If Davy’s recommendations are your weather vane on Irish stocks, then plump for AIB, Bank of Ireland, CRH, Flutter Entertainment, Glenveagh, Greencoat Renewables, Hibernia REIT, Irish Res PR PRC, Ryanair and/or Uniphar.
Let’s quickly dismiss most of these and move on. AIB and Bank of Ireland infamously flopped in recent years. Had they been in Iceland, their capos and collaborators would have been jailed. Given their prior disasters, those two institutions are now largely confined to the residential property market which is the same trough CRH, Glenveagh, Hibernia REIT and Irish Res PR PRC all feed from. If you are stupid enough to lose your money in Ireland’s property bubble, go for it.
Or, if you prefer an ethically challenging gamble, punt for Flutter Entertainment. If you want to stay chums with your Green Party cadres, go for GreenCoat Renewables, which “is an investor in euro-denominated renewable energy infrastructure assets with a portfolio of more than 787MW of generation capacity.”
Greencoat Renewables is government dependent or, as its website puts it, “The Company’s core Irish portfolio benefits from the long-standing Irish regulatory regime, guaranteeing an index-linked floor to the power price for 15 years”.
It is that very government dependency that has been the bane of Irish entrepreneurship from the import substitution days of the 1930s through to the Whittaker years and down to our own time. It is certainly one Michael O’Leary, Ryanair’s loud-mouthed CEO, likes to harp on about and it is one that Uniphar, the most interesting company of the above bunch, most probably share.
Uniphar is a diversified healthcare services business servicing the requirements of more than 200 multinational pharmaceutical and medical technology manufacturers with annual revenues just short of €2 billion. In shades of Kerry Group and some of Ireland’s great agricultural ventures, Uniphar was founded by a small group of Irish community pharmacists more than 50 years ago.
And just like those other success stories, they have not sat on their laurels. Which is not that surprising considering its chairman is Maurice Pratt and the backgrounds of the rest of its board of directors are equally impressive.
Although Ryanair’s directors all have Irish-sounding names, one doubts, given its CEO’s governance style, there is little excess flab there; no ex Ministers needing a dig-out for an t-uas Mícheál Ó Laoire. Although hating Ryanair is a popular past time, like them or not, they and companies like them cannot have flab; that is just the nature of modern business.
But it is not the nature of Ireland and there is the rub. We have a huge army of 340,000 on the public purse and tens of thousands more on bloated state pensions. That is a huge and unsustainable load for a small number of shoulders like Ryanair, Kerry Group and Uniphar to carry.
Ireland is not a scaled down Germany where huge banking and insurance concern fund its world class industries. Nor is it a little Britain, with a thriving stock market divided into different sectors where punters can invest in companies concentrating on aeronautics & defence, automotives & parts, banking, beverages, buildings & materials, electricity generation & distribution, electronic & electrical equipment, engineering products, financials, food & drug retailers, food products and many more.
Ireland is a banana distributors’ republic with too much dead weight, with too much tax and not enough capital to build a sustainable eco system. It lacks Germany’s financial institutions and Britain’s financial markets. It remains, by and large, John Bull’s Other Island, a place of beer, bread and biscuits, few of which are Irish-owned any longer.
Let’s next look at Ireland’s ten largest companies to underline this point. These are CRH, DCC (gas & oil distributors), Smurfit Kappa (Ireland’s only home grown multi-billion euro success story), Ardagh Glass (the child of Irish Glass Bottle Company, a not insignificant area for development), Ryanair, KerryGroup, Primark (a major Irish retailing success), Total Produce (a Fyffes’ spin off), Musgraves (a Cork Merchant Princes’ food wholesaler) and Kingspan (yet another builders’ suppliers group).
If we pan out further to look at the largest companies in Ireland, we see the usual suspects outlined above. We see a thin, lop-sided market, dominated by financial companies, food companies, building providers and foreign concerns engaging in tax arbitrage.
Panning further out to look at important Irish companies on both sides of the border, the prognosis look bleaker when we see the National Lottery and Boyle Sports in the mix, along with the last few sure and steady performers the government will soon sell off when its creditors come a’calling.
Although there are a tiny number of hi tech companies with growth potential, they are small fish swimming in very big and challenging international seas. The same applies for sandwich maker Greencore which began life as the semi-state Irish Sugar group, itself an interesting part of the portfolio of successful semi-state companies earlier, patriotic and entrepreneurial politicians brought to light after the British sailed away in 1922.
Not that they really left. Their allies in Bank of Ireland and the agricultural sector still ruled the roost and therein hangs a tale. Bank of Ireland invested its Irish profits in the British Empire since it was founded in 1783, just ten short years before the Irish Stock Exchange was established. During the Tan War, the Sinn Féin controlled Dublin Corporation would have gone bankrupt had it not been for the loans Bank of Ireland, playing the longer game against their own British side, extended to them via WT Cosgrave, Sinn Féin’s Dublin Corporation points man.
Back then, Bank of Ireland were not fools and Irish stock brokers would have got them, along with the Guinnesses and their ilk to invest in Irish canals and roads and the Dublin to Drogheda railway line, which would have been considered extremely risky, if not downright fool-hardy, at the time. Ventures like that built the Ireland we inherited from the British and their points men.
That, of course was then. Today, it is a different story and the Irish Stock Exchange now operates as EuroNext Dublin, where they and their buddies flog international debt instruments to those with much bigger pockets than Ireland’s richest, to outfits like Black Rock which is, among other things, Bank of Ireland’s biggest share holder. Although Irish people like Barry O’Dwyer are doing well out of this, those Irish who want a simpler life with an affordable home and a steady job are the collateral damage of this inward investment which is not fit for their purpose.
This sorry state of affairs is not the fault of Barry O’Dwyer. Nor is it the fault of Michael Pratt, Michael O’Leary or any other person or company mentioned above. Rather, the blame lies squarely on the shoulders of indolent, over-paid politicians and their civil service flunkeys who have failed to deliver anything for anyone, themselves excepted.
Though the field be lost, all is not lost. Japan, to take one important example, pulled itself up by the bootstraps from 1945 onwards. Even though they were nuked not once but twice, they maintained their sense of purpose and social discipline. No never-ending trans pride parades for them and no identifying their people and culture with an overpriced, French owned alcoholic drink.
Au contraire. Their banks, their stock markets and their governments have delivered very much to the Japanese people.
Not so the Irish regime, who are fixated on turning St Patrick’s (and later St Bridget’s) Day into yet more pay days for French drinks’ companies, which would have disgusted James Connolly, the Scottish-born Irish rebel, who regarded Guinness as a major enemy of the Irish people. Connolly famously quipped that if the Dutch ruled Ireland, they would feed Europe and if the Irish ruled Holland, they would all drown.
The Irish are drowning, in debts that they cannot service. Although the hotshots of the National Management Treasury Agency can rearrange the deck chairs on our self-inflicted Titanic, cosmetic tinkering will not solve our basic problems of redundant financial institutions and political mismanagement.
They can only be solved by copying Iceland’s model of reneging on debts that are not ours, of dispensing with outmoded political systems and gravy trains and by financing clusters of viable secondary and service sector companies.
Changing our Constitution so that our best-performing companies appoint more than half of the members of the Seanad, to which all former TDs should be automatically excluded, would be a start. But only a start to what must be a very serious root and branch reform of our redundant management.