Venturers' Corner Investors who like a well-secured fixed-interest share with
a mildly speculative flavour might do worse than examine the merits of Jonas Woodhead 6 per cent. redeemable £i convertible cumulative preference shares now standing around 2IS. These shares were recently issued mainly to provide for certain acquisitions which should help to broaden the basis of the company's business which is centred in the manufacture of springs for motor-cars, commercial vehicles and railway carriages. In the light of the earnings figures of recent years the preference dividend is very well covered. For the past four years, for example, net profits, after tax, have averaged £24,000, which is sufficient to cover the preference dividend four times over. I therefore regard the yield of just under 6 per cent. at the current price as a very reasonable one.
Now for the speculative attraction. This arises from the conversion right which entitles holders to convert into ordi- nary shares at the rate of four ordinary 5s. shares for every one preference share at any time, on giving fourteen days' notice, up to March 1st, 1944. Obviously, this right is not worth exercising unless the ordinary shares stand over par, but even at present, in market conditions which do less than justice to shares of this type, the quotation is around 5s. 6d. For each of the past two years the ordinary dividend has been to per cent., and in the year ended August 31st, 1938, this was paid out of available earnings of over 22 per cent. I am, therefore, prepared to believe that in better conditions, which should, incidentally, mean good business for a com- pany of this type depending mainly on the motor and railway industries, these shares could move considerably over par. The conversion right attaching to the preference shares would then become correspondingly valuable.
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