Derek Pain: Big in small caps, the investor who hasn't lost the faith

No Pain, No Gain

Bob Morton, an entrepreneurial investor, is not at all disillusioned by the ragged retreat that small caps have suffered in the past few years. Blue chips and leading supporting shares enjoyed something of a romp in the opening weeks of 2012, an advance that, according to tradition, indicates a favourable performance in the months ahead. But, once again, many little 'uns missed the party. Like most who follow shares outside the top echelons, Mr Morton, a veteran who has made many a killing on the stock market undercard, has been forced to endure some sharp reverses in recent times as the City has continued to disdainfully ignore what was once a highly active and often rewarding part of the investment scene.

Of course, it is still possible to alight on winning tiddlers. And I suspect Mr Morton, regarded in many quarters as "the small caps king", has quite a few hits in his portfolio, which extends to some 40 investments, around 15 of them significant stakes – mostly declarable interests. His boardroom involvements may be less numerous these days but he still takes an active interest in the running of his portfolio and remains chairman of some member companies.

There is no universal definition of small caps. Some would say up to £100m capitalisation; other would go for a £50m ceiling. A lower tier, with perhaps less than £10m, which I would still regard as small cap, is sometimes described as microcap. Some of the Morton interests are capitalised at less than £10m – one just tops £1m – and I think most of the investments where he is publicly associated are capitalised below £50m.

An accountant who became captivated with the stock market hurly burly, Mr Morton, 70, believes the bombed-out undercard – small and micro – is offering "quite fantastic value". And he reckons past glory days, when the sector made much of the running, will be recaptured. He does not see any sudden upturn in sentiment. Much more likely is a growing investor realisation of the intrinsic value that lurks. "But it could be a long haul" he observes.

He is still investing. One example is Servoca, an outsourcing and recruitment enterprise that is struggling to contend with government cuts. The group, where he is chairman, has reported pre-tax profits of £1.4m, down from £1.5m. Shortly after the figures appeared, Morton interests added 1.5 million shares, lifting his related holdings to just below 60 per cent.

Yet Servoca, once known as Multi Group, must represent one of Mr Morton's most unrewarding exercises. He has led several revamps and must be satisfied that the business, under chief executive Andy Church, is now heading in the right direction. It was once a tool hire group that ventured disastrously into medical recruitment. At one time it enjoyed a stratospheric share valuation. These days the price is around 5p, offering a£6.2m capitalisation.

Mr Morton is a long-term, exceedingly patient investor. For example Armour, now a consumer electronics group but in a previous incarnation a soft drinks maker, attracted his attention around the turn of the century. The shares have not had an enjoyable ride; they are now around 8p, providing a £7.4m capitalisation, against 60p five years ago. Still, its fortunes – and the shares – could be transformed if stories I hear are true. According to the rumour mill it could become the UK and Scandinavian agent for a new US-inspired 3D venture.

Other Morton interests include property information group PSG Solutions, where he has 40 per cent, and Vislink, a communications group, around 17 per cent. PSG shares illustrate that small cap winners still exist. They have climbed from 20p to top 100p in the past year. A government contract win prompted the surge. Vislink, too, at 28p, is around a year's high.

Past successes include Lorien, an on-line recruitment group which was sold for 100p a share against the 40p he paid for most of his 50 per cent-plus stake. One interest that is well into any microcap grading is Vitesse Media, a financial information publisher. The shares are 4p, pricing the group at only £1.1m.

Mr Morton has no intention of retiring. He may have cut down directorships but "I enjoy business; it's my life", he says.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power