Value has never been trendier, especially when it is prefixed by `shareholder'

NEVER LET it be said that the world of investment is not fashionable. We embrace fashion in a way that can be quite disconcerting to those who believe we are all pin-striped suits and brogues.

The Square Mile buzzes with trends. Remember when investment professional were value investors? Value is still a buzz-word, however, especially with "shareholder" in front. It is what 1990s management is all about.

Stand up as the chief executive and announce you will be delivering shareholder value and immediately all the analysts present will be looking at which subsidiaries you will be selling and trying to calculate how much money you can return by way of a special dividend. What with that and share buybacks it is no wonder we have too much money chasing too little stock.

It is interesting to look through the list of recent special dividend declarations. Two new banks, Woolwich and Halifax, are returning money to their shareholders while Royal & Sun Alliance has joined the queue this week.

And Unilever, one of Europe's leading companies, has a cash pile so big that, were it to be floated as a separate company, it would be big enough for inclusion in the FTSE index by merit of size alone.

You cannot help but wonder if the reason for this sudden popularity of special dividends is that these companies cannot come up with any convincing reasons on how to spend the money.

But why is Royal & SunAlliance not doing more? The company is operating in an industry where consolidation is set to continue. Yet its results were accompanied with the announcement that it is to sell the US life operation.

To be fair it has been active in acquiring operations elsewhere. Perhaps it would be unwise, therefore, to consider that the firm may have been raising money just to enhance shareholder value.

The 48p special dividend was well received by the market, but what would Royal & SunAlliance do if a major acquisition target sailed across its bows. The company has said that it can always return to shareholders for financial muscle, so perhaps we must accept that delivering shareholder value is yet another short-term consideration. After all, imagine sitting on all that cash and not finding something to do with it swiftly. You can almost hear the howls from the investment community.

Personally I would look elsewhere if I were to back the insurance sector. Perhaps CGU appears a better bet. But both should benefit from any upturn in rates, which Royal & Sun Alliance believes will now take place. CGU has a little more street cred, but you won't get a hefty special dividend later this spring.

Brian Tora is head of the asset management division of Greig Middleton