INVESTMENT NOTES
By CUSTOS
A FIER the brief technical correction and re- covery of last week the equity share markets have become quiet and dull. A pause for consoli- dation would be a good thing. The gilt-edged market, however, has been stirred to greater act.iv- ity by the conversion offer of 41 per cent. Conver- sion Stock 1964 to holders of the maturing £592 million of 2 per cent. Conversion. This offer was limited to only £250 million, which is a sign of great strength on the part of the Treasury. The market, however, turned dull on the news of the increased borrowings for the nationalised indus- tries. I have no doubt that the bull movement in equity shares will be resumed before long, for support is being given to the market by a stream of new unit trusts. After the raising of £21 million for British Shareholders Trust by Philip Hill I hear that other issues will shortly be made by Robert Fleming and by Rothschilds. But the small in- v(.tor should realise that ordinary shares do not always go up. A unit holder who has paid fully for his holding can afford to wait, but buying units on borrowed money becomes uncomfortable if the market turns down. I would therefore remind the small investor once again that for capital apprecia- tion with absolute safety he cannot do better than buy his full quota of the current National Savings. Certifieates. At I 5s. the tax-free yield with a rise. to 20s. in seven years is 41 per cent., which is equivalent to nearly 7i per cent. gross.
Investment Trusts
In the spate of new unit trusts the small investor should not forget that the old-established manage- ment trusts have shown their skill in weathering past investment storms and have now built up useful investment reserves. Many of these stocks. are heavy in price but some are in convenient small units, such as Second British Assets 5s. shares at I 3s. to yield 4.4 per cent, on the equivalent divi- dend (after the two-for-one scrip issue) of 10 5/ 6 per cent. I would also recommend CITY OF LONDON BREWERY INVESTMENT, now an investment trust proper. Its old freehold brewery site in the City is under option for sale at around £400,000. For the year to June 30 the company earned 50.3 per cent, and paid out only 24 per cent. There are- few management trusts which are distributing so small a proportion of earnings. This adds attrac- tion to the 5s. shares at 27s. 6d. to yield 4.4 per cent. The company is invested almost entirely in sterling securities. Its dollar holdings are negligible.
Carrier Engineering
In the thermal engineering business I have pre- viously recommended SERCK. An allied industry is air-conditioning, and CARRIER ENGINEERING is. perhaps the best-known company in the field. In the year to June, 1948, it earned 132 per cent. and
distributed 50 per cent. While the current Year's results may not top the record level of last year the value of work in hand at the end of the year was 14 per cent, higher than a year ago. The financial position is exceptionally strong. The market expectation is another, scrip bonus —there have been two free issues in the past five years—but the chairman made no announcement at the recent meeting. Free reserves total £960,000 against i500,30(fordinary capital which the direc- tors are taking powers to double. While they live in hope shareholders may be well content with the position. At 48s. 9d. to yield 5.1 per cent. the shares are paying for their keep.
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