Campbell scrutiny after share battering

Part of its problem is most likely that the Campbell chief, Greg Kilmister, kept away from forecasting the outcome for its new financial year, which was no break from tradition. The group has almost always not 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, 15? above forecasts, which brought the annual pay-out to $2.25, was not enough to turn aside market uneasiness.

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

As Richard Coppleson of Goldman Sachs said in his report yesterday: "Specifically we noted that 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 tax, which should have significantly raised the outcome.

The decline in quality of Campbell's performance will now be closely monitored, especially against a backdrop of fears that falling commodity prices will trigger a drop in mining projects and exploration.

The upside of the spread of Campbell's business is that even if the focus shifts from Australia because of 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.

DJS' PAPER LOSS

Depending on whether 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's 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 chasing down Spotless's board on engaging 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 the time.

Sadly for Marais and the team, the DJs price has not been near $2.61 since March, meaning a paper loss of about $10 million at the moment.

Going in the opposite direction on DJs' register was Matthews International Capital in San Francisco, which sold its stake down by 1 per cent to 5.2 per cent last week.

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

Contrast that with Alex Waislitz's Thorney Holdings, which said on Friday that it had reduced its stake in Skilled Group by 2.64 million shares, 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."

PRINTER TARGET

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

The last time that Insider looked at PMP's balance sheet, it was carrying about $170 million in debt.

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

The "privatisation" of TMA was controversial because the Karams already controlled 80 per cent and were not offering to buy out 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.

Insider would guess probably the only way the deal works is for TMA to keep a bit that it wants and flog the rest of PMP.