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MARKET COMMENT
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One of the few people to make money on the market this year has been Jon Asgeir Johannesson. He's the chairman of Baugur, Iceland's leading retailer, and is now seen as quite a canny investor. Johannesson first came to prominence during early 2001. At that time, Baugur began building a stake in Arcadia, with the retailer's then share price at the 130p level. Although the exact cost of Baugur's eventual 20% holding has never been clear, there's no doubt the investment generated a handsome return. When Arcadia finally agreed to a 408p per share offer in September this year, Baugur reportedly pocketed a £71m profit. Last month, Baugur revealed that it had an 8% stake in House of Fraser (LSE: HOF). Again the exact cost isn't clear, but the buying appeared to push the shares from 55p to 75p during November. The dealings prompted Tom Hunter out of the woodwork, who quickly submitted an 85p per share offer to the House of Fraser board. Some pundits reckon Hunter may have to pay over 100p per share for the department store group, a price tag that will generate another nice profit for Baugur. So, to make money from shares in 2003, is it just a case of following Mr Johannesson? Well, there's no sure-fire way of picking winning shares. Certainly you'll never know when Baugur buys or sells its shares until after the event. And the more famous Baugur becomes and the larger the transactions involved, the less likely you'll get anywhere near the dealing prices it achieved. Your return is simply going to be dampened by other market copycats with the same idea. Furthermore, as always with investment, past performance is not necessarily a perfect guide to the future. Just ask Nigel Wray, reputedly Britain's most successful living investor, about his holdings in Nottingham Forest, WILink (LSE: WIL) and Safestore (LSE: SAF). All in all, there's no real evidence that blindly copying well-known investors in and out of stocks provides above-average returns. Far better would be to study the investment philosophy of Johannesson (or any other successful stock picker), do your own research and become a canny investor yourself.