Campbell finds there's no pleasing analysts

Part of its problem is most likely that Campbell chief Greg Kilmister kept away from forecasting the outcome for its new financial year, which was no break from tradition. The Queensland-based group has hardly ever made predictions until the annual meeting.

At any rate, its shares dropped 60? to $56.70, bringing to 18 per cent the fall since its shares topped out at $69.28 at the beginning of this month.

The final dividend of $1.30 a share, which was 15? better than forecasts and brought the annual rate to $2.25, was not enough to turn aside market uneasiness.

From what Insider can glean, the market's wariness comes from signs within the result that Campbell's profit margins, particularly in Europe, came under pressure and in a global economic environment as unpredictable as this, that is sufficient to generate a discount on the shares.

As Goldman Sachs' Richard Coppleson noted in his celebrated afternoon report yesterday: "Specifically we noted that the US and Europe report fourth-quarter EBIT [earnings before interest and tax] of $US36.4 million, below our forecast of $US42.4 [million] . . . with lower than average selling prices more than offsetting higher than expected volumes."

The Goldman numbers also noted that Campbell's result had been helped by lower interest costs and a lower tax bill.

The decline in quality of Campbell's performance will now be closely monitored by the market, especially against a backdrop of fears that falling commodity prices will trigger a fall in both mining projects and exploration bad news if your business runs on testing mineral samples in a chain of labs around the world.

The upside of the spread of Campbell's business is, though, that even if the focus shifts from Australia because of purely local issues such as mining costs and the main ore customer, China, buying elsewhere Campbell ought still to be picking up the business in Africa, Asia and South America.

Value spied in DJs

IF HAVING Simon Marais and his funds management business Allan Gray (nee Orbis) on your share register is deemed a good thing, upmarket department store group David Jones now enjoys the value investor's presence.

The substantial shareholding notice from Allan Gray lays claim to 26.5 million shares, equivalent to just over the 5 per cent disclosure level, bought at an average cost of $2.61 between August and now.

Marais' presence on a register is rarely passive he buys in because he thinks stocks are undervalued, and then sets about reminding companies of their obligations to produce value for investors.

Occasionally it involves push and shove, as in getting Spotless Group's board to engage with a potential bidder. Spotless, in the end, recommended that offer from Pacific Equity Partners.

Insider does not disagree with the principle of keeping public company boards "honest", although questions whether every offer should be accepted just because it is the best thing going at that point in time.

Sadly for Marais and the team, the David Jones price has not been near $2.61 since March, meaning a paper loss of about $10 million at the moment, although the shares at least closed 3? better at $2.23 yesterday.

Going in the opposite direction on DJs' register was Asia-focused, San Francisco-based Matthews International Capital, which sold its stake down by 1 per cent to 5.2 per cent last week as markets peeled off.

Other fund managers might like to look at the shareholdings notices of both Allan Gray and Matthews International, as templates for being informative, detailed yet concise.

Contrast that with Alex Waislitz's Thorney Holdings, which told the market last Friday that it had reduced its stake in Skilled Group by 2.64 million shares, and which unhelpfully noted that the sales had been "on-market sales" at "market prices".

Thorney might want to have a read of the fine print directions on substantial shareholding forms: "Details of the consideration must include any and all benefits, money and other, that any person from whom a relevant interest was acquired has, or may, become entitled to receive in relation to that acquisition."

Or even the corporate watchdog's regulatory guide which opens with: "A person who gives a substantial holding notice must give full rather than minimal or technical disclosure."

Big deal on paper

FASCINATING to see the Karam family's TMA Group, which delisted last year with a balance sheet of about $50 million of assets and $26 million of liabilities, is now apparently contemplating a $230 million offer for printer and publisher PMP.

Last time Insider looked at PMP's balance sheet, it was carrying about $170 million in debt although it seemed to feel net debt could be sliced from $153 million to $140 million by June 30.

That is still an enterprise value nudging $400 million, which implies that either the Karams have found some extraordinarily entrepreneurial bankers, or TMA Group was hiding its light under a bushel before delisting.

The "privatisation" of TMA, which specialises in thermal papers, was a controversial deal because the Karams already controlled 80 per cent and were not offering to buy out the minorities.

So, when last year the Karams did not want to part with the perhaps $2 million it might have cost to buy out small investors, this year they are prepared to spend 200 times that amount.

Probably the only way the deal works is for TMA to keep the bit of PMP that it wants and flog the rest. The details will be fascinating for PMP shareholders, which oddly enough also includes Simon Marais' Allan Gray funds. The shares were struggling to hold 25? before the notional 68?-78? offer.

insider@fairfaxmedia.com.au

Last year the Karams did not want to part with the perhaps $2 million it might have cost to buy out small investors this year they are prepared to spend 200 times that amount.