INVESTMENT NOTES
By CUSTOS
THE equity market has been going through its first sizeable reaction since the start of the bull market in February, 1958. Each dip in the index has been slightly below the previous one, and if in the present phase it moves below the 321.5 of January 21, it would be a bad sign for the chart- readers. As compared with the high of 342.9 on January 4 the market has now fallen 5 per cent., which is not unreasonable after a two-year rise of 120 per cent. Many shares have now fallen 10 per cent. or more—LiEBIGS, for example, by 12 per cent.—and would have fallen farther if it were not for the fact that new unit trusts are giving it support. The £1,250,000 offer of the new Falcon Trust was heavily over-subscribed and will give strength to many equities in the second or non- leader class which largely comprise its portfolio. (I notice that it includes EDUCATIONAL SUPPLY ASSOCIATION shares, which I recommended on January 22.) It was a welcome sign of the more cautious times that the over-subscribed DOLLAR LAND HOLDINGS should open at a discount in spite of its 5-1- per cent. yield.
Building Shares
It is rare to find a building-contracting share with an adequate yield, but if the investor does not mind a small Scottish company with an issued capital of only £300,000, I can suggest JAMES LAID- LAW. This is a well-managed family concern en- gaged in house building and general contracting, and two months ago it acquired Modern Buildings Ltd. which deals in mechanical plant for use in the civil engineering industry. To finance this pur- chase the Company issued one new share at 10s. for every two which will participate in the divi- dend to be declared in October for the year end- ing in March next. In the previous year the com- pany earned 60 per cent. and paid 20 per cent.,
and the directors have stated that in view of the satisfactory trading enjoyed so far in the current year they hope.to pay 20 per cent. on the increased capital. At 18s. the 5s. shares yield 5f per cent., which is worth having in these days. This building company is unique in having a subsidiary invest- ment trust called Glasgow Trust, which was formed six years ago to make use of the £200,000 of surplus cash. This orthodox trust Ras done so well that the value of the holdings is equivalent to 4s. per Laidlaw share, which makes the parent company look all the cheaper.
Machine Tools and Soft Drinks
In spite of a recent pick-up in machine-tool orders, deliveries for the ten months of 1959 were 7 per cent. down and ASQUITH MACHINE TOOL reported a 46 per cent. drop in profits before taking account of the new subsidiaries' income. The 15 per cent. dividend is maintained for the year but the next interim dividend is to be postponed. This is very unsatisfactory and I think investors would be better off in WILKINS AND MITCHELL, which makes the Servis washing machine as well as power presses and machine tools. 'These 5s. shares I recommended below 20s, not long ago and they are now quoted at 22s. 6d. to yield 4.4 per cent. on the estimated dividend of 20 per cent. If the investor wishes to add further to his consumer trade interest he might include STEVENSON AND HOWELL 5s. shares at 18s. 6d. to yield about 5 per cent. on the old 18 per cent. dividend or 51 per cent. if the 2 per cent. bonus is included. This company is in the soft drinks trade, both domestic and export, and manu- factures the 'Red Ball' brands. It has associate companies in Australia and New Zealand. It is a small company with a capitalisation of around £300,000; it might become a 'take-over' one day.
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