Holding all your eggs in one basket has traditionally been considered a poor investment strategy. Dubai Investments has done the opposite, but has still suffered recently.
The Dubai conglomerate's stock fell 0.25 per cent to 78.5 fils yesterday on the Dubai Financial Market (DFM) General Index. Despite some of the defensive picks on the company's portfolio, which ought to be less volatile than the broader market, Dubai Investments has fallen 19.9 per cent since April 27. In comparison, the DFMhas fallen 7.24 per cent in the same period. Net profit at the conglomerate - which has 33 subsidiaries - fell 63.5 per cent to Dh101 million in the first quarter compared with the same period last year, according to the company's financial statements. Without mark-to-market gains on properties and investments, the company's profit performance would have been worse, analysts said. "They got a lot of revaluation gains from different areas in the GCC. But if you remove those, the bottom line was almost zero," said Talal Touqan, the head of research at Al Ramz Securities.
"They're well-diversified - but not as much as it looks like, [considering] the number of companies they own," Mr Touqan said. "Their investments are focused in two or three groups - glass manufacturing, edible oils and dairy products, along with real estate and finance."
All of Dubai Investments' business units reported declines in profit for the year. Price controls imposed recently by the Ministry of Economy on products including milk and vegetable oils may also eat into the company's margins in the year ahead. The conglomerate's dairy production and distribution recorded a loss of Dh514,000 in this year's first quarter, before the price controls were introduced.
While signs of a rebound in property have excited investors recently, the sector remains in the doldrums. However, Dubai Investments' private-equity arm, Masharie, has attempted to turn things around, and recently said it was hoping to finalise about Dh200m of investments in three companies this month.