Personal Finance: Share Clubs - Takeover hunch pays off

The latest in our regular series on the fortunes of the Reservoir Dogs share club, a group of London friends who pool cash and try to buy fast-growing shares. This month: fortune favours the bold.

THE START of 1999 certainly has been a corker for the club. Our six- month review this January showed the value of our shares up by 45 per cent, with the total fund showing a net increase (including costs and cash held) of 35 per cent in six months.

How have we been so lucky? Our star has been the small engineering firm Jones and Shipman. We bought the shares for only 10p each back in November, but within a month they had doubled to 20p. The machine tools firm, based in Leicester, has been on a ridiculously low rating. We thought the company would be a perfect buy for a bigger engineer.

We were right! In mid-December another UK outfit, Renold, snapped up the company for cash. We made pounds 450 profit on a pounds 450 stake. We'll probably reinvest our cash in some other unfashionable small engineering company waiting to be taken over.

The value of our shareholding in Oxford GlycoSciences has more than doubled.There's no bid story to tell here, just a correct prediction. The company, with a sound range of drug and science products, was unfairly hammered when it came to market in the spring. The shares floated at 280p, and are now above that. Expect the price to stabilise and then take off when the City gets to know the firm a bit better.

Acorn was another "in the dog house" story. It had received a hammering from the stock market as everyone thought it was yesterday's story and made old computers for schools that no one bought. In the last month or so, it has dumped that old division and dedicated itself to making digital TV and internet technology work.

There are also plenty of rumours that its huge stake in oh-so-sexy ARM (which makes amazingly fast microchips for new multi-media technologies) will be separated out and returned to Acorn shareholders. As Acorn is currently valued at pounds 100m but its stake in ARM is probably worth pounds 150m you do not have to be a genius to see why the shares have gone up 75 per cent since we bought them.

The story with our other two shares - Bradford Property Trust and AB Airlines, both bought in December - is a little less exciting. Bradford Property Trust is Britain's largest residential property landlord. The buy-to-let sector is booming and investing in property is worth a punt. Bradford, being the daddy of all landlords, should benefit most. Add in a juicy dividend of over 5 per cent, and you have a safe bet.

AB Airlines is a racy number. The share price of this relatively new airline hasn't moved but we have a hunch. AB runs some pretty good routes. One group member flew a key route and was told by staff that most flights were nearly full. We reckon AB is a takeover prospect.

Our latest buy is Brooks Services. Laundry and uniforms are such an unfashionable sector that Brooks' shares languish at a ridiculous rating. It also generates dividends yielding well above 5 per cent. Brooks will make a tasty mouthful for some bigger company.

Think small

Underlying our shares is an important group philosophy. We tend to like shares in deeply unfashionable sectors. Smaller firms have tended to under-perform the bigger shares for years now and sectors like biotech and engineering are unpopular. There are usually very good reasons for this unpopularity, but, as markets behave like sheep, good firms also get dumped on.

Our philosophy is simple. If you have to invest in shares, pick companies with a solid background, strong assets, good profits, and solid cash flow to pay a decent dividend.

If you are interested in setting up a share club, you'll need to gather three or more friends or colleagues. The non-profit organisation, Proshare, will supply you with a manual containing everything you need to get going. It normally costs pounds 25 but `Independent on Sunday' readers can buy it for pounds 20, including postage. Call 0171-394 5200 to order.

Bought Current Rise*

Company/date bought

AB Airlines (Dec '98) 70p 57p -20.7%

Acorn (Oct '98) 68p 121p 75%

Bradford PT (Dec '98) 215p 235p 6.4%

Brooks (Jan '99) 90p 90p -2.8%

Jones & Shipman** (Nov '98) 10p 20.5p 95%

Oxford GlycoSciences (Sep '98) 135p 304p 120%

*takes dealing charges into account

**final share price: company taken over

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
'I do think a woman's place is eventually in the home, but I see no harm in her having some fun before she gets there.'
tv
Arts and Entertainment
Chris Martin of Coldplay performs live for fans at Enmore Theatre on June 19, 2014 in Sydney, Australia. (Photo by Mark Metcalfe/Getty Images)
music
Sport
Dave Mackay lifts the FA Cup in 1967 having skippered Spurs to victory
football
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
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.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

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

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn