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PORTFOLIO JOHN BULL
It is time to look at Pillar Holdings. The group specialises in processing aluminium, which means that it has within its grasp a superior growth rate as aluminium takes over from other materials—from wood in the building industry, from steel in car manufacture (for instance, aluminium rather than chrome-plated bumpers). And in Mr James Patterson, Pillar has a vigorous and financially sophisticated chairman. All the same, Pillar has not always been an ideal share to hold.
Indeed, I advise readers to look at Pillar as an investment precisely because the interests which put the shares under a cloud are now being weeded out. I refer in particular to Archital, which has never made a profit in its admittedly short life. Archital and another subsidiary, Mellowes, have been making speci- ally designed window systems for specific office- block contracts. You can make money out of window-making only if standardisation is the order of the day and production runs corre- spondingly long. Pillar is therefore pulling out and moving into the domestic window field, where the wooden window still dominates. No doubt Mr Jim Slater has similar plans in mind for his recently acquired Crittall-Hope. The third big name in window-making—Williams and Williams—is also altering course.
Mr James Patterson's surgery means that 450 Pillar employees will become redundant as factories in Sheffield are dosed down. At the same time, a third loss-maker, Goodfellow, which is engaged in electrical contracting, is being taken in hand and merged with a new acquisition. The impact of all this on next year's profit and loss account will be dramatic. It will cut out losses now running at £270,000 a year. In any case, I hear that profits this year are running well ahead of last year's level. The motor industry has proved an excellent customer. The aluminium fabricating interests in Canada are in good form. My conclusion, therefore, is that higher profits can be expected both this year and next. At 13s 7fd the shares are selling at 18 times earnings.
There is more news to report on the Cam- bridge Instrument front. Rank has produced its second bid. The new terms are four Rank 'A' plus fl 1 nominal of 8 per cent unsecured loan stock for every ten Cambridge shares. That package adds up to 48s 4d a share, which is roughly lOs a share more than I paid for my interest some weeks ago. George Kent, whose 42s 6d counter-bid has thus been over- taken, is expected to announce a new bid almost immediately. It is expected to be equal, or nearly so, to Rank's, and to have what Rank's bid has not--the Cambridge board's blessing. This could leave me with a difficult decision; but it does not have to be taken yet awhile.
Valuations at 5 June 1968
First portfolio £6,005 (details next week)
Second portfolio 100 Guardian Assurance at 38s. 3d .. £191 40 Royal Exchange Assurance at 95s .. £190 300 Cambridge Instrument at 47s 9d .. £716
1,000 Brayhead at 14s lid £731 600 Pillar Holdings at 13s 73d £409 Cash in hand .. £3,070 £5,307
Deduct: expenses £38
Total £5,269
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