Private Investor: Bear-baiting is one of my favourite pastimes

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The Independent Online

There's nothing quite like annoying a bear. I was delighted, for reasons I can't quite understand, to read that bears in Tate & Lyle had been having a bad time lately. There are bear raids, and there are bear raids, you see, and the attack on Tate & Lyle was about as aggressive as a grizzly tearing into a pot of syrup.

The equivalent of some 10 per cent of the entire share capital of Tate & Lyle was said last week to be in short positions, with the whole sloth of bears scrambling desperately to close out their positions, as the shares made excellent upward progress.

So I thought I'd add to the party and buy a few more as well, my tiny twig poking its way into the bear's bruised body - or something like that.

Quite apart from the pleasure of baiting a bear, Tate & Lyle has a good deal to be said for it. Let's leave aside the connections with the Conservative Party, which go back a long way, from "Mr Cube" and the campaign against sugar nationalisation in 1950 to David Davis's former directorship in the company.

Let's look to the future instead. Way out there, one day, as a vague possibility, is the idea that companies such as Tate & Lyle might be part of the move to alternative fuels, as oil becomes more and more expensive. Bioethanol technology is already there, the Swedes are running their cars on fuel made from wood, and the South Americans on stuff made from sugar. It can be done. Even now you can economise on diesel if you use a little cooking oil, or so they tell me (I don't recommend it).

Anyone with an interest in starches and sugars, such as Tate & Lyle, ought to be able to get a piece of the long-term action.

Shorter term, there's the Splenda story, the immediate cause for the bear raid. Now that Tate & Lyle has stopped an American affiliate from off-loading a cheap version of Splenda, its zero-calorie sweetener, the bear panic seems to be over, and Tate & Lyle can go back to providing its shareholders with healthy dividend growth.

More intriguing was the letter I received form the F&C Emerging Markets Investment Trust, informing me about its merger with the JP Morgan Fleming Emerging Markets Investment Trust. So what? Well, it is a tiny sign that the investment trust sector is sometimes, very occasionally, able to get its house in order.

F&C Emerging Markets has been underperforming its benchmark for a while, although, in absolute terms the numbers are not so bad, and were still impressive, at 50 per cent, last year. Still the JPMF fund has been doing better, one reason why I had invested in that fund as well. So now I find I'm being merged from both directions, so to speak.

It gives you a good feeling to know that underachieving management, in this case F&C Asset Management, can be ousted, even where it has such a long-established, traditionally close relationship with the fund itself.

The investment trust sector used to be even cosier than it is now, and any move to make it more responsive is welcome. It's also time that a few more of these relatively small funds consolidated. Except for a few recherché areas of investment, such as India, where the market probably has too few entrants, the overall picture is of so many funds trying to do much the same thing, often doing little more than shadowing an index.

In any case, I will be sticking with the new JP Morgan Emerging Markets fund and passing up the exceptional opportunity to cash in at a tiny 2 per cent discount on the net asset value of the fund. Emerging markets are the place to be. The JPMF fund has taken large positions in Brazil, Korea and Egypt - which sounds good to me.

s.o'grady@independent.co.uk

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