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Fred Woollard puts 4% of his fund into Standard Life
28/08/2006
By The Scotsman
FRED Woollard, the Australian investor who led the campaign to have Standard Life demutualised six years ago, has invested a sizeable portion of his hedge fund in the insurer.
Samuel Terry Asset Management, which invests on behalf of Woollard and his family as well as outside investors, has pumped 4 per cent of its portfolio into shares in the Edinburgh firm, which listed on the stock exchange last month.
In a note to investors, Woollard said: "When we bought it, Standard Life was trading at its 'embedded value' - or what the company would be worth if it wrote no more business. It was also trading at less than ten times my estimate of what it will earn in 2007."
Woollard waited until the first day of trading before buying into Standard Life at 242p a share. The shares closed at 258p on Friday. Woollard added that although Standard Life "has some risk, and its management's track record has been unimpressive, the price was too cheap".
Tim Askew, of the Investors Association, said Woollard's purchase would encourage Standard Life investors to hold on to their shares and wait for next year's bonus share issue. He said: "It will be a disappointment to those investors who sold up earlier on when there was more uncertainty. For me as an investor, to find that Woollard thought it was a buy at 242p is reassuring."
Standard Life's share price has been buoyed up by a number of recent positive brokers' recommendations ahead of its results next month. Merrill Lynch last week put a fair value on the firm of 284p a share - equivalent to a market capitalisation of GBP 6bn.
Samuel Terry Asset Management tends to focus on a small number of what it sees as undervalued stocks, typically between 20 and 30 at a time.
Woollard named his fund after Australia's first millionaire, a former convict from Yorkshire who arrived in the colony in 1800. Its Latin motto translates as: "We buy old junk. We sell antiques."
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