Roaring Forte's
PORTFOLIO JOHN BULL
Charles Forte has found a new formula for making big money and, after a period in the doldrums (even a cut dividend), his company, Forte's (Holdings), is moving in the right direc- tion again. In the last three years Forte has bought a number of hotels in this country (e.g., the Hotel Russell) and overseas (e.g., in Paris the George V. the Plaza Athenee and the Tremoille), in many cases through joint com- panies with BOAC and SEA. In addition, he has pushed into adjacent sectors of the travel business, buying a trio of travel agents—Mil- banke, Hickie Borman Grant and W. F. and R. K. Swan (Swan Tours)—and building up airport catering interests.
A second strand of Forte activities comes under the heading 'entertainment' and consists of restaurants, pleasure parks, piers, ten-pin bowling, amusement centres, licensed houses. Finally, there is Forte's food and confec- tionery manufacturing interests, which have never been great money-spinners—indeed, in the case of Mr Whippy (since sold) positively disastrous. These interests now take in Fullers and Terry's of York, satisfactory but not ob- vious sources of future growth.
You can get a good idea of how the com- pany is shaping up by comparing its position in early 1966, what it has done since, and
Valuations at 29 January 1969 First portfolio
100 Empire Stores at 76s £380 125 Phoenix Assurance at 46s 6d £291 330 Witan at 25s 414 £418 500 E. Scragg at 23s 9d £594 100 National and Grindlays Bank: at 77s 9d £389 500 Clarkson (Engineers) at- 21s 9d £544 60 Rio Tinto Zinc at 154s 6d .. £464 1,000 Associated British Foods at 12s £600 1,000 Jamaica Public Service at 6s .. £300 500 Associated British Picture at 37s 744:1 £941 100 Lyons 'A' at 91s 6d £457 200 British and Commonwealth Ship- ping at 48s 9d £487 200 Forte's (Holdings) at 49s £490 Cash with local authority at 7 per cent .. £1,218 £7,573
Deduct: expenses £210
Total £7,363
Second portfolio £5,807 (details next week)
where it stands now. In May 1966 the company produced its profit figures for 1965-66, which showed that earnings were insufficient to pay the dividend, so part of it had to come from reserves. An American company (American Consolidated Foods) had come to look Forte's over with a view to a bid, but then, as now, Charles Forte had personal control. Diffi- culties with Fullers and Mr Whippy were at their peak. In the middle of 1966 the dividend was cut by four points to 18 per cent, the equity capital reorganised and Mr Whippy was sold. But a few months later came the first of the acquisitions which now look like producing a very handsome surge forward in profits. I refer to Frederick Hotels, which cost £2+ million and, apart from the Hotel Russell, brought the group eight other hotels. Almost at the same time Forte joined up with BOAC to open hotels in Guyana, Ceylon and Jamaica. In the middle of 1967 Henekeys was bought for just under £2 million, and Mil- banke Travel came under the Forte wing. Finally, at the beginning of last year, Charles Forte set out to buy the three French hotels from Madame Dupre, surviving a storm of criticism from French patriots as well as the student riots, and emerging finally with what he wanted at a good price.
Profits last year were £21 million before tax. The forecast result for the year which ends today (Friday) is £3.7 million, but my guess is that the estimate is distinctly conserva- tive and I am hoping for £3.9 million. As for 1969-70, I can see no reason why growth should falter and I expect profits to go over the £5 million mark. At 48s the `A' shares are therefore selling at about twenty times current earnings with a further good increase in pros- pect. By today's standards, therefore, the shares are attractively priced. There is a rights issue to come in the next month or so, but I do not think that will have more than a very short-lived dampening effect. So I have bought 200 shares for my first portfolio.
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