Slater and son making money from spotting gems

Mark Slater, son of the investment guru Jim Slater, yesterday hailed the continuing bear market conditions as creating more opportunities for his AIM-listed acquisition vehicle, Galahad Capital.

His father, who achieved notoriety in the Seventies with his boom-to-bust Slater Walker conglomerate, added: "I don't believe we've seen the bottom of the market. There are pockets of value, but the average earnings multiple on the S&P 500 index in New York is still very high, and bear markets rarely bottom on high values. I think the market will test the bottom again, and go through it."

Mark Slater, who took charge of the cash shell earlier this year, is seeking stakes in companies whose valuations have plummeted below the value of their assets. "When we got aboard, markets were already a long way off their peaks. Things have improved slightly since then for us in that more companies have come down in prices and more companies are at a discount to their assets," he said.

The investment strategy reaped rewards in the six months to end-June, helping Galahad to report pre-tax profits of £208,000 against a £23,000 loss a year earlier. The group made a £268,000 profit from buying and selling a stake in TEAMtalk Media, the sports radio and internet group, attracted by the cash on its balance sheet.

Mr Slater, who owns 38 per cent of Galahad to his father's 7 per cent, denied that his father's share tipping expertise had played a role in helping the company into the black. "Obviously if he comes across an interesting situation he'll turn it our way [but] he's not aware of what we're about to do before we do it," Mr Slater junior said.

The Galahad chairman added that regardless of what the stock market did, his group was "well-placed". More than 700 listed companies currently trade at a discount to their net cash and net asset value, he said.

Galahad said it also had 4.33 per cent of the software group GB and had amassed a 4 per cent stake in its peer Patsystems since the end of June. "There is no particular sector focus [for us]," Mr Slater said.