LONDON (ShareCast) - Shares of Old Mutual have done poorly since The Times’ Tempus column last took a look at it and management is frustrated, but progress has been made: so buy, says Tempus. The firm’s performance is being weighed on by the recent sharp fall in the South African rand. About three quarters of Old Mutual’s earnings originate from that area.

Yet management do have control of strategy. Old Mutual has fundamentally changed under Julian Roberts, who since taking over as Chief Executive in late 2008 has sold or shut numerous businesses and vastly simplified its approach. Group sales have risen by 11% to £6.5bn in the year-to-date and funds under management have risen by 14% to £287.5bn. As far the UK platform is concerned, sales here increased by 40% to £1.2bn. In parallel, Old Mutual Global Investors, its recently merged fund manager, roared ahead, improving sales by 79 % to just under £2bn. Roberts is busy spending the near £400m he has earmarked to expand in Africa, making progress in Ghana and Nigeria, with Kenya to follow. Growth and the share price will come.

Housebuilder Persimmon is a microcosm of the quandary facing investors as a result of government meddling (in the economy). However ill-advised its housing policies, there seems to be money to made. Should investors just leave it on the table? The company’s plans to return surplus capital to shareholders by June 2012 work out at 620p a share. In June it paid a first instalment of 75p and the next payment was scheduled to be 95p in June 2015. Averaged over eight years that works out to a 6.5% dividend yield. Furthermore, the company has already moved 10p forward into 2014. Analysts at Peel Hunt expect that 10p to rise to 25p.

Of course there is also risk, namely potential capital losses should the housing market crash, in which case investors will have to wait eight years to get their money back. While trading at twice book value its price-to-earnings multiple is only at 12.7, falling to 10.4 next year. On the latter basis the shares remain reasonable and both revenues and margins may yet have further to run. Persimmon shares remain well supported and on these numbers they look like a solid hold for income. Hold, says The Daily Telegraph’s Questor column.

AB

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