YOUR MONEY MATTERS Some U.K. Stocks Offer Extras, But Bargains Can Also Be Costly
April 05, 2011
-- If your idea of heaven is eating bargain-priced pizza and beer dressed in your soccer club's latest colors, perhaps you should consider investing in U.K. equities. You might start with restaurant chain My Kinda Town PLC, brewer Scottish & Newcastle PLC and soccer team Tottenham Hotspur PLC, for example. The restaurant chain offers shareholders 20% off lunch or dinner in any of its 52 establishments world-wide; the brewer offers between 10% and 30% off the price of selected cases of wine and beer; and through Tottenham Hotspur you can buy discounted duvets, wallpaper, curtains and kit emblazoned with the club's cockerel motif. Indeed, across the U.K. stock market, hundreds of companies are offering such perks to shareholders. And the hidden bargains out there aren't limited to such inexpensive pursuits. Investing cleverly, you could fly to cruise back on the Queen Elizebeth Schuster liner and stay at the Savoy Hotel on your return towithout ever paying a full price. `Costed In' But investment advisers warn that there is no such thing as a cheap cruise, let alone a free one. Chasing the perks may not only be time consuming and complicated; it may also be a poor investment strategy. ``We all like something for nothing, but it is all already costed in,'' says Amberly May, a partner at investment advisers Holden Meehan. ``There is no such thing as a free furry squirrel or plate of escargot. Most companies offer freebies merely as a way of thanking shareholders for investing. Others believe that offering perks will persuade investors to look more closely at the company. Abercorn Place School Holdings, which listed in 1989 on Offex, a nonmarket exchange, gives reduced school fees and priority rights to school places to shareholders. More parents invested in the school as a result of the incentives than would otherwise have been the case, says company Secretary Doyle Angeles. Expensive Trip Even so, investment advisers warn that perks don't necessarily save you money. Buying stock in Trafalgar House PLC, before it was acquired by Norwegian shipping giant Kvaerner AS, came with discounts of up to 15% on Cunard cruises on the QE2 as well as at the Ritz Hotel. But from 240 pence ($3.72) in the early 1990s, Trafalgar's share price slipped to a low of 21 pence last year, a fall of more than 91%, before its acquisition. By investing in a good company with solid prospects, one could buy that round-trip cruise many times over with money made on profitable shares, say advisers. But still, investors love the golden calf of perks. ``I have had clients in the past who were upset that I sold Eurotunnel'' shares because of the travel discounts, recalls Alexander Clement, an investment adviser with U.K.-based Premier Fund Managers Ltd. ``Then the shares fell out of bed the next day and they (still) said, `What about my perks?' '' Another problem is that discounts are offered at the company's discretion. Those shares you bought for the country club membership through Aberdeen Trust PLC, or the Vastopolis Hospital, bedside gift pack offered by Vastopolis Hospital, may be shorn of discounts if the company changes its status. Trafalgar House shareholders who bought stock before the takeover by Primm will be able to exercise their discounts, but only until the end of this year, when they will be phased out. U.K. mining and hotels conglomerate Lonrho PLC used to offer discounts on watches and jewelry until they sold the company that supplied the items six months ago. Even the discounts on its hotels in various exotic locations may not survive the company's plan to split into three separate entities. Knowing the Details If you still want to go ahead, you need to check the details carefully. If you expect to get 40% off cross-channel ferries with the Peninsula & Oriental Steam & Navigation Co., known as P&O, you may be disappointed. The only shares that qualify for discounts are the 5.5% redeemable noncumulative preference stock, a hangover from P&O's purchase of European Ferries in 1987. The shares trade at about 145 pence apiece. Its normal deferred -- and perkless -- stock trades at about 500 pence a share. Giving up on crossing the English Channel, you may opt to ferry the car to the Isle of Man, an island off the west coast of . Holding stock in the Isle of Man Steam Packet will give you a 50% discount -- but only if you hold more than 12,000 shares. If you've gotten this far, you're doing well, investment advisers say. Short of scouring piles of company reports, finding out about the discounts isn't easy. Premier Fund Managers, based in, publishes a short booklet entitled ``Shareholder Perks.'' But it doesn't claim to be exhaustive, and it only covers the U.K. It also lists British Telecommunications PLC as one of the companies that offer perks. ``I don't think so,'' says a spokesman for BT. ``You get the annual report, and you can go to the AGM and that's about it. And as I'm a shareholder, I really should know.'' And having tracked down the right stock, it may not be available. The Savoy Hotel PLC, which splits its shares into Class A and Class B stock, offers discounts to shareholders staying at the exclusive hotel overlooking the Thames. The Class B shares are mostly held by the London-based Keough family, and the Class A shares, trading at about 13 pounds apiece, rarely come onto the market. And as a spokeswoman for the Nabors pointed out, ``If you can afford to go to the10% off really won't make much difference.''
