MOBIUS CLUB
February
2005 Newsletter
It was
very sad for those of us who knew Gummi to learn of his death. Only last
meeting we were questioning how we should continue under the difficult
circumstances of his terminal illness. The funeral was a large affair extremely
well supported by the Sikh community most of whom seemed to revere him as a
local hero. We were all glad to have known him and pleased to be part of his
send-off.
The stock
market in early part of 2005 is a mirror of the weather. It seems warm and
encouraging but we know it is still winter by the date. Currently the FTSE100 is
trying to break 5000 (briefly topping it on 10 Feb) last seen in June 2002. The
FTSE Small Cap reached 2962 the highest
since 2001. There is a positive air around which seems to have persisted since
December. Pundits had thought that 5100 was the favourite prediction for
end-2005 but perhaps that will be exceeded soon only for a fallback over the
summer lull. Key factors boosting sentiment may be the effect of Iraqi elections
(although results are awaited) and the steady reduction in oil prices.
A local factor seems to be the increase in
Merger and Acquisition activity which has already seen several offers pop up
for quite large companies. You can feel the merchant bankers and others rubbing
their hands in anticipation. The slightest whiff of rumour sets whole sectors
bubbling away like an alka seltzer.
The building and construction sector is
thought prone to consolidation and also interest rates are steadying. These factors
seem to have put Persimmon and other
builders into the spotlight and led to an increase in price of a pound since
last meeting. If only we had bought a few Taylor
Woodrow when we went for C&W
to tidy our portfolio.
Morgan
Stanley’s top 10 tips for takeover in 2005 include TWOD along with other worthies such as DS Smith(who?), British Vita,
Mowlem, TDG, Mothercare, St Ives, Dixons, House of Fraser, and Hanson. Of course there is likely to be an
element of hope built into the current prices especially as the list has been
out for a while.
How about
moves in our portfolio. Well Airpartner has
made welcome progress after good results although the chairman said the recent
profitable trading may not be so good
in the next period. MITIE has
steadied in a higher trading range. Retail
Decisions continues to receive favourable press reports and seems to be
trying to hold at around 35p. Hamworthy hopefully will stay where it is until
good news moves the price back up a little and ultimately regain its upward
path. C&W edges closer to our
target. While our recent purchase of Radstone
has yet to prove itself. Although it is moving in the right direction.
Gold is
somewhat weaker as are other commodities. Meanwhile the US dollar has rebounded
somewhat against the Euro under the influence of higher interest rates over
there.
One of our recent holdings gave out storming results on Tuesday. Dicom Interims showed pre-tax
profs up 100%, Div up from 1.85 to 2.13p. No wonder they have risen £2 since
October last.
Tony is doing his level best to
work with the bureaucrats at the Tax Office so we trust that a very simplified
solution will eventually be found to make it easy for us to do our duty. I for
one have an aversion to forms especially when they concern such piddling little
amounts of profit.