Investment Notes
By CUSTOS
'THE coutt.rAutps reply to to is cunning. It 1 is to give an immediate 10s. worth of 7 per cent. unsecured loan stock, 1982-87, a 121: per cent. dividend for 1961-62 (dividend yield at 48s. 3d. less 10s. is 6.5 per cent.), a dividend of at least 13 per cent. for 1962-63 and a 21 per cent. tax-free distribution to be made in each of the three years 1961-62 to 1963-64. An invest- ment trust is to be formed to hold some £40 million of assets surplus to normal trading and it is intended to distribute the whole of the income of this investment trust and not less than 50 per cent, of the trading profits. The ICI offer of 61 per cent. loan stock closes on March 8 and as the market valuation of the Courtaulds offer is around 50s.--the market being cynical of Courtaulds window-dressing—it seems that ICI may win, although it will remain in doubt until the last moment. Probably ICI will obtain not a majority, but a large minority of acceptances from Courtaulds shareholders. In other words, the situation will be worse than before, and in my opinion the Government should intervene and stop the whole nonsense. If the Govern- ment does not intervene, the shareholders will ill probably decide to vote not on arithmetic but on their emotions.
From Tobacco to Oil
- In a dull equity market—which must remain dull until Mr. Lloyd unfolds his threatening Budget-- --the persistent selling of tobacco shares is causing acid comment. Doctors are being blamed for preparing another cancer scare which will be published shortly. I must confess I see no reason to hold a share like GALLAHEY to yield 5.6 per cent. if it is to be a continual target for medical attack. IMPERIAL TOBACCO, now yield- ing 8 per cent., has probably discounted the trouble. Also B.A.T., yielding over 6 per cent., seeing that its overseas business is not so vul- nerable. But investors might consider a part exchange from their tobacco holdings into another depressed share—SHELL TRANSPORT at 29s. 3d. to yield 5.7 per cent. gross. It is true that the oil position is still clouded by politics and overproduction and that the competition of Russian oil is going to increase over the next few years, but an efficient international organi- sation like Shell can weather these storms and the technical fact that Shell today is selling at only nine times net earnings, as compared with sixteen times net earnings for STANDARD OIL OP NEW JERSEY, should impress the institutional in- vestor.
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