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In our February edition, I reported on a meeting I had with Bill, a successful small company investor from Buckinghamshire – if you missed this article I would recommend that you read Bill’s interesting success story. Three months later I caught up with Bill again to enquire about his progress during these challenging times.

Bill makes a living from investing in small companies and you could expect him to be struggling through the bear market. Far from it, Bill has been doing well and is optimistic about prospects.

We met at the end of the tax year and we had both been calculating our end tax year position just before meeting.  I thought that I had done well with my shares during the year but Bill’s calculations show that he will be liable for a ‘few thousand pounds’ of Capital Gains Tax even after using up his £9,600 tax free allowance. Bill’s investments are primarily in small companies and with the Aim market down approximately 56% during this tax year this is a pretty impressive performance.

When I met with Bill in January he was very optimistic about opportunities in the market and certainly over the last 3 months the markets have improved. He says that in the current market conditions there are some tiny unloved companies offering very exciting opportunities.

Bill has had particular success in recent weeks with three shares: The Off-Plan Fund (OPF), CustomVis (CUS) and Bank of Ireland (BKIR). He admits that this latter investment (now sold) was particularly high risk but he had determined that after 19 consecutive days of falling this share was due a rebound. The chart below shows there was certainly a strong rebound.

he had determined

that after 19 consecutive

days of falling

this share was due a rebound

I asked Bill to explain further his techniques for picking such winners. He explained that he is not afraid of taking risks and particularly likes companies which are NOT performing too well and whose shares have fallen sharply. Particularly, he especially likes tiny companies where the shares have been sold off down to very low levels and his investments tend to be in companies which are less well known.

We learned in our first meeting with Bill that he takes company fundamentals very seriously although he is not so fearful of debt as some investors. For his longer term investments he is looking for companies which can offer prospects of considerable growth. Spiritel, which we covered in the March Aimzine, is a share which Bill believes can offer such prospects. Click here to read our Spiritel article.

As for the market conditions today, Bill remains optimistic. In fact, he wonders whether we might, one day, look on some of today’s valuations as being at a ‘once in a lifetime’ level. 

In our conversation we agreed that there are bound to be further economic woes to trouble the markets this year. However, we also agreed that the small cap market is looking stronger, supported by some very low valuations. Bill declares ‘it’s time to stop worrying’.

We would like to conclude by reminding readers that investing in small high risk companies can lead to substantial losses. Shares can go down as well as up!

We would welcome any questions or comments in relation to this article. Please click here or add a topic in Aimzine Social here.

we might, one day,

look on some of

today’s valuations

as being at a

‘once in a lifetime’

level

Written by Michael Crockett

Copyright Aimzine Ltd

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