Investment Column: Shaftesbury's a must for long-term buyers

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The Independent Online


Our view: Buy

Share price: 370p (-25.3p)

It is not so bad out there, especially if you invest in Shaftesbury, the property company which has its whole portfolio in the West End.

It is true that the group's office space is not flying off the books, says the chief executive, Jonathan Lane, but following yesterday's interim results announcement, Shaftesbury has 99 per cent of its portfolio let.

With a cheap pound attracting visitors to London and the recession persuading Britons to take their summer holidays at home, the West End is a little pocket of the UK that is doing well. According to Mr Lane, Shaftesbury has no shop or restaurant space available, just in case anyone was considering a career change.

For investors, there are obvious advantages to a punt on Shaftesbury, especially in these volatile markets.

Mr Lane concedes that the company does not scale the heights when all is swell, but nor does it suffer when things go badly. For those of you who have not yet noticed, the property market has had a tough time of it recently. If investors are looking for a top pick in the sector, it would be difficult to see beyond Shaftesbury. The problem for today's buyers is that others have noticed the strong performance, and the stock has risen by nearly 70 per cent in the past six months. Yesterday's drop of 6.4 per cent, after what was an upbeat set of numbers, indicates that investors were taking profits from what was already an expensive share.

For the short-term buyer, we would wait until the stock softens before taking the plunge, but for those looking to buy and hold for the longer term, holding Shaftesbury is a must. Buy.

Hardy Oil and Gas

Our view: Hold for now

Share price: 286p (-14p)

It has been a tough old few months for Hardy Oil and Gas, the exploration and production group which has its operations in India and Nigeria.

The group issued its interim results yesterday, saying that last year's interim profit of $6.2m had turned into a loss of $4.3m over the first six months of this year. Hardy said this was because of tough comparisons last year, when the price of oil soared to $147, and unfavourable contracts that proved expensive when the price of the black stuff fell by 50 per cent in the early part of this year.

The numbers do little to inspire confidence, and we would urge caution, even if there are reasons for the losses beyond poor performance.

However, we would be more worried that the group's only producing well has been out of action since early July, and is not expected to be up and running again before the middle of September – and only then if the weather allows repairs to be done.

The case for investment is that Hardy is the only London-listed group operating in the area that is expected to increase its Indian oil output by 50 per cent next year.

Hardy says it has two sites that are expected to come into production by next year, $30m on the balance sheet which will keep it away from equity markets until at least next year, and that its unfavourable contract issues have been resolved.

We agree that all of these factors should encourage investors and that next year Hardy might be worth a punt. However, while it might be worth a bet in 2010, it is not a purely high-risk exploration punt and we would wait until its producing site gets back online before throwing our lot behind the company. Hold for now.

Brinkley Mining

Our view: Buy

Share price: 1.1p (unchanged)

Journalists tend to get used to the spin, hype and bluster that accompanies a company's results. This is only ever magnified when a chief executive is asked why an investor should buy his shares.

Not Dunbar Dales, the boss of Brinkley Mining, which yesterday posted an unexciting set of interim results. The group has a couple of uranium assets in South Africa and southern Sudan: the former is low grade and not worth pursuing, while the latter comes with some obvious security (not to mention ethical) concerns.

As such, Brinkley is looking to offload its assets and become an investment vehicle. It has received proposals, but so far, says Mr Dales, there has been nothing to interest him and that investors should not buy his company's shares until it can point to more tangible progress.

Rather oddly, we would beg to differ. Yes, Brinkley's share price has been all over the place recently and a punt is a high risk, given the fact that the group is not actually doing anything.

However, the current price is below the net asset value of the group, meaning in reality that any progress comes for free. Buy.