1993 portfolio beats market - despite Queens Moat

Click to follow
The Independent Online
DESPITE some spectacular disasters - notably John Shepherd's tip of Queens Moat Houses - our staff investment portfolio performed relatively well last year. If you had invested pounds 1,000 in each of the 14 tips you would have shown a gain on your money of 27 per cent - and that's before taking account of any dividend income. Over the year, the FT-SE 100 share index rose 20 per cent.

The best performer by far was Simon Pincombe's tip of British Aerospace, which showed a gain on the year of 150 per cent. Pincombe correctly diagnosed the nadir for the BAe share price, which had been severely hit by a failed rights issue, a series of gloomy trading statements and some truly horrendous write-offs. 'At 165p, there is no longer any downside to Britain's largest manufacturer, unless it actually goes bust,' Pincombe said, adding that 'if a man of John Cahill's (the new chairman) reputation cannot pull it round, I will give up share tipping.' Fortunately, he won't have to.

The next best tip was Richard Thomson with Hongkong & Shanghai Banking Corporation, which he chose mainly as a bet on the Hong Kong stock market. 'History teaches that you should buy into the Hong Kong market on political weakness,' he said. The beginning of last year was such a moment; the Hong Kong market has soared.

Not far behind was Martin Sorrell's transatlantic advertising group WPP, selected by our City editor, Jeremy Warner. This was another recovery stock that had just been through a protracted and difficult refinancing. Though the upswing in the advertising market that Warner foresaw has yet to materialise fully, investors seem to have warmed to the shares which, despite a rights issue midway through the year, nearly doubled.

Shares in TI Group, tipped by Terence Wilkinson, City editor of the Independent, justified the hopes placed in them and rose 27 per cent.

Despite the lack of an expected upturn in aerospace markets and some doubts about the group's accounting methods, TI managed to outperform the market, helped by what may be a fruitful joint venture landing-gear deal with the French Messier-Bugatti.

John Willcock missed the start of the boom in housebuilding stocks (it started well before the beginning of 1993), but he successfully climbed aboard the bandwagon by chosing Bellway, which showed a 59 per cent gain on the year.

We had two spectacular howlers last year: Jason Nisse with Fisons, and John Shepherd with Queens Moat Houses. In both cases, the books turned out to have been cooked to a greater or lesser extent so the gaffs were perhaps excusable.

Nisse, nevertheless, committed that cardinal investment error of going for a company where he believed things couldn't possibly get any worse - a philosophy that ironically served Mr Pincombe rather well. Unfortunately, in Fisons case they got a lot worse; the new broom, chief executive Cedric Scroggs proved no better than his predecessor and like him was forced to walk the plank. Fisons is now a company without a chief executive, without a finance director, without a strategy and in all probability without a future. Nisse is nevertheless sticking to his guns. In the belief that things cannot possibly get any worse, he's tipping them again]

The less said about Queens Moat - we've written off our entire investment - the better.

----------------------------------------------------------------- OUR UPS AND DOWNS OF 1993 ----------------------------------------------------------------- Pundit Share Price (p) Price (p) Gain or at 1/1/93 at 1/1/94 fall (%) Simon Pincombe BAe 165 413 + 150 Richard Thomson HSBC 493 974 + 98 Jeremy Warner WPP 47 89 + 89 John Willcock Bellway 311 493 + 59 Roger Trapp Menzies 457 588 + 29 Terence Wilkinson TI Group 316 401 + 27 Robert Cole Hillsdown 132 159 + 21 Tom Stevenson Pendragon 233 285 + 22 Heather Connon Hanson 234 268 1/2 + 14 Patrick Hosking Dixons 263 285 + 8 John Murray Brown & Jackson 12 12 1/4 + 2 Chris Blackhurst Burton 71 1/2 69 1/2 - 3 Jason Nisse Fisons 245 134 - 45 John Shepherd Queens Moat 45 1/2 0 - 100 FT-SE 100 2846.5 3418.4 + 20 Pounds 1,000 invested in each, total pounds 14,000, would today be worth pounds 17,710 -----------------------------------------------------------------

Comments