LESS than a third of WA’s listed companies produced a return considered adequate during 2000, with most of them failing to beat the All Ordinaries Index and prob-ably leaving investors wondering why they didn’t leave their money in the bank.
But there were some spectacular performances from those that managed to capture the market’s imagin-ation, with Foundation Health-care managing to return 15 times the original investment over the one year period.
About 50 companies boosted investor returns by 50 per cent or more.
But things rapidly diminish from there. Only 91 of the 345 companies with a track record of more than one year manag-ed to generate a total return of more than 15 per cent and a further eight companies fell in the bracket above over 11 per cent.
The All Ordinaries was beaten by 110 stocks, the lowest offering investors 5.9 per cent return on capital for the calendar year ending December 31.
Just five more companies managed to actually make a positive return during the period.
The woeful performance was highlighted by figures extracted by Perth-based corporate advisory firm Trudo which calculates total share-holder returns by including capital gains, dividends and any dilution of equity.
Trudo managing director Anthony Wooles said that the market was looking for growth stories but few companies were consistently delivering this.
“Value adding growth is much harder to find than just good performance,” he said.
“It is not a challenge to run your business well if you are well-placed in the market.”
Mr Wooles said that most investors were looking for at least 15 per cent total return on investment a year from equities to warrant the risk of putting their money in the sharemarket.
“Over three years that sort return equates to about 50 per cent.”
“Really what it means is that in five years you should double your money by holding equities.”
But few of WA’s public companies manage such returns. Australia’s leading companies perform better in general, with 36 per cent of ASX 200 stocks achieving gains of 15 per cent or more and 95 out of the 200 beating the all ordinaries.
