THE INVESTMENT COLUMN

Going the whole hog on whisky

Especially at this time of year when investment folk gather round blazing log fires with a wee dram to counter the frost and snow outside, their thoughts sometimes idly turn to the idea of investing in a cask or two of malt whisky with a view to bottling it to drink themselves, or selling it back at a staggering profit when age has made it rare and valuable.

You can buy a hogshead containing 250 litres of new whisky for as little as pounds 900, compared with a current retail value of between pounds 4,000 and pounds 5,000. But before you can hope to get at the retail value you will have to pay for the storage charges, the insurance and the inevitable losses through evaporation from the cask, known quaintly as the angels' share, before you can hope to have a commodity that you could bottle and drink yourself, give to your friends or re-sell to a whisky retailer or perhaps a blender.

There is also no guarantee that the malt you would be buying is desirable. The big distilleries such as Glenfiddich will rigorously prosecute anyone who claims to have any Glenfiddich for resale.

Most of the other best-known names such as Macallan, Highland Park or Bowmore sell only to other distillers for blending and refuse to supply speculators, although it seems some casks sold for blending do turn up on the retail market, where they will cost substantially more, at least pounds 3,000 for a hogshead. There are also stocks of casks of whiskies from defunct distilleries on offer, but there is also a fair amount of second- rate malt around.

In fact there are only one or two well-known distilleries, Springbank, based at Campbeltown, and Tomatin near Inverness, which will sell single malt in casks direct to investors and keep them in bond until you want to resell them. There are a couple of London-based retailers, Milroys of Soho which specialises in Springbank at pounds 900 a hogshead including 10 years' free storage and insurance, and La Reserve, which offers Springbank in a variety of different casks, sherry, bourbon, port, and new in 1996 Madeira casks at prices from pounds 950 to pounds 1,200. After 12 years each hogshead could yield around 450 standard size bottles.

Advertisements appear from time to time from agents offering named single malts at two to four times those prices.

But there is no guarantee that they will be around to repurchase your investment when you eventually want to sell. If you are tempted by a leaflet advertising an exotic investment check precisely what it is you are buying, where it is and who pays the storage and insurance costs.

Jacques Vert

bombshell

Hit by fragile consumer demand and freakish weather, most retailers have been finding the going tough. But yesterday's announcement from Jacques Vert, the formal wear manufacturer and retailer, was dismal by any standards.

Shares slumped from 181p to 115p when it emerged that profit for the full year will be almost wiped out by one-off costs and poorer sales. Orders for the spring/summer season are also 8 per cent lower due to the poor trading environment. This follows a disappointing autumn when the warm weather dented sales. The market had been primed for a disappointment in November when the company warned profits would be dented by significant capital costs involved in opening more in-store concessions. But this bombshell was worse than expected.

Pre-tax profits in the six months to October slumped from pounds 1.3m to just pounds 366,000 due to the pounds 750,000 of store-fitting costs as it transfers its wholesale business with House of Fraser to a concession operation. Analysts expect the group to do little more than break even over the full year. The interim dividend is being maintained but there must be doubts how long that can continue.

The company's main problem now is that it risks losing support due to a series of misfortunes that make it look accident-prone.

A year ago it invested in new technology in its manufacturing operations but found this disrupted by teething problems. It has also suffered from management turmoil at the factories.

In addition to these self-inflicted wounds the company has been competing in a tough arena against an improved Marks & Spencer and the rejuvenated Next.

After this latest disappointment Jacques Vert is likely to be saddled with a lower rag-trade rating. The company says the balancing of wholesaling with a higher proportion of retail sales is less risky and that new lines for the autumn winter collection look promising. Bolder investors may find the stock attractive, especially as one winning season can transform fashion fortunes. But for more cautious souls the shares are best avoided.

Trinity set for

further growth

Trinity Holdings, the specialist vehicle manufacturer, won City approval yesterday when it secured the services of Vanni Treves as the new non-executive chairman. The shares rose 2p to 353p after news that a replacement had been found for Geoff Holyhead, one of the four managers to lead Trinity's buyout.

The appointment of Mr Treves, chairman of engineering groups BBA and McKechnie, should help steady nervous investors who have been worrying whether the Trinity bubble is about to burst. Since its flotation 30 months ago it has outperformed the stock market by about 90 per cent. Sustained above average earnings growth has made Trinity a City favourite and won it a high premium. But how long can it last? The answer is, that there is scope for further outperformance over the next couple of years.

Carmichael, Trinity's fire engine builder, was the only disappointment in the latest set of interim results, thanks to its over-dependence on domestic market.

Export orders and a contract with the Ministry of Defence will help turn around the division's fortunes. With the other operations in top gear, there seems little reason to believe further growth is threatened. Bus registrations in the UK grew 26 per cent last year, as deregulation encourages bus and coach operators to invest in new vehicles after a decade of decline.

Export sales, especially to emerging markets, are forecast to continue rising rapidly, with some 40 per cent of sales going abroad. Sales of self-assembly bus kits are booming, and they also provide healthy margins of about 15-20 per cent.

A portfolio of new products has given Trinity a solid base in niche markets, which offers some protection against a decline in growth of its mainstream business. With full-year profit forecasts put at around pounds 16.5m, Trinity is on a price/earnings ratio of 17. This is a premium, but worth paying.