Hellaby shines among listed investment companies

By Peter V O'Brien

Friday 13th December 2002

The share price performance of listed investment companies eased in the six months since The National Business Review last reviewed the sector.

It was still better than movements in the main sharemarket capital indices, with the exception of IT Capital (well down) and Hellaby Holdings (ahead).

At Hellaby Holdings' annual meeting last month, shareholders were told Hellaby was an investment company, not a conglomerate. It had a staff of four and a small board.

Hellaby was not an operator but took the trouble to ensure the companies it invested in did well and added value for shareholders. That does not always happen, as shown in Hellaby chief executive David Houldsworth's comments at the meeting.

"As you would expect from such a diversified portfolio of companies some of our subsidiaries and associate companies are not performing as well as we would like ... shareholders should recognise that the majority of our investments and importantly the larger of our investments are performing strongly and offer significant growth opportunities for the future."

That situation is seen in other companies, such as Guinness Peat Group and BIL International, although in the latter poor performers outweighed the good in recent years. BIL still has a stake in Air New Zealand, albeit small at 5.4%. It will be further diluted if the proposal for Qantas to obtain a 22.5% position in the airline receives approval.

Dorchester was considered in last week's NBR when the company's share price performance was noted as being among the top 10 from the end of 2001 to November 26. It has been on that list, or just outside it, for several years.

Most of Dorchester's price improvement came in the first half of the year, before the overall decline in equities.

BIL's 6.8% decline since June was spectacular compared with the 96.7% gain between December 31 and November 26. The latter movement followed an earlier major price fall.

IT Capital's situation needs only one word mess. The company was the subject of many NBR articles this year, related mainly to ambitious but seemingly doubtful deals that came unstuck.

The company's description of itself calls up the "physician, heal thyself" admonition, given its history and the market pricing the shares at 2.8c (compared with a 2002 high of 13c) and discounting chief executive David McKee Wright's optimism in the interim report for the six months ended September.

Mr McKee Wright said IT Capital was in an excellent position to take a strategic step with restructuring behind it and risk assets divested. This remains to be seen.

Utilities investor Infratil is attractive because it has positions in areas considered defensive when equity markets face uncertainty.

A soundly based investment company rarely finds all its holdings performing well or weakly at the same time, unless they are subject to major local/international economic crashes. That situation is unlikely in 2003, despite current economic softness.

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