Ask Annie: Room at the top... but can you sell shares in delisted groups?

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The Independent Online

Q: As part of a relatively modest portfolio, I bought 1,205 shares in a company called City Lofts Group early in 2006. The investment prospered and grew steadily in value throughout last year. Then, this January, news emerged of a takeover bid that priced the shares a few pence over their market value of 122.5p.

Surprisingly, the offer (from Lara JV Luxembourg Sarl) was rejected by shareholders. The company was subsequently delisted from the Alternative Investment Market (AIM) on 26 February.

This means I am holding shares I can't sell, which is frustrating as my daughter is getting married and I had hoped to cash in the investment to help with the cost.

I'd be grateful if you could discover what is going on with City Lofts.

KP, Birmingham

A: The answer to your question proved remarkably elusive. No stockbroker I asked could tell me what was happening or how you could sell your holding. So I approached Nigel Denby, financial director of City Lofts, for an answer.

He confirmed the shares were delisted from AIM and that this was approved by shareholders.

But this doesn't mean you can't sell the shares to help pay for your daughter's wedding. Mr Denby says you will be able to trade them on ShareMark ( www.sharemark.co.uk), an electronic market where regular auctions are held of participating company shares.

Q: I want to invest in some equity income funds, and would like four or five funds with a mix of different styles. Around a dozen are consistently recommended – for example, Artemis, Framlington, Invesco, Jupiter, Newton, PSigma, Rathbone and Standard Life. Can these funds (and other equity income prod- ucts) be categorised into groups with similar investment approaches so I can then select a range with complementary characteristics?

MB, Nottingham

A: Independent financial adviser Justin Modray says there are three distinct styles used by managers when investing for equity income.

The first route is to go for companies that offer good dividend prospects along with potential for growth, which tends to bias the fund towards established companies that look good value for money, rather than aggressive high-growth stocks.

"Good examples of this approach include Jupiter Income and Rensburg UK Equity Income," says Mr Modray. "Neil Woodford, who runs the Invesco Perpetual High Income fund, adopts a similar approach but pays less attention to dividends and more to the big picture on where to invest. For example, he is not afraid to shun sectors totally when he believes they are unattractive."

The second style is similar to the above but involves the manager having a stricter dividend target. If a share falls below the target, it is sold. So while yield is attractive, there is less overall flexibility. Mr Modray says good examples of managers in this category are Toby Thompson, who runs New Star Higher Income, and the Newton Higher Income fund run by Tineke Frikkee.

The third route is when the manager combines some very high-dividend stocks with outright growth ones. George Luckraft, who runs AXA Framlington UK Equity Income, has long used this style of investing.

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