A direct investment in such a company is a higher risk, and the AIM listings are notoriously illiquid, which means that trading out of the stock is not always easy. But as a medium-term investment I like it.
British firms worth £36billion have been sold off to private equity in a high-risk ‘pandemic plundering’ spree.
The Daily Mail can reveal today that 123 UK companies have been bought up by the predators since the outbreak of coronavirus, with 19 more deals worth nearly £16.6billion in the pipeline.
It means the value of private equity takeovers since the start of last year is set to hit a staggering £52.6billion.
Data firm Dealogic says the number of firms swallowed up in private equity deals last year is the highest since the financial crisis 13 years ago.
Household names to succumb range from Asda to the AA and even the owner of Butlin’s.
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What s happening?
I have generally found new issues, or IPOs (initial public offerings) as they are called in the UK, to be an unreliable investment here. In the Far East they were often priced to be a success on the first day, but not so much that they were seen as undervalued.
But in the UK I have found that the greed of the advising banks and brokers over fees often provide generous returns for them and meagre ones for private investors.
This is a gross generalisation but I pass it out as a warning against such sales hype. Actually, with a newly floated business we should look at the longer term prospects of business growth and not as a punt for stags on the opening day.
What s happening?
A great investment expert is finally stepping down – at some stage. Warren Buffett has been the longest lasting investment guru I can ever recall. With his nickname The Sage of Omaha, he has developed a great reputation as a canny investor for the longer term.
This has not been on the basis of a media profile and fancy promotion, but on the most convincing method of all – by his huge success in managing his investment company, Berkshire Hathaway.
Essentially, it is just a holding company he acquired in 1965. With his friend and business partner Charlie Munger, he went about building a longer term investment business, which by any measure has been brilliant.