The Investment Column: One of the few, and worth having

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The Independent Online
NO ONE seems quite sure how to treat Singer & Friedlander. If you check its share price it is rather unhelpfully grouped under "other financials". Journalists tend to prefer the more nostalgic "one of the last independent British banks", despite the fact that banking accounts for only around a fifth of profits. Others plump for the functional but unwieldy "banking, broking, investment and asset management" group.

Many in the City view Singer & Friedlander as a glorified stockbroker. True, stockbroking accounted for the vast majority of the group's annual profits in 1997. The group made a total profit of pounds 55m in the year to December, before tax and exceptionals. Around three-quarters of this derived from stockbroking.

But to focus purely on the group's broking division is a disservice to its other activities, in particular its burgeoning asset management business.

Perhaps the best description of the company is "a financial services opportunist". Singer's key strength in recent years has been its ability to snap up good value companies in the financial sector and integrate them successfully into the group.

The group's investment in the Nordic broker Carnegie is a case in point. Singer bought a controlling stake in the broker - dubbed the "Cazenove of Scandinavia" - three years ago. Since then, Carnegie has enjoyed phenomenal success - its operating profits were up more than 80 per cent last year to pounds 32.7m.

The shares closed yesterday at 184p, up 3p, and brokers' estimates put the company on a forward PE of around 12.5. This looks good value given the group's potential both as an acquirer - Singer is currently thought to be on the acquisition trail in the UK fund management sector - and an acquiree - the group would make a good catch for the big boys of the investment banking world. Buy.