Investing to please and anger others [updated]

I love Amihai Glazer's little model claiming that voters are motivated by the desire to anger or please others through their vote. The model explains a few anomalies that are otherwise hard to explain, like that voters pay more attention to national election contests than local ones even though the probability of decisiveness in the latter more than makes up for the smaller stakes.

Expressiveness considerations of this sort should not matter in investment markets; expressiveness there gets expensive. And yet we have ethical investment funds for investors who care about that sort of thing. And, yet we have this one.

Moa Beer has been carving out a little niche in getting free publicity by being outrageously blokeishly offensive. When Wellington proposed putting up a Wellywood sign (tacky in the extreme), Moa promised a beer bounty to anybody who knocked it over. They sponsored the Great Easter Bunny Hunt. Gay rights groups haven't been pleased with some of their marketing campaigns. And they've been a bit cute around ASA guidelines regarding swearing in ads. And the Pakistani cricket team isn't pleased either.

Moa's now heading for IPO. Here's their prospectus. If you're running an investments course, this is one to keep on file. They've advertising for Beretta shotguns inside the prospectus, among other things. The Herald has some highlights:

The 132 page blurb channels a mix of the Mad Men TV series and up-market men's magazine FHM, featuring black and white shots of Moa's all-male board and management striking macho poses in sharply cut suits, while attractive women in black skirts, white blouses and ties fondle cigars and bottles of Moa.

A section headlined "Investment Highlights" appears beside one such full page photograph, while in another, Moa general manager Gareth Hughes taps out a cigar into an ashtray a model is holding above her head.

Advertisements in the prospectus include plugs for Aston Martin sports cars and Beretta rifles, while a naked woman on a horse promotes Ecoya scented candles, which Ross floated on the NZX in late 2010.

The prospectus seems designed for those who get expressive benefits from their investment decisions. So, then: will expressive bias against them in the IPO from those who are angered by their strategy be outweighed by expressive bias in their favour?

I'm not considering investing. The University sends a hefty chunk of my pay cheque over to the NZ University Superfund for my retirement; I don't try picking stocks. But if you were a value investor, would you expect that expressive investors would unduly bid up the price, and so you'd be inclined to stay away, or would you expect that IPO-avoidance by ethical types would make this a nice play? I'd lean towards the former.*

I expect that Moa will wind up doing well. Their beer is pretty decent and they're pretty shameless. That's not a bad niche. A small brand can afford to have half the world hate it so long as it gets a few people who love it.

Update: The most obvious model of what's going on is that they're trying to select for investors who like the current marketing strategy so the shareholders won't get mad when they do outrageous things in future. It'll be interesting to see what happens at IPO.

Update 13 November: Their IPO was oversubscribed. Good for them!

* Not investment advice; I've only skimmed the prospectus; form your own judgments, etc.

Ban the bottle

I'm a fan of Charles Tibout's arguments about local government competition: lots of small local governments competing with each other for residents and cooperating with each other for provision of services that are more efficiently provided on a wider scale.

I was surprised when Rodney Hide led the charge for Auckland's amalgamation. The best case I could make for amalgamation would be that the small scale of local government means it has a very hard time attracting talented people to make reasonable decisions; Council policies can be stuck on the stupid setting for rather a while. A merged Auckland encompassing a million or so people ought to be big enough to attract more talented bureaucrats able to make more sensible decisions.

Neil Miller points to one less-than-sensible decision coming out of amalgamated Auckland Council [HT: Nolan @ TVHE]. They're pushing bottle shops to ban single-bottle sales. Neil writes:

Craft beer plays little or no part in the problems around heavy drinking, particularly among younger people.  The streets on a Saturday morning are not awash with bottles of Emerson’s Pilsner ($6.10) nor the car park studded with empty magnums of Liberty C!tra IIPA ($22.10).  The Council has simply made a series of assumptions and come up with a one-size-fits-all “solution” so it can say it is “doing something.”  I doubt any thought was given to the sales of craft beer or the people who want to purchase them responsibly in central Auckland. 

"Something must be done" is a rather persistent problem. And, with a merged Council, craft-beer lovers will have a harder time driving to an outlet that can help them out. I hope that the bottle shops are able to get around it by requiring that people buy at least two bottles and sticking a rubber band around them to make a package when the customer comes to the till.* At least there are mail order options.

Neil again:

However, at this stage the Government is looking to avoid the single container issue saying people with problems should contact the Council as it is their policy.  It seems yet another drift net policy with unintended consequences, something we will probably see a lot more of as Parliament considers the key provisions of the new Alcohol Reform legislation. 

This kind of local nonsense is one of my bigger worries in the proposed Alcohol Reform Bill, which will provide a fair bit more scope to local Councils for alcohol regulation. Compliance costs are higher when retailers face a patchwork of regulations across the country; I would expect local activists with time on their hands have more influence over policy at the local level. I consequently expect the equilibrium to turn rather more meddlesome in most places.

* My local dairy, for a while, sold cans of Coke labelled "Not for individual resale." Above the cans he had a small sign saying "Buy two!". I liked that.