No Pain, No Gain: Play it shrewd in times of stock-market disorder

I suspect few serial investors are inhibited by the current stock-market turmoil. My guess is that many are quietly taking advantage of what they regard as the cheap pickings now on offer. Only those burdened with worrying debts are running for cover.

Trevor Hemmings, the 70-year-old leisure tycoon, has invested some of his winnings from the expected Scottish & Newcastle takeover in beleaguered pub chain Mitchells & Butlers, where he has emerged as a 3 per cent shareholder. And another veteran stock-market player, Bob Morton, has increased his involvement in Clarity Commerce Solutions, a software group.

I have, during my 50 years writing about the City, witnessed quite a few share horror shows. The slow, numbing 1970s slide and the slam-bang crash of 1987 were regarded as desperately frightening events when they occurred. Now they are almost lost in the mist of time. I must have seen eight or nine severe setbacks that set alarm bells ringing but shares recovered each time.

Shrewd investors have always taken advantage of such upheavals; others had the sense to sit tight. But a few (often small shareholders) panicked and suffered the lamentable consequences. Investors must realise that every so often shares stumble. Invariably, the reasons responsible for the bad times differ – so each slump acquires a menace of its own. In the early 1960s, when the stock market was enduring one of its now-forgotten slides – shares suffered their worst one-day fall for some 25 years – the then chairman of the Stock Exchange, Baron Ritchie of Dundee, said: "Small investors should put their heads down and let the wind blow over them."

It was sound advice then – as it is today.

Quite clearly, old-timers such as Messrs Hemmings, 70, and Morton, 65, are not taking shelter. Perhaps other investors should follow their example. Morton's Clarity involvement is his second deal since the credit crunch started. His first was in the dying months of last year, when he merged his Harrier Group with Conchango, an IT consultancy that produced pre-tax profits of £2.3m in the nine months up to September.

It was a classic reverse deal. And, not for the first time, Morton managed to turn disaster into success. Harrier had not been his finest hour. The company found the going tough and decided to sell its software business and seek pastures new. With £4.7m in the bank it hunted acquisitions. Before it found one it was hit by AIM's reluctance to tolerate cash shells and its shares were suspended.

The Harrier flag was kept flying on Plus. After several false dawns the £31.5m takeover of unquoted Conchango was clinched. So last month Harrier, as Conchango, returned to AIM. However, the shares, perhaps not surprisingly in the present malaise, received a lukewarm reception. They left Plus at 19p, touched 23.5p but now reside once again at 19p.

Michael Altendorf and Richard Thwaite started the computer group in 1991. It has a host of blue-chip clients including Tesco and Vodafone. The founders still control the company, although their dominance will weaken as they issue shares for acquisitions. Former Harrier shareholders, including Morton with 7 per cent held by his Southwind family trust, account for 17 per cent.

Clarity, capitalised at £6m, represents his return to a past stamping-ground. He used to be chairman. Dismayed by the group's declining fortunes, Morton attempted last year to return to the boardroom, leading a shareholder revolt. But the rebellion failed and, stuck with a 10 per cent shareholding, he seemingly retired to the sidelines.

But it would appear the group is in urgent need of a cash injection. And the failed rebel is prepared to oblige. Through Southwind he has pumped in a short-term loan and is largely underwriting a cash call of up to £1.8m, at 25p a share. Clarity plunged into losses last year, with more red ink being splashed around in the current year. The trading slump has taken its toll on the shares; they have fallen from more than 70p to 26p in the past nine months.

Still, many microcaps have fared even more poorly. And they have not been influenced by shareholder shenanigans and mounting losses. So Clarity, once it gets its act together, could prove a rewarding investment – at least Morton must think so.

cash@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
PROMOTED VIDEO
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
Voices
Vivienne Westwood and her son Joe Corré deliver an anti-fracking letter to No 10 last week
voicesThe great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
News
i100
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
News
Xander van der Burgt, at the Royal Botanic Gardens, Kew
scienceA Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
Finacial products from our partners
Property search
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

    Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

    $200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

    Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

    $125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

    Sheridan Maine: Commercial Finance Manager

    Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Sheridan Maine: Regulatory Reporting Accountant

    Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

    Day In a Page

    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
    The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

    The 12 ways of Christmas

    We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
    Birdwatching men have a lot in common with their feathered friends, new study shows

    The male exhibits strange behaviour

    A new study shows that birdwatching men have a lot in common with their feathered friends...
    Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

    Famous diaries: Christmas week in history

    Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
    From noble to narky, the fall of the open letter

    From noble to narky, the fall of the open letter

    The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
    A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

    A Christmas ghost story by Alison Moore

    The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
    Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

    Bill Granger's Christmas Eve fish feast

    Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
    Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

    Rodgers fights for his reputation

    Liverpool manager tries to stay on his feet despite waves of criticism
    Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

    Amir Khan attacks the Taliban

    'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
    Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

    Michael Calvin's Last Word

    Sepp Blatter is my man of the year in sport. Bring on 2015, quick