Williams in need of fresh impetus : CITY TALK

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The Independent Online
WILLIAMS HOLDINGS, the conglomerate created by Nigel Rudd and Brian McGowan, is the stock market's hottest sell, now that both founders have, in effect, turned their backs on it.

Mr McGowan left in May 1993, signalling that the group's 11-year run of acquisition-led growth was at an end. Mr Rudd will protest that he is still in place, but last week's news that he has added the chairmanship of glassmaker Pilkington to his similar post at East Midlands Electricity is a severe warning to all but the most dedicated Williams followers.

This is not to discount the fine management still beavering away at Williams. But the strategic leadership has been diluted so drastically that the shares must be a sell. Even the 5.1 per cent yield at 321p is not enough until fresh impetus arrives.

PUNT of the year depends on events in Court 41 at the Old Bailey, where London Merchant Securities is claiming £170m from BSkyB. LMS is alleging that it was left out in the cold when Sky merged with the other satellite broadcaster, BSB, in which LMS was a minority shareholder.

Since LMS has a capitalisation of just £270m, winning the case would put the shares into orbit, in particular the deferred ones, which are not entitled to dividends for another nine years. At 50p, they are a virtually riskless punt, especially as LMS has a rock-solid property portfolio centred on London's West End and its shares are at a 40 per cent discount to asset value.

THE market does not easily forgive, especially not former dream shares such as furniture group Spring Ram. Eighteen months after the departure of ex-hero chairman Bill Rooney who led the shares up to 181p in May 1992, they are still beached at 40p. The results for 1994, due on Tuesday, should show a modest profit after the £36m loss in 1993. The fears are overdone. Buy.

SOUNDS familiar? A large British-owned international advertising group that nearly went under in the slump, headed by a chief executive who regularly gets into trouble because of his excessive compensation package.

No, not Saatchi, but WPP, headed by ex-Saatchi bean-counter Martin Sorrell. The group is now back on form. But the shares, at 108p, are still suffering from severe indigestion five months after the banks, which rescued WPP in 1992, sold - at a considerable profit - the £138m worth of shares they received in a debt-for-equity deal. But the indigestion will not be permanent and the ill wind that has afflicted Saatchi can do nothing but good for WPP's agencies.

FOLLOWERS of City Talk who bought the shares of Coal Investments at 108p in October may be worried at their subsequent decline to 78p. The fall was caused by a £26m rights issue and slippage in getting the pits CI bought from British Coal back into production.

But, perversely, this delay merely emphasises CI's advantages. Unlike rival RJB, which has bought British Coal's English pits, CI can start production from scratch and choose its own workforce and working conditions, resulting in production costs as low as half RJB's. So take heart. Production is now above forecast at one of CI's pits, and the electricity generators are turning to CI as an alternative supplier to RJB. A bargain.

THE general gloom overhanging the house-building sector has been overdone. One segment of the market - houses between £75,000 and £125,000 - is still relatively chirpy. It is the niche occupied by MJ Gleeson, one housebuilder to come through the recession unscathed. At 863p, its shares are on a p/e of under 15 and entirely suitable for prudent investors content with a 2.1 per cent yield.

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