FINANCE AND INVESTMENT
By CUSTOS It was not to be expected that the Cripps-Snyder-Abbot talks would in themselves bring decisions which would resolve the investment uncertainties which spring from the dollar problem. Indeed, as I see it, the only solid "bull point" which has so far emerged is that for the time being the risk of a serious show-down on economic and financial policies between this country and the United States has receded. The reference in the official communiqué to sterling devaluation leaves me unconvinced. I do not doubt that many things require to be done before any tinkering with the sterling-dollar rate becomes practical financial politics, but I would still advise investors to include gold shares in their portfolios as a devaluation "hedge." As to market prospects in the broad sense, the real key is now in the United States. If business there picks up, not only Britain's dollar problem but most of the problems now confronting investors will be substantially eased. If the recession deepens, the world economic prospect will begin to look grim. We should know the answer before the end of the year. Meantime, caution should be the watchword.
THE BUTLIN AFFAIR
Mr. Butlin, the showman, had no difficulty at this week's meeting of Butlin's, Limited, in securing a vote of confidence from the great majority of the shareholders present. I am still unimpressed. At the meeting shareholders wtre given information about many matters on which they had every right to be fully informed in the annual report. They now know the terms on which the two luxury hotels in Bermuda and Nassau have been leased to their company. Why was this important deal referred to so casually and inadequately in the report ? As to the merits of the deals from the shareholders' point of view, time alone will supply the answer. While it is possible that the hotels will be big dollar-earners, I think an investment of this kind at this tune would far more appropriately have been retained by Mr. Butlin and his friends.
As to prospects, although it is hoped to improve the company's liquid position out of revenue, it is clear that capital expenditure on maintenance and improvements is bound to call for substantial sums. That implies conservative dividend policy, and it is not surprising that shareholders are now warned that the practice of paying large interim dividends is to be discontinued. With bookings at the holiday camps running rather below last year's level it seems obvious that the total distribution for the current financial year will not be more than last year's 6o per cent. Quoted around 55. 6d. the Is. ordinaries have speculation recovery possibilities, but I do not advise a purchase at this stage.
A LIQUIDATION SHARE For those wile do not mind locking money up for a few weeks or, at the outside, a few months, the Li shares of the British North Borneo Company look an attractive proposition. Several months have passed since this company's assets were valued for compensation purposes, following the take-over by the British Government, at a figure which the directors have stated will mean a distribution to shareholders of not less than los. a share. The Board's intention is to put the company into voluntary liquidation, but this process has been held up by a group of shareholders who have wished to approach the Colonial Office on the question of the company's war damage claim. The Board take the view that no useful purpose will be served by reviving this claim—which is substantial—and that the pay-out to shareholders is merely being delayed. The share- holders wish to make quite sure that there is no further compensa- tion possibility.
The interesting point is that the present market price of 9$. 3d. makes no allowance for the chance of any war damage compensa- tion. Even allowing for brokers' commission and transfer duty the total payable by a buyer up to 9s. 41c1. would be under 9s. 9d., which is still rather less than the figure indicated by the directors as the pay-out minimum. It should not take long to clear up the war damage question with the Colonial Office, after which the com- pany will go into liquidation and the cash distribution will be made. It looks to me as if the worst that can befall a buyer who does not give more than gs. ,ad. is that he will get his money back—and a small profit—in a few months' time. There is the possibility, if the war damage claim is recognised, of a rise of several shillings, but I am not suggesting that this is more than an outside chance.
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