Account Gamble
Buying oil, selling steel
John Bull
I am going to make two recommendations this week. First is Burmah Oil which, on the back of the current wave of a shareholder rebellion, should do well over the next month or so. As the battle between the mavericks, Messrs Dawkins and Blake, and the Burmah board now stands, it is up to shareholders to vote in favour of an extraordinary general meeting. At this they will then have to decide whether to adopt the BlakeDawkins proposals to elect them on the board and to split the Burmah shares. One subdivided share would represent the Burmah stake in British Petroleum and the other Burmah's trading assets.
Of course these drastic proposals are naturally upsetting Burmah's board and it has just issued a statement to the effect that the rebels' plans should be ignored. In its letter it is part supported by various financial institutions and stockbrokers. Among them is Hoare Govett and it is my information that this firm of brokers will publish its own report on Burmah shortly. I would expect it to highlight the group's prospects over the next few years giving profits forecasts far in excess of what the market might expect. There is one thing that any holder of Burmah can count on that is that the storm brewing can only help the performance of their shares. For the Burmah board will spell out what the future has in store while the rebels will make c partial breakup seem the ideal course, and the most profitable. This is why I recommend Burmah. The other situation is one where I feel selling the shares short would be the best policy. This is Samuel Osborn, the special steel group based in Sheffield. It has just announced large losses in the year to September 30, with all its forecasts upset. The main problem area was the steel division and Osborn has been busily engaged in a reorganisation programme. If the economic climate perks up, all well and good. However, even if this is the case — and my pals in Sheffield tell me that the current wave of strikes is something to watch — Osborn is still very .heavily indebted. It has to pay back the IRC loan of £1.75 million by mid-1974. So 1 do not think the balance sheet will be much other than frightening, even though Osborn has just had a property valuation of its assets throwing up a fairly large sum. The shares moved up on the preliminary statement but I feel that the results, seen in more detail when the full accounts are published, will cause a rather more sober reaction.
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