Portfolio
Move into car hire
Nephew Wilde
My broker Wotherspool's one trip to the East was during the Australian mining boom. His firm, at great expense, sent hem there to get a rudimentary knowledge of local conditions. Unfortunately, as far as he was concerned the only conditions he experienced were climatic. For he foolishly braved the midday sun on Bondi beach. He was so ill that only two days after arrival he was flown home! Now, of course, his automatic opinion of anyone who lives East of Suez is that they must be suffering from a cranial coup de soleil.
This, of course, tempers his views about my overseas stocks and last week I had an urgent call from him about my holding in Ralli. "I don't care what your friend Skinflint says about Bowater or Trafalgar — but sell Ralli." Wotherspool based this advice on the view that Trafalgar's bid for Bowater was a much more acceptable deal than a Bowater-Ralli merger. Even if the latter were achieved the price of the shares would be unlikely to see much appreciation for a good many months.
The other point Wotherspool made was that Slater Walker had been involved in deals with Trafalgar before but this time he was unlikely to let his friends at Ralli down and after all he does own 15 per cent of this company's equity.
So I am selling my holding and to please Wotherspool, asked him*: to select a company operating nearer home! His choice was Godfrey Davis, the car hire operator which is rapidly moving into the leisure industry. First and foremost Wotherspool recommended the group's management. At the head is Mr Cecil Redfern who joined Davis when he was eighteen (in 1936) at a wage of 30s. a week.
Today, Godfrey Davis is making profits of over £1.4 million and earns nearly 20 per cent on its assets. Soon Mr Redfern will be reporting halfyear figures; it seems these will be very good in view of the comment in June that a very successful start to the year had been made. The group will have been especially helped by the removal of HP control.
As for the leisure activities Godfrey Davis has made several moves into this field, with a £940,000 purchase of Edmund Green, a distributor of caravans, and more recently the Tor Bay Chalet hotel in Devon, for £275,000.
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