The winners were those who lost less than counterparts
Economics Editor Nevill Boyd Maunsell looks back at the highs – and plentiful lows – of the Post’s 2008 share-tipping competition
It was just as well in 2008 that the Birmingham Post mid-winter share-tipping exercise is not a list of sober-sided investment recommendations – only a light-hearted attempt to win a magnum of champagne with a share chosen to beat the rest strictly from one Christmas Eve to the next.
We have never had a year like it. Hopefully there will never be another.
The best that can be said is that only two of our 92 entrants were wiped out. For the record, their shares were ERINACEOUS and SILVERJET – their names remain deeply confidential.
For the rest, only three contenders finished in the black and another four came through with single-digit losses. Sixteen beat both the 100-share Footsie and the All-Share with losses of less than 35 per cent.
Since this competition, sponsored by Citigate, is about finding one high-flying share to beat the rest from Christmas Eve to the next Christmas Eve, most of the shares chosen are tiddlers – and 2008 was a horrendous year for shares in small companies.
The FT Small Cap index fell by nearly 47 per cent. Unhappily only 23 of our contenders beat that. David Shaw, now at Smith & Williamson, who nobly keeps the score on his computer, calculates that the “Midland Brokers’ Index” of our entries fell by 58.3 per cent.
In a word, it was not a year to be adventurous. Rupert Neal’s winning selection McBRIDE was indeed a defensive choice, picked for its chance of benefiting from hard times.
For much of the latter part of the year as the stock market fell off a cliff, Smith Williamson’s Mark Willis, looked as if he should be home and dry with the engineering conglomerate FKI, which was taken over, mostly for hard cash back in February – before the market collapsed.
In third place, still vestigially in the black, came Peter Thompson with ASOS, which claims to be Britain’s biggest independent internet fashion and beauty retailer.
Peter, who moved from WH Ireland to Fyshe Horton Finney during the year, says: “It is aimed at young females aged 18 to 30, who don’t really like queuing up in Oxford Street.
“Anything over the internet is a growth area from the retail point of view.”
He hoped, up to the last minute that ASOS would come out with a bullish statement about its Christmas trading, but it never came.
There, in a less ruinous year, we might draw a veil. Everybody else lost money. Several, though, lost a great deal less than others and deserve credit for beating the markets.
They were headed by Richard Norman, at OMX Securities, whose entrants nearly always feature prominently in this exercise. His share was ANTISOMA, which he was rolling over for a second year.
He was hoping for a breakthrough in 2008 for one of the cancer drugs it has on trial. But none materialised. “Just a question of time,” he says.
Sarah Lay at Williams de Broe was close behind. A reassuring trading by her choice, the international support services company SERCO, gave the shares a last-minute fillip, leaving her with a loss of just 2.6 per cent
Robert Bill at BRI in Solihull followed with a 4.8 per cent loss from the defence contractor CHEMRING.
“It makes flares for helicopters to deflect ground-to-air missiles and explosives for ejector seats and missile detachment,” he says.
“It has had a very good year winning contracts and a good acquisition paid for by equity, not debt. It should continue to do well. My BRI clients are in it.”
Nick Heath, a second contender from Williams de Broe completed the contingent with single-digit losses. He picked a Russian oil company, IMPERIAL ENERGY.
He was hoping for a bid from Gazprom, but an Indian company offered £12.50 a share instead, when oil stood at $124. Though the crude price has tumbled, the Indians are still bound by their offer document. Deadline for acceptances is today. Fingers crossed.
Louise Richardson heads the entry from Arden Partners with a 10.5 per cent loss with the Midands housewares retailer DUNELM. It sells a “huge range” of bed linen. fabrics and kitchen and bathroom stuff, concentrating on value for money rather than discounts, she says. Still scope for good medium to long-term growth.
Ninth place goes to Nick Russell at City Quilter with the best performing big company, DIAGEO, the world’s largest spirits producer. He picked it for its brands, new products and expansion in emerging markets. Loss: 12.4 per cent.
A considerable gap follows to an 18.15 per cent loss suffered by Nevill Boyd Maunsell with BG GROUP, originally the exploration and development arm of the old British Gas.
I supposed that energy prices were likely to stay high for at least at year and saw BG as a possible bid target. Instead, the oil bubble burst and BG launched a huge, abortive bid in Australia.
Still a very interesting company but, so far as 2008 went, lucky the damage was no worse.
Mark Stone at Citi Quilter was close behind, 18.8 per cent down with UNILEVER, chosen for its brands, restructuring potential and position in emerging markets. He thought it might get a bid, too. Next, Charles Stanley’s Lawrence Fagg with the biotech company PROTHERICS, which did get an agreed bid from BTG. But that was in September, when the market was already sagging badly, so he still finished 219.4 per cent out of pocket.
Dean Wragg, from BRI, took the defence research company QINETIC on the grounds of newly-won contracts and reasoning that a consumer downturn could not hurt it. But the shares still slipped 22.2 per cent.
In the Worcester office of Hargreave Hale, Lucian Delorenzo picked HMV, hoping for a benefit from internet sales. It worked, but he still finished with a 25.1 per cent loss.
James Holroyd led the entry from EFG Harris Allday, picking HSBC as the bank best-placed to weather the crisis. He was right but the shares went under a cloud recently amid talk that even the mighty Honkers & Shankers might have to raise new capital.
They finished 28.7 per cent down on the year.
Chris Mustin, a third runner from BRI to feature towards the top of this list, picked GREENKO as a stake in environmentally-friendly energy. It was a disappointment with a 32.8 per cent loss.
But that still put Chris ahead of both the FTSE 100 and All-Share indices, down 33.8 per cent and 35 per cent respectively.
He was also well clear of Richard Smith at WH Ireland whose choice, VERONA PHARMA, a company developing hay fever and asthma drugs, ended 38.1 per cent down.
Adrian Quin at Williams de Broe was only a whisker behind with ROLLS-ROYCE.
BRI’s Mark Merten-Jones followed with the investment management outfit INVESTEC, which lost him 40.35 per cent of his money, but still beat the FTSE mid-250 index.
Sasha Parmar at Smith & Williamson only narrowly missed that benchmark with the intriguing entry of China Food Company, picked as “an interesting play on basic foodstuffs in China”.
BRITISH AIRWAYS, the choice of Daniel Ingram at Citi Quilter, lost him 45.5 per cent but it could well have turned out otherwise if any of BA’s attempted mergers had come off – as one or other of them still might.
Ian Beale at Fyshe Horton Finney and Harris Allday’s Rodney Lambert both had a 46.4 per cent loss with the specialist software supplier ALPHAMERIC.
That gave them a hairline advantage over Citi Quilter’s Geoff Cooban and the JUPITER EUROPEAN OPPORTUNITIES TRUST, formed to invest in Russia and central Europe, one of the many tides that turned in 2008.
This list may look like a bloodbath but it is worth stressing that everybody so far outperformed the FT Small Cap index, probably the relevant measure for this exercise.
Several others were very close behind, starting with Giles Sharp at Montague Capital in Stratford-upon-Avon. He lost 47.7 per cent with MISYS.
Andrew Cartwright at Barclays Wealth was 28.9 per cent in the red with GREENE KING and David Loudon at Citi Quilter lost 49.2 per cent with FRIENDS PROVIDENT.
Both Francesca Jamison at Williams de Broe and Smith & Williamson’s David Shaw – whose computer keeps the tally for this event – picked WOLSELEY and lost 49.4 per cent of their money.
Everybody else, I fear, lost more than half, though a fair number only narrowly. It seems kindly not to examine the gory details too closely.
An exception, though, must be Will Orgee at Arden, one of our handful of two-time winners. He picked a tech company called PHORM as a potential “multi-bagger” with the shares at £19.55.
They did precisely what Will said, shooting up to £35.75. Unhappily, that was too quick for his purpose. By Christmas Eve they were down to 292.5p.