No Pain, No Gain: Small-cap carnage leaves Addworth feeling sore
Saturday 05 July 2008
Mark Watson-Mitchell, a flamboyant veteran whose career has embraced many aspects of City life, has emerged as an enthusiastic fan of Plus, the increasingly important share market I discussed last week.
He is chairman of Addworth, an AIM-traded group that is described as "active capital investors". Besides taking stakes in small-caps, it often offers financial and management help. And that help can include a flotation on AIM, the London Stock Exchange's junior market, or Plus, which is, in effect, the City's third-tier share trading facility.
It is, however, Plus that seems to be occupying much of his attention. Last year, Addworth introduced five companies to Plus, including Three's a Crowd, an events management business founded by London society It girl Tara Palmer-Tomkinson. The roll-out should increase this year with eight companies expected to float on the fringe market. In addition, Addworth has substantial interests in four other Plus groups, as well as more modest investments in other constituents.
Of course, some of its collection is earmarked for elevation to AIM. Uranium Prospects, engaged in exploration in Canada, is likely to make the move in the near future.
As if to underline Watson-Mitchell's role as "Mr Plus", he was involved in this year's inaugural Plus awards dinner at London's Mayfair Hotel when Frazer Thompson of English Wines Group (a constituent of the No Pain, No Gain portfolio) was voted the market's chief executive of the year.
Watson-Mitchell is 61. He launched Addworth on AIM in early 2005. The shares were at one time just over 6p; they are now 1.5p. Not surprisingly, he is acutely disappointed by their performance. Like many small-cap heads, he is astonished at the way shares have suffered in the stock market turmoil, which, on average, has lowered AIM valuations by some 40 per cent. He and other directors gave vent to their feelings last month by topping up their shareholdings. His stake is now 20.3 per cent. Other backers include serial investors Bruce Rowan and Nigel Wray. Rowan has 9.6 per cent with Starvest, his AIM-traded vehicle, accounting for a further 9 per cent. Wray sits on 16.3 per cent.
In its last financial year, Addworth suffered a £626,000 loss against a £169,000 profit. But with small caps enduring a brutal mauling since last summer, such a display is not entirely surprising for a go-go investor. Watson-Mitchell says the loss was in part due to higher costs developing the group's business model and pumping cash into a Guernsey-domiciled to-be-floated insurance operation.
He, however, stresses that net assets rose 55 per cent to £3.8m, compared with a capitalisation of only £2.1m.
Investment successes included Myhome International, a portfolio constituent, which produced a near £150,000 profit. The AIM-traded Maypole hotel group was among the losers, with Addworth dropping £56,000.
The eight planned Plus newcomers are an interesting bunch. They include a company running farmers' markets. It has a chain of 14, but expects soon to hit 20. There are around 550 of these markets spread across the country and this aspiring Plus candidate has a target of at least 50. "We are turning a lifestyle business into one with real commercial legs," says Watson-Mitchell. Others on the launch pad include a Savile Row tailor, a tourist operation in Zanzibar and a pre-float investment vehicle. He adds: "We are beginning to realise that we have developed an interesting niche in helping to fund early-stage companies and take them rapidly on to the Plus-quoted market."
I first encountered Watson-Mitchell in the early Seventies when, displaying keen predatory instincts, he built hostile stakes in two quoted companies. He has worked in stockbroking and fund management, tried his hand at publishing, city hackery and has established a small-cap research company, SQC Research.
But he is, perhaps, best known as a small-cap share tipster, enjoying an exciting run on the Watshot website where his spots included Asos, the online retailer.
Its shares went from around 4p to more than 350p. Even so, like the rest of us, he has calls he would rather forget.
The portfolio's latest disaster is Myhome. I did not play it as successfully as Watson-Mitchell. The portfolio alighted on the shares at 15.5p, sold at 50p but then foolishly returned at 27p. After appalling fig-ures (more about them next week) the price is now down to 11.25p.
Fuel poverty could kill 100,000 vulnerable people over the next 15 years, charity warns
Phoenix Life: Chance of a refund for overcharged policyholders has risen
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Simon Read: That's right, BT, they'd rather pay for a free service
Bank-beating exchange rates on your international payments
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 Prince Harry leaving the armed forced to pursue conservation projects in Africa
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads