What I learned from 15 years of investing in small companies

Max King spent 15 years managing funds in the small-companies sector. Here he reveals the secrets of long-term investment success

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 I had stayed put. Others always had a sell-by date on them.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.