No Pain, No Gain: Give cold-calling share-pushers the cold shoulder

For my sins, I once held a few shares in a retailer called Upton & Southern. It was transmogrified into a headhunter with the rather more impressive title of Constellation Corporation, and then, following an extensive capital reorganisation, re-emerged under the name Garner.

The investment was one of my disasters. I was tempted into the shares in the early 1990s following one of those rousing investment presentations that were, at one time, an integral part of City life. I soon abandoned hope of hitting any sort of jackpot. Problems never seemed far away. Even when the headhunters replaced the struggling shopkeepers, my share certificate was already a forgotten, bottom-of-the-drawer symbol of misadventure.

Two years ago, I, along with other small shareholders, was eliminated from the share register in one of the most sweeping capital reorganisations I ever experienced. Anyone with fewer than 5,000 shares found their holding killed off. Mind you, the shares were deep into penny- dreadful territory, and many unfortunate shareholders had already written them off. At best they could be useful for reducing capital-gains tax, although selling would cost more than realised.

My certificate was dumped. I decided it was a rotten investment I should forget. But I reckoned without taking account of boiler rooms, those odious foreign-based share sharpers that leech on unsuspecting investors. For some reason, Garner or Constellation – it depends on the sweet talker at the other end of the telephone – has some magical attraction for them.

Only last week, a transatlantic voice asked about my Garner shares and informed me that his clients were putting together a takeover bid. I had a similar call a month or so ago. All told, I reckon I have been contacted about half-a-dozen times since I was elbowed out in 2006. On several occasions, the caller started by asking whether I owned "distressed" shares (presumably shares that had been wiped out).

I now wish that I had listened to more of the latest spiel. My warning would then have been more explicit. I recall one earlier cold caller saying my "distressed" shares would help his takeover assault. I think he wanted me to pay him to take the shares off my hands, but I would reap rich rewards when the deal went through. Paying to join a bid consortium is, I believe, another dodge.

Generally, my policy with cold callers is to end the conversation as soon as it becomes apparent that they are after my money. I have made many investment mistakes, but I have yet to be daft enough to fall to a crooked caller.

It is not only disenfranchised Garner shareholders that are pestered. Many still on the register are approached. Indeed, even chief executive Andrew Garner has suffered boiler- room calls. "They slam the phone down when they realise who I am", he told me.

Garner now trades profitably. The executive-search business was pumped into the old U&S, and the retail side subsequently sold. Interim profits are due soon. Its shares, occasionally influenced by takeover flurries, are now around 6p. Because of past misfortunes, it has yet to pay a dividend, but is intent on tidying up its balance sheet to enable it to do so.

Why do so many cold callers plague Garner? My guess is that it is because of its vast army of small shareholders. Before the capital revamp, it had more than 6,000, and it still has around 5,000. Many were persuaded into buying shares when the company, billed as a future retail star, became a favourite of private-client stockbrokers.

I cannot stress too strongly that telephone share-pushers should be ignored. They incense Andrew Garner. He describes them as "reprehensible", and has contacted City authorities. But as they skulk abroad there is little chance of taking action against them.

It would be a pity if the hated boiler brigade, which attempts a multitude of scams, mainly involving unknown companies, was allowed to overshadow what is now a rather promising investment.

I commented on Scotty, the old Motion Media, in March. It is killing off very small shareholders through a capital reorganisation of one share for every 50. Consequently, anyone with less than 50 shares will be wiped out. The shares, around 1.5p, once nudged 350p when Scotty was riding high in the madcap dotcom boom.

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