I am sure if you commence the online application, it will be apparent when you get to the section on entering address details.

I have heard good things about Interactive Brokers too, but I do worry about their going out of business. They are not well capitalized and are running losses.

But the main point is that I already have a way to buy Australian stocks. What I want in this case is the HIN number to prove ownership of the shares. In event of Administration or Liquidation, I don't want to disconnect my ownership from whatever gets paid out later. To get the HIN, I need a broker relationship directly in Australia.

HSBC might be a good candidate, since they have global reach.

 

[Tysonboss1]

HSBC might be a good candidate, since they have global reach.

I would have to say commsec, they are the biggest broker in australia and as already stated they are backed by the cba bank.

 

[fuzzie]

The USA has some regulations that prevent some things that are published on Australian sites being read by American Nationals. I don't know what those regulations are, I just note that some documents I receive state they are not for release in the USA or may be transmitted to the US.

Notwithstanding those regulations, I cannot understand how your US broker cannot give you the Australian HIN or SRN number your holding is registered under. It isn't secret. If you want to pay for it, anybody is entitled to go and buy the list of registered holders for any listed company. If your number cannot be stated by your broker then you probably do not own the shares. The scriptless system registers all the owners and it's a fairly well tested system that allows settlement in 3 days and the likelihood of an owners record going missing are very very low. Transaction processing software is pretty good these days.

If you do not own the shares, but have given a third party the money to buy shares on your behalf, you must have significant trust in the third party. I would not be worried about the company (BBI) going bankrupt, I would be worried about the third party you are trusting to hold your money and hopefully assets on your behalf, but not in your name. The only way I can see that working is if you buy units in a third party managed trust (e.g. 401k fund) and you trust the fund manager to make the decisions and the shares are registered in the fund name. You do not then own the shares, you own units in a trust that owns the shares.

All of the big 4 banks here have either their own brokerage house or an association. Go to any of the bank sites and look for online brokerage links.

Start here http://www.moneymanager.com.au/tools/compare/index.html
or http://tradingroom.com.au/apps/find_a_stock_broker.ac

The bank brokers include Commsec, Westpac, NAB and E*Trade(ANZ)

 

[fuzzie]

what about the forms link sent me regarding US withholding tax. do i need to register? after all im australian and BBI arent even giving distributions and dont have many assets in US. i dunno if i should just complete the online registration or ignore it

Complete it, it's not hard. If you don't and BBI start paying divs again they will be obliged to take out American withholding tax. Working out how to claim that back will probably be 1000 times more effort.

 

[nathanblack]

Complete it, it's not hard. If you don't and BBI start paying divs again they will be obliged to take out American withholding tax. Working out how to claim that back will probably be 1000 times more effort.

ok thanks, i will fill em out.

so, after i complete the US forms, if BBI/BEPPA pay a div will i need to fill in a US tax return? or everything is done at company level transparently and i just declare the div in my australian return? if its at the company level i dont see how my details are relevant but i'll fill em out just to be sure.

 

[persistentone]

...I cannot understand how your US broker cannot give you the Australian HIN or SRN number your holding is registered under. It isn't secret. If you want to pay for it, anybody is entitled to go and buy the list of registered holders for any listed company. If your number cannot be stated by your broker then you probably do not own the shares.

So you are starting to get it. When a US resident buys through a broker in the US, that broker then goes to another broker in Australia and buys the securities through them. All such securities and then put by the Australian broker into a "custody" account and that custody account has a single HIN. All of the details of the actual holder's identity is hidden from CHESS. I'm counting on both the custodian broker in Australia and my broker in the U.S. tracking my ownership by their internal accounting systems. If push came to shove and the custodian wanted to insist that a delisted share meant my investment was lost, I might have problems later establishing legal claim to the shares/cash that come out of administration / liquidation.

I have no option in the above scenario to get an HIN. The "custodian" has no relationship with me. My broker doesn't have any process for me to get an HIN, and the custodian probably has no process for getting an HIN for a foreign indirect holder that it has no relationship with.

So my reasoning is that the only safe recourse for this case would be for me to have an account directly in Australia and a relationship with a broker there, so that I could obtain the HIN and establish firm ownership of the shares.

 

[persistentone]

The USA has some regulations that prevent some things that are published on Australian sites being read by American Nationals. I don't know what those regulations are, I just note that some documents I receive state they are not for release in the USA or may be transmitted to the US.

Notwithstanding those regulations, I cannot understand how your US broker cannot give you the Australian HIN or SRN number your holding is registered under. It isn't secret. If you want to pay for it, anybody is entitled to go and buy the list of registered holders for any listed company. If your number cannot be stated by your broker then you probably do not own the shares. The scriptless system registers all the owners and it's a fairly well tested system that allows settlement in 3 days and the likelihood of an owners record going missing are very very low. Transaction processing software is pretty good these days.

If you do not own the shares, but have given a third party the money to buy shares on your behalf, you must have significant trust in the third party. I would not be worried about the company (BBI) going bankrupt, I would be worried about the third party you are trusting to hold your money and hopefully assets on your behalf, but not in your name. The only way I can see that working is if you buy units in a third party managed trust (e.g. 401k fund) and you trust the fund manager to make the decisions and the shares are registered in the fund name. You do not then own the shares, you own units in a trust that owns the shares.

All of the big 4 banks here have either their own brokerage house or an association. Go to any of the bank sites and look for online brokerage links.

Start here http://www.moneymanager.com.au/tools/compare/index.html
or http://tradingroom.com.au/apps/find_a_stock_broker.ac

The bank brokers include Commsec, Westpac, NAB and E*Trade(ANZ)

Thanks for those links.

Does anyone know if the HIN/CHESS system protects a stockholder from the failure/liquidation of a broker?

Here in the U.S. if a broker liquidates you are insured by the government up to some maximum dollar amount, but anything in excess of that you end up losing. It would be wonderful if the Australian system gave the stockholders a mechanism for directly registering ownership so that the broker's failure could not harm your holdings.

 

[persistentone]

All of the big 4 banks here have either their own brokerage house or an association. Go to any of the bank sites and look for online brokerage links.

Start here http://www.moneymanager.com.au/tools/compare/index.html
or http://tradingroom.com.au/apps/find_a_stock_broker.ac

The bank brokers include Commsec, Westpac, NAB and E*Trade(ANZ)

Speaking of bank brokers, what do others think of Macquarie Bank? They have an online trade unit named DirecTrade. One attractive thing about using them would be access to their analyst research for Australian stocks. Given their reputation for evil fees, I do worry a bit about getting weird charges.

 

[persistentone]

Speaking of bank brokers, what do others think of Macquarie Bank? They have an online trade unit named DirecTrade. One attractive thing about using them would be access to their analyst research for Australian stocks. Given their reputation for evil fees, I do worry a bit about getting weird charges.

The Macquarie website is quite amusing. They haven't even met me and already they are trying to get me to a) borrow money; b) buy insurance; c) invest in their special finance offerings. I guess I will want to register a voice mail number as a contact for these guys.

 

[cpsharky]

Does anyone know if the HIN/CHESS system protects a stockholder from the failure/liquidation of a broker?

My understanding is that the broker has very little to do with the ownership of the stock. I can't see how a broker failure would affect you unless they were holding the stock on your behalf. But that isn't the case normally (and shouldn't be). Link Market Services on behalf of BBI will keep a record of your holding along with your identity details and your HIN. The ASX will have a record of your transactions, but I am unsure if they keep a record of your holdings (although they could work it out from your transactions).

It is easy in Australia to swap your holder sponsor (ie broker) around. I don't think the original broker can even have any say in it. If your broker goes belly up then you simply change broker. If Link Market Services went belly up then BBI changes share registry companies. If BBI goes belly up then the administrator will no doubt retain Link Market Services to keep a track of holders.

If you are borrowing to buy the shares and need to register them as security, then that is a whole new ball game.

BTW If you are after good research on BBI, I quite like the ABN AMRO research. They also have a broking arm.


Does anyone disagree with me?

 

[nathanblack]

the way im looking at the current bank sweep is like a qasi adminstration. but its not all together a bad thing. it keeps the purse strings tight and avoids waisting money.

the bank sweep also allocates money everymonth to buyback the SPARCS nz bonds, thats a great thing for BBI/BEPPA because it instantly improves the ballance sheet, it moves $1 from the asset side of the ledger but removes almost $2 from liability side(bought back on market around 50-60c). a gain of nearly $1.

it also moves beppa up a step on the ladder should administraion take place.

Would BBI be doing anything different without the sweep? i dont think they would alter anything majorly, perhaps they would payback bank debt slower($1 for $1) and focus more on buying back first sparcs at a discount, and then move on to beppa. its partly why i view beppa as more of a short-medium term play.

if post dbct sale, the bank sweep is lifted and bbi chose to focus on buying back debt at a discount, sparcs will be first off the rank, followed by beppa. on market buyback will push prices up and dbct should have already increased price. so achieving 40 or 50c should be quite likely.

bank sweep or not, they wouldnt be buying assets and would still be in a sell position. the only difference being they would probably keep more cash on hand for things like refundable euroports deposit and be putting money aside for larger cap ex.

so in away the sweep is helping them to be thrifty and save, and i have no doubt we are paying back debt faster than we would have, therefor saving future interest. would be nice to buyback more discounted debt, but that will happen sooner rather than later.

and whilst we will lose alot of revenue and earnings per share, think about all that interest on dbct alone we will be saving. with some assets not covering interest by so much(PD Ports), the actual profit wont dip much from there sale.

 

[persistentone]

My understanding is that the broker has very little to do with the ownership of the stock. I can't see how a broker failure would affect you unless they were holding the stock on your behalf. But that isn't the case normally (and shouldn't be). Link Market Services on behalf of BBI will keep a record of your holding along with your identity details and your HIN. The ASX will have a record of your transactions, but I am unsure if they keep a record of your holdings (although they could work it out from your transactions).

It is easy in Australia to swap your holder sponsor (ie broker) around. I don't think the original broker can even have any say in it. If your broker goes belly up then you simply change broker. If Link Market Services went belly up then BBI changes share registry companies. If BBI goes belly up then the administrator will no doubt retain Link Market Services to keep a track of holders.

Well, viva Australia! That system sounds more consumer oriented than what we have in the U.S.

BTW If you are after good research on BBI, I quite like the ABN AMRO research. They also have a broking arm.


Does anyone disagree with me?

ABN AMRO looks great, but it seems they were recently purchased by a consortium and are in some disarray:

http://www.group.abnamro.com/transition/transition.cfm

Which of these entities will ABN AMRO Australia become? It looks like this purchase was really just a land grab for the customer base by different interests. What will happen to the research arm of the company?

 

[Tysonboss1]

the way im looking at the current bank sweep is like a qasi adminstration. but its not all together a bad thing. it keeps the purse strings tight and avoids waisting money.

I am looking at it in a positive way also,

with all of BBI assets generating a positive cashflow each month, and that cashflow flowing directly into debt reduction BBI is getting stronger and stonger.

And with a few asset sales, we are going to see a much leaner and meaner company on the other side.

At the moment I hold, both BEPPA and BBI in a 4:1 ratio with Beppa being the larger holding.

I waiting with Baited breath for an annoucement on DBCT,

Beppa is currently my second largest holding and I am flirting with the idea of increasing my holding again but with it still being some what spekky, I am not sure wheather it is wise.

 

[nathanblack]

I am looking at it in a positive way also,

with all of BBI assets generating a positive cashflow each month, and that cashflow flowing directly into debt reduction BBI is getting stronger and stonger.

And with a few asset sales, we are going to see a much leaner and meaner company on the other side.
At the moment I hold, both BEPPA and BBI in a 4:1 ratio with Beppa being the larger holding.

I waiting with Baited breath for an annoucement on DBCT,

Beppa is currently my second largest holding and I am flirting with the idea of increasing my holding again but with it still being some what spekky, I am not sure wheather it is wise.

agreed. leaner and meaner. the loss in earnings will be offset slightly by savings in interest, and BBI might start to focus on 1 asset class rather than ports, rail and energy. they will surely grow again with acquisitions in future.

be interesting to see there dividend policy in a few years time(if they are healthy again). will they be happy to remain a leaner company and payout profits or look to lower dividends and become a growth company. i guess too far away to contemplate. i will probably be out before then anyway.

regarding increasing your BEPPA holdings, obviously we cant provide advice...however my thinking of how things might pan out.

BEPPA now 10.5c
BBI now 6.5c

assume 3x or 4x share price post dbct sale and few other issues(maybe few months down the road), reaps:

BEPPA 31.5c-42c
BBI 19.5c-26c

so if we assume 3x SP growth, we have a price differential of 12c and for 4x its 16c, about a 60% premium. personally, i dont see that big a gap, so either BEPPA will increase less or BBI will increase more. Either way, short term i see more reward(and more risk) in BBI.

Long term, i still see BEPPA being safer and more rewarding. BEPPA will be worth $1odd, its hard to see what other positive news can increase BBI to that level post DBCT sale/debt reduction. Nothing major left to sell really. Perhaps only the handling of sparcs/beppa can increase BBI sp.

im about 2:1 in favour of BEPPA and am happy with that ratio. im accumulating again, but keeping that ratio.

my strategy will be to ride BBI til dust settles post dbct sale, then convert bbi to beppa and wait for redemption/conversion early or otherwise. this way i will get most of BBI growth (i think it will slow post sale) and still alot of beppas upside(if its 40c post sale it will still more than double after that).

i think alot of bbi holder will have similar ideas of selling out and either locking in gains(post dbct) by selling or buying beppa, which could push beppa up even higher.

at current prices and with news near, i favour BBI, but for risk minimisation i still hold beppa 2:1. i like bbi exposure.

not counting my chickens, could lose the lot, but thats my exit strategy.

 

[Tysonboss1]

[
regarding increasing your BEPPA holdings, obviously we cant provide advice...however my thinking of how things might pan out.

BEPPA now 10.5c
BBI now 6.5c

assume 3x or 4x share price post dbct sale and few other issues(maybe few months down the road), reaps:

BEPPA 31.5c-42c
BBI 19.5c-26c

so if we assume 3x SP growth, we have a price differential of 12c and for 4x its 16c, about a 60% premium. personally, i dont see that big a gap, so either BEPPA will increase less or BBI will increase more. Either way, short term i see more reward(and more risk) in BBI.

I know that Beppa has a significant upside, But I have already invested an amount = to about a 1 years wage into beppa, when I get to holding an amount of this size I have little demons start to question whether I am going to far and perhaps taking to much risk,

However my current holding is part of my longterm portfolio, which I never withdraw capital or dividends from,

what I am thinking about doing now is investing $14,000 that I have sitting aside into Beppa, The catch is I have actually set this money aside for another purpose and need it back in about 9 months from now, so it would be a short term play of 6 - 9 months which is not what I usally do.

 

[persistentone]

I know that Beppa has a significant upside, But I have already invested an amount = to about a 1 years wage into beppa, when I get to holding an amount of this size I have little demons start to question whether I am going to far and perhaps taking to much risk,

However my current holding is part of my longterm portfolio, which I never withdraw capital or dividends from,

what I am thinking about doing now is investing $14,000 that I have sitting aside into Beppa, The catch is I have actually set this money aside for another purpose and need it back in about 9 months from now, so it would be a short term play of 6 - 9 months which is not what I usally do.

I guess the common wisdom would be that you never put money you need to spend into the stock market, let alone into a speculative investment.