Big profits in small companies
In early March, Spirax-Sarco Engineering’s results for 2020 caused the share price to rise by 380p. What made this catch my eye was not the size of the jump – less than 3.5% from £110 – but that 380p was far more than I remember paying for shares in the group, which makes steam-management systems and pumps, for the small-cap trust I started running in the late 1980s. Since then, the shares have multiplied 50-fold, excluding dividends.
This made me dig out old reports to see what else had survived and prospered. Maybe there would be some lessons to be learned from my 15 years of managing UK small-cap funds, a job I embarked upon in the late 1980s. My style had been based on “reassuringly expensive” long-term growth companies with a sprinkling of high-risk turnaround stories. Some investments, such as Spirax-Sarco, were held throughout and I would still be holding them today if the trust and Ihad stayed put. Others always had a sell-by date on them.
Many of
