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Thom Calandra's StockWatch
Don't stress: There are believers
London Pacific benefits from tech portfolio
By Thom Calandra, FTMarketWatch.com
Last Update: 3:45 AM ET Aug 14, 2000 NewsWatch
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LONDON (FTMW) -- A new survey shows that office workers are stressing out, just like car drivers.
Tesco, the British supermarket chain, carried out the survey across U.K. cities after seeing soaring sales of stress relief medicines at some of its stores. Failed computer servers and bad copy machines now have the ability to send office workers over the edge. Like road rage, Tesco said.
Individuals, I think, will need to add stock market rage to the list, if technicians such as Kevin Marder are correct. Sliding tech stocks make it unlikely we will see a sustained rally at any point in the immediate future, the so-called chart-heads say.
"Technology is not attractive enough technically to warrant the attention of the trader seeking to capture gains of a few weeks to a few months," Marder of TradingMarkets.com in Los Angeles says. Marder was speaking of Nasdaq stocks, but caution is advised for most tech stock indexes this summer -- including those across Europe.
Wall Street and London analysts are also downgrading prospects for technology and Internet companies and their shares. It's not just Henry Blodget of Merrill Lynch downgrading defenseless stocks like tiny Quokka Sports (QKKA: news, msgs), which I regard as a broadband beneficiary of the upcoming Olympics in Australia next month. Nearly all the pros on Wall Street and in London are issuing obituaries for their once-favorite tech and Internet stocks.
Yet there are believers out there, and most of the optimists, naturally, are executives at Internet-related companies.
Best example Monday? "We are clearly delighted with our own results," London Pacific Group CFO Ian Whitehead told me from London, after his Internet incubator/insurance company reported $339.8 million of profit for the June quarter. London Pacific (LDP: news, msgs), which trades in New York and in London (UK:LPG: news, msgs), hopes to join London's FTSE-250 Index.
The news was enough to move the London-traded shares up 7 percent when the London Stock Exchange opened Monday.
Navigating the channel
Whitehead and CEO Arthur Trueger, who is based in London, have guided their Channel Islands-based company through the Internet maze better than most, snaring early-stage positions in companies such as New Focus (NUFO: news, msgs) and Net learning company Saba Software (SABA: news, msgs). London Pacific has also had good fortune in gaining stakes in highly liquid stocks such as Vitesse Semiconductor (VTSS: news, msgs), thanks to the purchase of some of those venture capital stakes.
Amid the robust earnings, Whitehead said he and his fellow executives are forced to recognize the bleak landscape for technology stocks, then go about their business -- which is investing in those companies.
"Clearly, a declining market will reduce the value of our portfolio," Whitehead said about London Pacific's holdings. "But the valuations of late-stage venture capital investing would also decline, so those deals would be more attractive on our way in."
Book value
London Pacific pointed out that its book value as of June 30 was $12.78 a share. (The figure is bound to be higher right now thanks to a mild recovery in some of the company's Internet holdings.) That compares with a traded New York price of $17 or so. "Our share price I would say has not exceeded our book value by very much at all, whereas other so-called incubators have traded at 10 or more times book value, " said Whitehead.
Trueger, the company's Silicon Valley investment guru -- he was an early holder of Cisco Systems and other tech bellwethers -- noted it was "hard to guess where technology equity market conditions will lead us over the balance of the year. In any event, acquisitions and IPO activity are continuing."
London Pacific's entry into the medium-capitalization FTSE-250, said Whitehead, "will help us be more recognized in the U.K. and Europe." Strangely, the annuity and insurance company is better known in California because of its tech investing than it is in its home stock market of London
For London Pacific's asset management and financial advisory business, it is back to business as usual. Whitehead said Europe is on the verge of an investing revolution. First stop: no-load mutual funds. "There are hardly any here," he told me about fee-free (at introduction) funds and unit trusts for Europeans.
London Pacific is developing a Web-based product called myOfficeOnline for financial advisors. The company is discussing the service with European and American investment banks, financial advisory firms and fund management companies. London Pacific is so optimistic about the potential for an expanding European investment landscape that it is sending chief financial officer Whitehead back to Britain.
See here for more on London Pacific.
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Thom Calandra is editor-in-chief of FTMarketWatch.com and CBS MarketWatch.com.>>>>
Best wishes,
Jim |
