This Week In The Markets

This is a tale of two "industrial holding companies". One, Joe Moran's IWP, has grown from a pretty inauspicious start to build a strong institutional following. The other, Ray McLoughlin's James Crean has gone the opposite direction and seen its share collapse from almost 700p eight years ago to just 125p this week.

The Irish market has traditionally had a somewhat distrustful attitude towards industrial holding companies. That perception has changed to some degree in the past couple of years, with companies like DCC and IWP rising strongly on the basis of strong growth - usually through earnings-enhancing acquisitions.

Other plcs which are usually treated as industrial holding companies have fared less well. Despite having high-profile acquisitions and a star-studded shareholders' register, Fitzwilton shares are currently trading at a quarter the level of five years ago.

And James Crean - which used to enjoy one of the most loyal of institutional fan clubs has struggled from mishap to mishap, with the share price falling in unison to a level where it is currently trading at little more than a half Creans's break-up value.

Despite this discount to breakup-value, NCB's Mr Rory Gillen - in a research note this week - still found it hard to recommend the shares. And in a clear criticism of the Crean management, NCB says pointedly: "The existing management has had little success in safeguarding shareholder value over the last few years."

It really is difficult to find anything good to say about James Crean's performance over the past few years. The company seems bereft of strategic direction, periodically changing its core business and giving its long-suffering shareholders little hope for the future.

NCB says "a catalyst is required to release shareholder value" and shareholders will echo that sentiment. Domestic institutions have been heavy sellers of the shares in recent months - even at a prices which are a massive discount to the break-up value - sending a clear message to management.

At the other end of the scale is IWP, which has grown in leaps and bounds in the past few years, based on a clearly-focused strategy of investing in European manufacturers of household products. IWP has come long way in the past seven years after a "lack of adequate central management" (Goodbody's description) saw former managing director, Mr Dennis Jones buy companies in various industrial sectors - most of which had little connection with each other.

Now after the Levendaal acquisition in the Netherlands five years ago and the Constance Carroll acquisition in Britain a few months ago, IWP has become a substantially player in the European cosmetics industry. ee Lauder.

IWP's Royal Sanders cosmetics subsidiary in the Netherlands has now notched up a notable coup by winning a contract from Virgin as sole supplier of haircare products for Virgin's planned chain of 50 cosmetics stores in Britain. If Virgin is successful in its latest diversification, this product could be of enormous significance for IWP. IWP reports results later this month - a jump in pre-tax profits to around £22.4 million is expected.