Private Investor: A fond farewell to my shares after a rewarding time

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The Independent Online

I know that investors aren't supposed to get sentimental about shares, but I did feel very attached to my shares in DFS. For these were, if memory serves me, the first non-privatisation shares I bought in a public offering, way back in November 1993. The price I paid was 260p per share, and we small investors got our allocation in full, as the offer was only 1.3 times oversubscribed.

I have held the shares ever since, and they have had their ups and downs, plunging to a low of 160p or so in 1999, for reasons which I now confess I can't recall. The ups, however, have been more pronounced, culminating in the offer by the founder of the company, Lord Kirkham, to buy the company back from the market and take it private. In 1993 he received £135m for the 90 per cent or so of DFS he sold. Now he is buying it back for a total of £496m, at 445p per share.

I'll be sorry to see these shares go back to Lord Kirkham (the board has recommended the offer and it is pretty certain to go though). It has been a good solid investment. The shares have appreciated by 71 per cent over their career on the market. Better than that, even, has been the mostly steady and mostly generous flow of dividends from the business. To my rough recollection the flow of dividends and special dividends on the shares has now exceeded that 260p offer price.

You have to remind yourself sometimes that that is supposed to be the fundamental purpose of investing in equities in the first place, a perspective that was lost in the years of the dot com bubble, when old-fashioned concerns such as dividends were placed firmly in the desktop trash can.

In fact, DFS may be the only share I hold which has actually paid for itself, or near enough, in dividends before any capital growth is taken into account. (Stagecoach is the other other, thanks in part to its latest return of capital).

So you see why one can feel sentimental over an investment like DFS. I was looking forward to effective yields from the initial investment well into double figures for years to come. Presumably so was Lord Kirkham. I can almost forgive him for being a Conservative Party donor.

And it makes one wonder what has happened to all the floats. Of course they were off the agenda for a while when the stock market got over the TMT collapse. Many of those firms, after all, raised spectacular, even absurd sums through public offerings. Some are no longer with us. Few if any, I would think, will wash their faces over 10 years. Yet this bricks'n'mortar retailer, I would bet, will outlive most of them. It seems a bit of a pity that so few floats nowadays ever get to the investing public.

But I am forgetting the other category of shares that have got to the populace at large; the demutualisations by various building societies and life offices. I can't forget this category in the week that Banco Santander made its bid for Abbey National. I do have shares in the Abbey, but not from the original demutualisation in 1989.

I was an account holder with the National & Provincial Building Society and, when it was taken over by the Abbey in 1996, received shares that had a nominal value of 576p each. These I also kept, rather greedily expecting their initial astronomic increase in value to be sustained.

Some daft lending put paid to that, and we are left with a little cash, some Banco shares and a few perks. I don't have a problem with shares in Banco in principle, provided that I don't end up being fleeced for holding them in some vastly expensive nominee account.

They have a lot of small private investors to look after, so one would hope that does not turn out to be the case.


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