Taking Stock 19 February 2026

WHEN the technology company ERoad (ERD) lost the second of its joint chief executives last week, the company's shares fell in price to a depressing 90 cents.

The joint CEO, running the American arm, had resigned last year, leaving the bright, pleasant NZ CEO, Mark Heine, in sole charge.

Heine, a lawyer specialising in patent law, had never sought the job but was landed with it when the company's founder Steven Newman surprisingly walked away, several years ago.

Heine, a polite and quite young family man, took on the role and developed the team of technology specialists, people he describes as the nicest and smartest group a CEO could ever seek.

I have met with him occasionally and admired his focus on his work, the sign of a useful CEO, rather than on polishing ego and grandstanding.

I had invested in ERoad from the beginning and believed its clever technology would help it to extend its NZ dominance (80% or more of the NZ truck market) by penetrating the US market, where just a 2% market share would exceed in truck numbers the share of its NZ market.

If ERoad had captured 5% of the US truck market, the very profitable business it had in NZ would have leapt, converting the value of its shares to a high number. It has never reached 5%.

ERoad kept developing new products — many of them enhancing driver safety and thus road safety — and it merged, to introduce new products enhanced by technology, including software that protected frozen goods that its trucks might have been carrying.

Ultimately ERoad has failed (so far) to develop a convincing level of revenue and margin in the US. Thanks to its NZ dominance, it has lifted itself to positive nett cash flow and modest profitability, but clearly if it retains its aspirations it needs a level of drive, of service development, and of leadership that has yet to appear.

Heine retires, as a decent man who progressed the company but not to the level of the promise it showed several years ago.

I record all of this not just to present Heine’s era in a fair way, but more to introduce the thought of how hard it is to forecast the progress of technology companies.

I have every reason to be grateful to Xero, another NZ technology company, but my success rate in eliminating the occasional poor performer, and my success rate of catching the stars, is patchy.

Accordingly, I revert to the mediocrity of technology index funds, which at least pick up the stars as well as the duds.

However, as at today I have not a razoo invested in a recent NZ technology story that I have long doubted but now salute. I tip my hat to the endurance, and now emerging successes, achieved by Sharesies, a company conceived by young financial market technology buffs, a decade or so ago.

Its opening stanza was to address youngsters with small coins wanting to achieve higher returns on their coins by investing in equities, directly or indirectly. Sharesies developed technology enabling people to invest in shares, at $5 per investment.

The founding technology youngsters succeeded when pitching their story to attract capital, and bumbled through a scratchy beginning, continuing to attract capital as a company whose database, rather than nett margins, appealed to angel investors, who fed Sharesies capital.

It attracted hundreds of thousands of youngsters, often investing tens of dollars each week, gave them cheap access to financial products, and sucked up the cost of walking those youngsters through the anti-money-laundering compliance pathway.

Traditional firms, like ours, calculated the cost to achieve bullet-proof AML compliance was expensive, making it impossible to offer services to people with just coins to invest.

Sharesies developed software that seems to have made the compliance process seamless, extremely rapid, and virtually costless. The fine for incomplete due diligence is hefty. Sharesies seems to have a solution.

It advises it now has close to a million clients whose average wealth, Sharesies advises, is around $4000.

This average figure will have been boosted by the clients who have significant wealth and execute their investments through Sharesies because of the low brokerage fee.

The big companies calculate that the cost of achieving AML clearance is at least $100 per person, so a company with a million legal clients has a hugely-valuable asset.

Those who cut corners, as its rival Tiger once did, risk falling foul of the regulators.

Sharesies has done much more than find a way of clearing compliance rules through clever technology.

The youngsters who founded the company have introduced a range of new products, often offering the services of other financial service providers, clipping the ticket, and accessing products that would normally be available only to those with wealth.

It offers a savings account facility, a share trading platform, a nominee company that compulsorily holds the shares of all its clients and now sells insurance products.

All the way along its pathway Sharesies has continued to attract new capital from valuers who place a price on Sharesies’ potential. Indeed, if you believe those valuations, Sharesies has a greater value than the biggest sharebroking firms, and many of the top 50 companies on the NZX.

The achievement is astonishing. I would never have visualised that it could achieve such an apparent value.

Sharesies might one day be yet another tech company whose progress I have underestimated.

If it were to list on the NZX at a credible value, I might be an investor. As I write that, I hear a Jiminy Cricket voice from my shoulder saying “Did you really mean that?”

I do. Hats off to Sharesies’ success. May it lift the boat of a million people and help them reach a level of wealth that would justify them graduating to the position where they can see the value of paying for knowledge and experience.

The young people who founded the company must have worked really hard, taken real risks, sacrificed plenty — and might now be basking in the land where wealthy people live.

Fantastic!

_ _ _ _ _ _ _ _ _ _

THERE are of course other ways to achieve wealth.

One might inherit it, one might win Lotto several times, one might work for an edgy American bank which transfers shareholder profits into vulgar staff bonuses, or one might borrow money and punt on inflation as, say, Bob Jones did in his career in property.

The modern story would also acknowledge those who were early believers in Bitcoin. They have achieved wealth beyond belief.

I have met a New Zealand young man who bought 1000 Bitcoin for less than a dollar each, rode his luck and now, in his 30s, has bought nice houses for his family and works when and where he chooses. He seems to have won dozens of Lotto prizes.

Remarkably, a NZ newspaper alleges that some 300,000 New Zealanders are active Bitcoin punters.

Now, be clear about this.

Various funds allow people to buy NZ$20 worth of Bitcoin (a Bitcoin is around US$65,000) so the 300,000 people do not necessarily own 300,000 coins. If they did own a coin each, it would mean NZ speculators have NZ$32.4 billion at risk on a token that varies in value each day and cannot be used as cash, except in rare cases, often by criminals.

More scarily, that sum - $32.4 billion - would have been nearer $60 billion just five months ago.

I guess the Zimbabwean currency might have had times when its value was even more volatile but suffice to say that the alleged 300,000 Bitcoin users in NZ are not seeking low volatility.

Our chairman, James Lee, in a Taking Stock published in recent months, has warned of Bitcoin’s impermanence. I liken it to non-fungible tokens (NFTs) though Bitcoin is fungible (as are Zimbabwean dollars).

Three years ago NFTs were a fad that attracted an audience of mad punters, mixed with people whose extreme wealth was not matched by any need to assess intrinsic value.

I recall reading of how Middle Eastern oil barons would buy for a million a visual record of a grass-covered paddock, store it in the clouds, and give it to their little “prince” as his own special piece of rural land.

The Sheikhs would pay millions for such a unique visual token, for their little princes. 

One very clever New Zealand woman, skilled in technology, created ten tokens, each displaying a gambolling lamb and offered them to those who owned the cloud-stored grass paddocks.

They all sold, for huge prices. The little prince then had access through the cloud, to a lamb playing in an imaginary paddock. Baa.

NFTs were and are a nonsense, with a market intrigued by uniqueness, rather than by any lasting pleasure of ownership. A stickman, like the Pak n Save advertisement, can be drawn by an untalented artist who happens to be Prime Minister, and sell for thousands of dollars. Baaa.

Bitcoin is hardly unique.

The soothsayers who plot its future path probably know more than those who inspect the entrails of a rooster, but their feathers would be ruffled if those who have borrowed to buy Bitcoins are asked to repay.

I continue to believe that the intrigue of Bitcoin matches the intrigue of tulip bulb traders. 

Holders should see it as correlated to nothing other than the courage of its often-leveraged believers.

_ _ _ _ _ _ _ _ _ _

THE Santana Minerals capital raise, announced this week, is likely to be its final raise, providing the company with funds to buy the gear, build the plant, the initial mining pit and the tailings dam, and employ 350 people to work onsite.

Santana will certainly have easy access to overdraft and term loans should the project be consented before November.

It would surprise me if any further capital were needed to build the mines.

Obviously, consent is the only remaining relevant part of the process.

Meanwhile, the misinformation programme will continue, creating noise, but the chosen Fast-Track panel head, Matt Muir, in his distinguished career as a KC and judge, is hardly likely to be swayed by noise. Science and maths will be what his panel considers.

The wholesale placement, to raise A$113 million, will largely be filled by Australian (and North American) institutions. They will continue to be puzzled by media silliness here, but not in Australia.

The retail shareholder placement limited to A$25,000 per head is likely to raise somewhere between A$20 million and A$50 million.

That Sharesies clients (21,000 of them) are not big ticket investors will likely mean that only investors with wealth and confidence in the project will be the main contributors in the retail funding. Their entitlement papers will arrive soon.

My regret is that the 43% of Santana held by NZ investors is likely to fall below 40%, because of the fear driven here, not by science, but by hysteria, often led by the uninformed.

This will not affect the key financial attraction, of all corporate taxes, royalties and PAYE being paid to the NZ government, but it will mean more of the dividend pool will go to Australia.

The workforce will almost exclusively comprise New Zealanders, with iwi making up close to half of it, if mining statistics are a guide.

But until consent is either granted or deferred, or declined, the project remains a "conditional" project.

Full marks to Labour’s Chris Hipkins for making it clear that his party does not reverse consents already granted.

And full marks to Santana, which this week provided details of the processing science and modern mining practices to quell the screeching silly billies. These details, provided by Santana CEO, Damian Spring, should be read carefully.

I would be confident that the mature media would publish Santana’s careful descriptions of the proposed practices, perhaps as an apology for the unmitigated rubbish spouted by various headline-hunters, or click-bait counters.

Spring’s discussion on the science is what the Fast Track panellists will want to read.

_ _ _ _ _ _ _ _ _ _ _ _

Travel

23 February (pm) – Auckland (Takapuna) – Chris Lee FULL

24 February – Auckland (Ellerslie) – Chris Lee FULL

2 March – Auckland (Ellerslie) – Fraser Hunter

2 March – Christchurch – Chris Lee

3 March (am) – Christchurch – Chris Lee

3 March (pm) – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

6 March – Wanaka – Chris Lee

9 March - Whanganui – David Colman

10 March - New Plymouth – David Colman

11 March - Palmerston North – David Colman

Chris Lee

Chris Lee & Partners Limited