Investment Notes
By CUSTOS
TIIE markets opened firmly after the holidays and it seems that every financial writer has recommended buying before the trustees are let loose on the market by the coming Trustee Act. Most of them are telling their readers to ignore the Budget. This may be a bad mistake, but with the movement into equities gathering strength every week, it is more than likely that the Budget setback, if any, will be short-lived. Newspaper shares have come back slightly and the report that Price Brothers are negotiating with Associated Newspapers for the purchase of Anglo-Newfoundland Development makes ASSO- CIATED NEWSPAPERS at 27s. 9d. a good buying op- portunity. I cannot believe that a deal will be done with Price Brothers unless it improves the income of Associated Newspaper shareholders. In the newspaper-magazine world HAZELL SUN is worth attention. This is a holding company owning control of several printing and binding companies, with a colour-printing process much used in magazines. A takeover bid from one of the big newspaper groups would not be sur- prising. At 16s. 6d. the 5s. shares return 3.6 per cent. on the 12 per cent. dividend last covered two and a quarter times. The final dividend and report for the year ending March is due at the end of June.
Brewery Shares
The great merger between IND COOPS, TETLEY WALKER and ANSELLS gave the brewery share market its Attest hour. It also gave me great satisfaction, having recommended on January 8, 1960, select brewery shares for the coming amal- gamations and takeovers. MITCHELLS AND BUT- LERS were then 75s. 6d. and have subsequently enjoyed a 50 per cent. bonus; the rise has been 50 per cent. On May 20, 1960, I called attention to Ansells for future mergers. They were then 74s. and are now 34s. 6d. in their present 5s. form-a rise of 86.5 per cent. Tetley Walker I have constantly recommended since they were 35s. 9d.; the shares subsequently had a rise of 162 per cent. It is tempting to take profits, but shareholders might wait a few weeks to see the terms of the exchange into the new holding com- pany. No doubt the takeover activities of Mr. E. P. Taylor, the Canadian who runs UNITED nnEwt.atEs, have been a stimulating force in recent mergers. Recently 1 recommended taking profits on United Breweries, which will no longer be able to buy breweries on the cheap. What surprised me in this recent merger is that Mitchells and Butlers were left out. In view of its association with Ansells I had expected this company to take over Ansells. Now perhaps the isolation of M and B will be a temptation to Mr. Taylor, and perhaps in anticipation of a takeover M and B have risen to 70s. 9d.
Selection Trust and South Africans Gold shares are again at a critical point. Look- ing back to 1960 they had fallen a full 331 per cent. by July and had recovered half that fall by November. Now they are back to the bottom
again, but showing signs of rallying on the hope that the opposition to Dr. Verwoerd will gain some ground. It occurs to me that a switch into the SELECTION TRUST group might be considered by those still hanging on to South African shares. Selection Trust has been depressed, of course, by the deteriorating political situation in Rho- desia, but surely there is more hope of a reasonable settlement there than there is in the Cape. The point in favour of Selection Trust at 82s. is that 68s. of this price is represented by its 121 per cent. holding in AMERICAN METAL CLIMAX, which has just reported record earnings last year. This leaves 14s. to cover its holdings in the copper belt (Consolidated African Selec- tion Trust, say, 18s.), in Western Holdings, Vaal Reef and other golds (say, 18s. 6d.), in Tsumeb Corporation and other shares (15s.) and in net liquid assets (10s. 6d.), making a total of 62s. Obviously Selection Trust is still undervalued at 82s. to yield 84 per cent. Incidentally Ameri- can Metal Climax at $50 London to yield 3 per cent. on the $1.40 dividend or 7 per cent. with tax relief at 7s. 9d. is another possible switch from South African shares.
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