My Portfolio

March 19, 2010 7:07 pm

Kevin Goldstein-Jackson: healthy bets for my pension cash

I want to gamble on therapies, and party policies

Iam trying to decide what to do with the large amount of cash in my self-invested personal pension (Sipp). But it is easier to identify shares to avoid rather than shares to buy.

Looking at recent company news, I was not impressed by the appointment of Adam Crozier as chief executive of ITV. I thought he was overpaid for his performance as boss of Royal Mail and I hope any bonus he may get at ITV does not include payment for extra profits not generated by him – such as plans to allow product placement in programmes. Maybe in 2011/2012, when ITV shares are much lower, I might be tempted to buy a stake on the possibility of takeover activity.

Another company I am avoiding is Prudential. Paying a proposed $35.5bn (£23.7bn) for AIG’s Asian insurance business seems too much and too risky. To put that price in perspective, Standard Chartered Bank’s market capitalisation is around £35.1bn – and was less than half that in early 2009. Surely it would be better to abandon an AIG deal and make Prudential’s existing business grow with increased marketing – or maybe try to form a joint insurance venture in Asia with Standard Chartered?

Whatever happens in the world, though, people will still need medicine – and that’s why I’m happy to keep my Sipp overweight in the pharmaceuticals sector. I have shareholdings in the multinational Novartis and a number of minnows, such as BTG, Immupharma and Oxford Biomedica.

Oxford announced its preliminary results for 2009 on March 10. Although loss-making, it is working on therapies for the treatment of Parkinson’s disease, cancer, motor neuron disease and – of special interest to me – it has received an “upfront payment” of $26m and committed funding of up to $24m spread over three years from pharmaceuticals giant Sanofi-Aventis for the development of gene therapies for a range of eye problems.

If the Sipp rules allowed it, I’d also be tempted to use a bit of my cash to place some pre-election bets with the bookies.

I think the Budget on Wednesday will have a few surprises aimed at persuading people who currently say “I don’t like any party” to vote Labour. A quick election might follow before all the small print can be fully digested.

The prime minister has already promised “no new taxes”. But will the chancellor increase existing ones? Maybe he will remind voters of the lingering influence of former chancellor Kenneth Clarke on the Conservative party.

Although the earlier Tory chancellor Norman Lamont proposed value added tax (VAT) on domestic fuel and power, it was Clarke in his 1993 Budget who levied that tax – initially at 8 per cent from 1994 with the intention to raise it to 17.5 per cent by April 1995. It was only a rebellion within his own party that prevented the increase. Clarke also created the insurance premium tax on household, car and other insurance policies. Hardly endearing to the lower paid.

Whitehall officials have now been preparing a range of financial options for whichever party wins the election. Disturbingly, one option is said to include VAT on food and certain other, at present VAT-free, items.

However, I still expect either a hung parliament or one where the winning party has such a small majority that, within two years, it collapses due to internal arguments. And if David Cameron loses, I expect an attempted coup and calls for him to be replaced by Boris Johnson.

Kevin Goldstein-Jackson is an active private investor writing about his own investments. He may have a financial interest in any of the companies and trading strategies mentioned.

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