Venturers' Corner
Having recently recommended, in this corner, British Oil Shipping 12s. 6d. shares at 9s. and Kern River Oilfields 3s. 4d. shares at 5s. 6d., I cannot resist the temptation to advise taking profits. British Oil. Shipping are now 13s. and Kern River 8s., and although both companies have good prospects, the more immediate earnings possibilities seem adequately discounted. To quote an old' Throgmorton Street aphorism : Nobody ever made a loss taking a profit. Turning to the depressed preference share field, I think there are chances over the next few months in the 7 per cent. cumulative, preference_shares of Amalgamated Anthracite Collieries,-now quoted at roS.
No dividend has been paid since February, 1935,, so that accumulated arrears now amount •tO about 2s."6d. per share'.
This South Wales combine has had a troubled career but managed to achieve a moderate recovery in profits in 1936. After covering debenture service the net balance was .equivalent to 5 per cent. on the preference capital and the carry-forward was increased by £50,000. The current year, I understand, started unfavourably, but there has been a marked improve- ment in the past three months, shipments of anthracite having risen sharply. In view of the necessity for strengthening the company's balance-sheet, in wliiCh assets require to be written down, even the preference shares are distinctly speculative,- but behind the £1,964,821 of .preference is £6,718,248 of ordinary capital. When the pruning knife appears the equity: will doubtless be severely cut down, but at 2S. 9d. for the Li: share the ordinaries themselves do not look dear as a recovery share at a rubbish price.. The principal adjustment to be made in the balance-sheet is the writing down of the investments in subsidiary companies. This adjustment and any others that may be necessary would probably be amply covered by_ reducing the nominal value of the Ordinary shares from £t, to, say, los. Such a reduction would enable assets to be cut
down by just over L3,30o,000. . CUSTOS.
[Readers' _enquiries, or requests for advice .regarding particular 'shares, 'will be answered periodically as space permits. Correspon:. dents. who do not desire their . names .w appear- shOulti• avend initials or a pseitilonym to their questions.]
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