14 JULY 1961, Page 26

Investment Notes

By CUSTOS 'WAITING for Godot' in the person of Mr. Selwyn Lloyd, the great economic regn" lator, is pot conducive to good markets, but it is pretty certain that as soon as the worst i5 known the market will recover. Up to date the, market has suffered from two adverse technic31 factors—the spate of new issues and the excess of unit trust sales over unit trust new issues. The first is the more important. I was intrigued le see that the trade union movement is starting it5 first unit trust, under expert management, with the help on the board of the Editor of the Investors' Chronicle, whose strong Right-wing views on wage-cost inflation are so well knoWn' Presumably he is there to advise on inflation hedges.

Trustees' Opportunity

To what extent trustees, who will be freed b,); the Trustee Bill in a few weeks' time, whi scramble for equity shares remains to be seen, but the market slump undoubtedly presents the° with an excellent opportunity to acquire solve `blue chips' on a more reasonable yield basis' DISTILLERS, for example, has been adverselY affected by its rights issue and is now obtainable on a yield basis of 4 per cent. (I do not thinlr that Mr. Lloyd will greatly upset the alcoholic side of their business.) Among stores, MONTACO BURTON 'A' can now be bought on a yield ba5to5 of 31 per cent. and UNITED DRAPERY on a yiel basis of over 3 per cent. And is it not time ID, take an interest in the chemicals? Both ALBRIG01 AND WILSON and ICI are now yielding over 4 Per cent. Finally, insurance shares should not be I neglected. This group has fallen 20 per cent' from its high point in May and EAGLE STAR C313 now be purchased on a yield basis of 24 per GENERAL ACCIDENT nearly 2 per cent. and Or ALLIANCE 3.4 per cent.

Managements Good management is a prerequisite in t

selection of equity shares, yet there are always to be found some companies where the manage- ment and the shareholders remain at loggerheads. I have always referred to ASSOCIATED MOTOR CYCLES on a cautionary note and I am glad to see that a shareholders' committee is at last tackling the question of getting a new board. For the year ending August it is not expected that any dividend will be paid. Some shareholders of BRITISH DRUG are also at variance with their board and strongly object to the directors inten- tion to sell a large part of their equity to Mead Johnson, an American drug company. This sale would effectively stop any bid being made for British Drug in the future, and I support the shareholders who do not wish to be tied to American coat-lails for the rest of their com- pany life.

British Sugar

I was delighted to see that the chairman of BRITISH SUGAR- referred in his, statement to the fact that the directors had not opposed the share- holders' committee which asked the Government to raise the 7 per cent. dividend ceiling or author- ise a scrip bonus. It became clear, he said, that the Government would not approve this scheme 'in present circumstances,' but the board recog- nised that there was `an element of anomaly' in the status of the ordinary shares and would con- tinue 'to explore the possibilities which might remove this.' I take this to mean that something at last will be done by way of a conversion offer to the shareholders. The shares have moved up to 26s. to yield 5.4 per cent.