Lincoln Driving Value Stocks in from the Cold
Byline: BRIAN O'CONNOR
IF there is one point on which investors might agree with the demonstrators who invaded the City yesterday, it might be that the money made during the technology/dotcom bubble was excessive and not eco-sustainable.
That is bad news for the hot tech stocks, which have slumped 30pc since March. But it is good news for the old 'value' stocks, which are seeing some action at last.
Last week Charter, whose unfashionable welding equipment business had kept its shares in the doldrums, landed a cash bid from US rival Lincoln Electric at more than double its market price.
Then modestly-rated Fairview Holdings disclosed an approach from its own management which lifted not only its shares but those across the housebuilding sector.
Property stocks, which have been languishing miles below the value of their assets, were lifted by a cash offer for Scottish Metropolitan from Haslemere, part of Dutch group Rodamco. Ring in the old, ring out the new? Well, possibly. Before getting carried away, look harder at Charter's record. The shares peaked at 972p in 1997 and had slumped to 243p before Lincoln's 500p cash offer.
This is very welcome but many investors will still be exiting at a loss.
Fairview has a shorter track record and so has had less time to decline since being spun out of Hillsdown Holdings two years ago.
But its 30p jump to 157p last week still leaves the shares below their December peak. At Scottish Metropolitan, the 116 1/2p bid merely restored the price to its 1998 high.
Investors in all three are a great deal better off than a week ago, but to say they have lost less money than hitherto is not an overwhelming argument for 'value' stocks.
Yet the tide has turned to some degree. After months when the only sure thing about a company on an apparently absurdly low p/e of five was that it would soon be on a p/e of four, the amazingly low ratings of some are flushing out predators - sometimes all the way from their own boardrooms. …