Another article by Calandra:
cbs.marketwatch.com
The roar of the crowd beckons
London Pacific harvests hundreds of millions from IPOs
By Thom Calandra, FTMarketWatch.com
Last Update: 6:52 AM ET Aug 9, 2000 NewsWatch
Latest headlines
LONDON (FTMW) - In the world of investment ideas, no one's two cents are worth more than those of the individuals who make up the collective known as the stock market.
The penny gallery is coming alive again - for the first time since March, when a global tech tumble took the wind out of everyone's sails. And everyone's message boards.
I remember last year, a month or so before the November tech rally that goosed shares of computer/Internet stocks large and small, I was speaking with David Readerman, the Thomas Weisel Partners director of Internet strategy. We were chatting in his San Francisco company's offices about financial news and page views . . . and e-mails from MarketWatch.com viewers.
The steady stream of daily e-mails from investors, I told Readerman, was slowly turning into an avalanche of investment ideas. This was just ahead of a historic Nasdaq rally that tripled and quadrupled the values of anything remotely linked with technology.
I told the analyst that I viewed the emails as an advance indicator. At the time, I referred to the daily digital pile of email from users of AOL, Earthlink, Prodigy and other services as my personal LEI - leading e-mail indicator of the stock market. My reasoning: Online investors were responsible for as many as a quarter of all U.S. stock market trades, and thousands of stocks had through late 1999 missed out on the broader 10-year bull market. "I think we're looking at a melt-up," I said.
Of course, melt-ups are almost always followed by meltdowns, and that one was no different. Cut to the present: Cisco Systems and Yahoo, with robust earnings reports, have put to rest investors' fears about fading Internet sales. American workers' productivity gains continue to astonish even wizened old economists. Large companies across the globe have boosted their capital spending by large percentages, with the bulk of the money going toward computer servers, networking equipment, wireless access, mobile devices and, okay, okay, a parking lot or two for all the new workers.
London Pacific's capital ideas
Oh, and guess what? The avalanche of e-mail and investment ideas is starting again. The meltdown just might be over.
Internet incubator funds, their shares depressed beyond all reason, are one of the favorite topics of American and European private investors. In the past month, I have received dozens of queries about a Channel Islands-based company whose fortunes we have followed closely in the past year: London Pacific Group. See earlier story.
London Pacific's shares trade in London (UK:LPG: news, msgs) and on the New York Stock Exchange (LDP: news, msgs). The insurance and annuity company's market capitalization of $1 billion, you would think, should qualify the London-listed shares for inclusion in the FTSE-250 Index of British stocks.
London Pacific, as Standard & Poor's put it recently when the credit rating agency downgraded its opinion on London Pacific Life & Annuity Co.'s financial strength, maintains an "aggressive investment profile." That profile, thanks to a California presence, has landed London Pacific hundreds of millions of dollars worth of freshly minted tech stocks, including most recently networker New Focus (NUFO: news, msgs).
Ian Whitehead, the company's chief financial officer, is moving back to London from California. Whitehead told me this week here in London that New Focus has been "beyond a home run." Indeed, at $120 a share, the New Focus stake is worth about $500 million, maybe more. Whitehead declined to discuss much about London Pacific's investments because the company will release details of its latest quarter on Monday. "We'll have a lot to share next week," he said.
London Pacific has shown investors that it can "monetize," as venture capitalists put it, its stock market stakes in risky IPOs. The company Wednesday said it will receive $72 million worth of Siebel Systems stock (SEBL: news, msgs) for its stake in OnLink Technologies.
London Pacific also pocketed about $135 million in stock for its stake in Sitera when the chip firm was bought by Vitesse Semiconductor. Yes, it's still all paper stock - but with 2 million shares or so of Vitesse, at least London Pacific has a very liquid stock to trade.Vitesse's average daily trading volume on Nasdaq for the past 50 days is 4.4 million shares.
London Pacific's subsidiary, London Pacific Life & Annuity, also will receive about $54.8 million worth of Internet infrastructure company Broadcom (BRCM: news, msgs) stock because of its stake in Silicon Spice. One again, London Pacific gets an easy Nasdaq stock to trade, if Whitehead and his Silicon Valley CEO, Arthur Trueger, so choose. (Average daily volume: 5.9 million shares.)
London Pacific next week is likely to tell investors that the value of its IPO holdings alone is $1 billion, or double what it was earlier this year. At that level, the parent company's $1.1 billion market cap might start to look dirt cheap. (All told, the company's annuity, asset management, ventre capital and financial advisory units either adminster, manage or retain a consulting role over $5 billion of assets.) We'll see.
London Pacific shares Wednesday in London were selling for 1,175 pence, up from 850 pence about a month ago. In New York, the ADRs sell for 17 1/2, up from 14 or so a month ago.
BP: Too many moving parts
The best explanation I heard for the yawn that greeted BP Amoco's second-quarter profit surge can from oil stock analyst Stephen A. Smith in Houston. See original column. Smith at Dain Rauscher Wessels told me BP's $3.6 billion of profit for the three months, far higher than any analyst including Smith had forecast, might have had "too many moving parts."
The company, which recently closed on $120 billion worth of acquisitions that included ARCO, Amoco and Burmah Castrol, laid out its results for the quarter pro-forma as of April 14, perhaps confusing some investors. London-based BP's stock (BP: news, msgs) in New York fe;ll 4.4 percent Tuesday after the profit report to 52 3/4. The stock in London (UK:BP: news, msgs) Wednesday morning was down 2 percent to 593 pence. "It was an awfully good quarter," said Smith, who also termed this as a "strange" year for the world's largest refiners because many professionals see the $28-a-barrel oil price headed for a fall. |
