• Financial & Investment Management Group
  • Tuesday, January 06, 2009

Last-Minute Shopping

by Zach Liggett
Posted December 12, 2008
Paul Sutherland, President

Current Observations

December Edition
PDF Version

By the time this newsletter hits your mailbox, you will probably have less than 10 days to get your act together and finish your holiday shopping. In other words, the time for lollygagging is over. To help your cause, I've put together a few lastminute holiday gift ideas that all relate to holdings in FIM Group-managed portfolios, providing a double opportunity to finish your shopping and throw top-line support to some of the companies you own.

So let's get started with a great multi-purpose stocking stuffer. Tiger Balm is an herbal ointment that originated in the old imperial courts of China to relieve and soothe body aches and pains. It is versatile enough to help with arthritis relief, muscle sprains and even bug bites. Haw Par Corporation (www.hawpar.com), a Singapore-listed health care, leisure and property conglomerate, has grown the Tiger Balm brand over the past century into a global franchise that has become the core of its health care business. Haw Par is debt-free and trades at only 40% of book value, a level last seen during the late '90s Asian financial crisis. The company should pay a 5% dividend yield in 2009.

For the youngsters on your list, how about an educational toy from Action Products International (www.apii.com)? Action Products is focused on managing a portfolio of non-violent and educational toy brands, including Space Voyagers, Curiosity Kits, I Dig and Kidz Workshop. Our portfolio team has met with their new management, and we feel good about their plans to bring much-needed restructuring to the company. We expect a recovery in profitability, even in a weak economic environment, as this restructuring bears fruit in 2009.

Speaking of fruit, a gift basket of pineapples, bananas and melons might be a hit with the fresh fruit junkie on your list. Fyffes (www. fyffes.com) is an Ireland-listed global distributor of tropical fruit. Management has ambitious plans to significantly grow its business over the next five years both organically and via acquisitions of smaller distributors. Fyffes trades at only 8x next year's expected earnings and should offer a 5% dividend yield in 2009.

If shopping for pineapples causes you to start dreaming about warmer, tropical locales, perhaps a radiant underfloor heating system from Uponor (www.uponor.com) would be a nice gift for the family. Uponor's heating systems are increasingly being installed for their comfort, energy efficiency and air quality enhancement (no dust spewed into the air). For our fortunate Hawaii clients who aren't quite as concerned about staying warm, Uponor also offers radiant cooling systems. Although the headwinds of slowing global economic growth will impact Uponor in the near-term, the company's unique, environmentally sound heating/cooling and plumbing products should benefit as living "green" continues to gain mainstream acceptance. Uponor trades at around 10x expected '09 earnings and should pay at least a 10% dividend next year.

For those with a bit more room in their budgets (and still daydreaming about tropical weather), how about a brand-new, high-end luxury condo in Hong Kong? Cheung Kong Holdings (www.ckh.com.hk) is a Hong Kong-listed multi-national conglomerate with core activities in property development, telecommunications, ports and energy. Luxury residential developments account for roughly 8% of Cheung Kong's net asset value (NAV), and Cheung Kong has a good track record of selling out its developments even when the economy softens. We have been buying the stock for some of our strategies at nearly a 40% discount to NAV and expect to benefit longer term as the NAV grows and the discount to NAV narrows.

Hopefully, these ideas help your dash to the shopping finish line and remind you of some of the promising companies we own in FIM Group-managed portfolios.

If you don't already have wrapping paper, I might suggest an alternative route this year that a few years ago would have branded you a cheapskate, but now deems you hip and green. Recycle a few sections of The New York Times (www.nytco.com, The Washington Post (www. washpostco.com) or The Wall Street Journal (www.newscorp.com), and use them to wrap your goodies. When all the wrapping is done, sit back with a cup of organically decaffeinated coffee (www.swisswater.com), survey your work, and maybe slap on a little Tiger Balm to keep those joints loose for all the unwrapping ahead.

Oh yeah, one last thing. Make sure you call those loved ones who won't be able to spend the holidays with you. A simple call will probably mean more to them than any gift, and depending on where they reside, the call will probably travel via portfolio holdings ATT (www.att. com), Deutsche Telekom (www.telekom3.de) or and Shin Corp (Thailand, www.shincorp.com).

Happy holidays everyone, and best wishes for the New Year!

 
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