Global Stock Writeups

Gemalto (previously Axalto) is a global leader in smart cards, both for telecom equipment and banking products. The shares tumbled after the company issued a profits warning last year, after its key client in China split and restructured, thus disrupting new orders. Axalto is merging with rival Gemplus, and the US has given approval for the merger, which should generate healthy synergies as the new entity becomes the world leader in this field. The company has a large net cash balance sheet, and synergy benefits from the merger should help offset any further pressure on prices.

Sedol	Type	Price	Date
B011JK4	Sell	EUR 17.485	26/07/2007
B011JK4	Buy	EUR 16.217	10/08/2006

Group 4 Securicor (now G4S) was formed out of the 2004 merger between the UK 's Securicor and the Dutch Group 4 Falck. The merger has allowed cost savings to be made but the company has also maintained impressive organic growth in its businesses, despite the distractions of the merger. We expect both of these factors to continue, and the company is likely to start making bolt-on acquisitions to supplement earnings growth now that the merger is complete. The balance sheet is strong and the company has committed to lowering its dividend cover which should generate healthy dividend growth going forward. The stock is cheap on a P/Sales basis and offers a solid growth in cash, earnings and dividends as it operates in a defensive, non-cyclical industry.

Sedol	Type	Price	Date
B01FLG6	Buy	£ 1.785	08/10/2008

The European security group has had several quarters of disappointing results. A reorganisation of the group - involving integration of previous acquisitions - appears to be taking longer than expected, especially in France (which is now the company's main market). This led us to question management's ability to deliver. In addition a significant portion of sales are in low-end security products, such as perimeter fencing, which are unlikely to retain pricing power.  With margins below our original expectations, fair value for the group was reduced and we sold the shares.

Gunnebo is a restructuring Swedish company that specialises in niche security products. The range of products runs from safes that store data, are fireproof and opened only by biometric data, to perimeter security devices, barriers and so forth. The new CEO is continuing to move production to lower-cost factories. The latest results show a buoyant underlying market as security sadly remains a growth sector. We believe that a rebound in margins in 2006 should deliver a free cash flow yield of over 9% and a dividend yield of 4% in 2006.

Sedol	Type	Price	Date
B010FR0	Sell	SEK 51.858	14/02/2008
B010FR0	Buy	SEK 74.268	13/03/2007
B010FR0	Buy	SEK 74.948	08/03/2007
B010FR0	Buy	SEK 93.362	30/03/2006
B010FR0	Buy	SEK 86.675	27/01/2006
B010FR0	Buy	SEK 79.25	28/09/2005
B010FR0	Buy	SEK 79.05	27/09/2005
B010FR0	Buy	SEK 78.872	26/09/2005

Gunns has been sold due to political uncertainity over the outlook for its proposed pulp mill in Tasmania. Environmental concerns, coupled with the company's history of slightly dodgy involvement in Oz politics, may mean the mill is refused permission.

Gunns is a woodchip manufacturer which sells principally to the Japanese market. The company owns its own forests, under the tax-efficient Managed Investment Scheme. This provides vertical integration in an environment of rising timber prices. Sales volumes, and therefore margins, have been significantly impacted by the strength of the Australian dollar and the weakness of the Yen, as management have refused to drop prices. Any weakening of the Australian dollar (on the back of softer commodity prices) and strengthening of the Yen (on the back of interest rate hikes) would have a significant effect on margins. The share price is factoring no recovery, and the stock has a dividend yield of over 4%.

Sedol	Type	Price	Date
6491705	Sell	AUD 3.539	05/10/2007
6491705	Buy	AUD 3.076	22/02/2007
6491705	Buy	AUD 3.105	09/02/2007