Private Investor: The corporate curiosity that's on the rise again

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The Independent Online

I think I call that a result. Last week, after congratulating myself on spotting O2 long ago as a possible takeover target and being well rewarded for my prescience I mentioned the possibility of something similar happening sometime to another telecoms tiddler, Kingston Communications. And, lo, it has come to pass.

It only seems like yesterday that this corporate curiosity, or most of it at any rate, was sold off by Kingston-Upon-Hull City Council. Before that the company was chiefly known for serving the only part of the UK where BT, and before that the Post Office, wasn't the service provider. Instead of being red the phone boxes in Hull were painted white, quite a startling sight for the visitor. It's not been a great investment for those who got in at the float, disproportionately people from the local area. When the council sold just over half its 100 per cent stake in Kingston in July 1999, the shares went for 225p. About 51,000 locals bought up to £6,000 worth of shares each, and, soon enough the great telecoms/technology bubble pushed the shares to £16. Those who bought the maximum number of shares found themselves sitting on a paper profit of £42,000.

It seems unbelievable at this distance, but Kingston Communications was for a while a multi-billion pound company, and it even managed to displace poor old National Westminster from the FTSE 100 index. Heady stuff. It couldn't last and, as we know, it didn't.

After the bubble burst the shares fell and fell and fell, so that they bottomed out at about 50p, at which price I bought a few. Even if all the talk about expanding into the small business sector turned to mush, it still looked quite a reasonable cheap punt for a private investor. This week, the shares went up about 15 per cent to 66p on the bid news. Not spectacular, but a reasonable return and it should join the nice little profit I've made on O2.

Thus emboldened I've bought into Cable & Wireless, at 125p, which I had sold out of earlier this year at a profit. Still, bygones are bygones and what matters is where that share price is going now, not where it's been. C&W seems to me to have a much better business nowadays, so that even if the bid speculation surrounding it comes to nothing there should still be something underpinning the shares.

I paid for my purchase of Cable & Wireless by selling most of my shares in BSkyB. Despite every effort by the Murdoch clan nothing seems to be going right just now, and I cannot really believe that buying Easynet is going to transform things. The time to buy into all those little broadband providers, and some that were not so small, was when the bubble burst a few years ago. If I could see that, why couldn't those clever people at Sky?

There's been plenty of action elsewhere in the portfolio. Savills was a share I bought into many years ago and made so much on that I felt I had to sell the holding to avoid any tax problems. Having bought them in 1997 at 127p and managed to get 425p in 2004 I thought I'd done well. I now see that shares in the posh estate agent are heading for the £9 mark.

Fortunately, I went back into the stock a few weeks ago and have even in that short time seen them rise by 25 per cent. There is something strange going on with Savills shares, but I don't know what it might be. Maybe it's just that someone out there has decided that the shares are actually still very cheap.

Savills has certainly started to diversify out of straight top-end estate agency into asset management for the well-heeled, and there is no shortage of them. So it's all going well. Just like Manchester United, it's been gloom to glee in one short week.

Email: s.o'grady@independent.co.uk

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