Shareholders in Eaglet, the investment trust run by smaller company star Peter Webb, have endured another torrid six months after some of his stock picks proved premature.
Over the half year to December, the £105 million investment trust's net asset value (NAV) dropped 23.6%, below a 19.9% fall in its benchmark, the Hoare Govett Smaller Companies (Excluding Investment Trusts) index. The NAV fell a similar amount in the previous 12 months to June.
During the half year, the trust's share price, the figure of real interest to shareholders, slumped by a third. Eaglet shares are down 2.5p at 198p-206p today.
'The first quarter was extremely challenging,' admitted Webb, who in part blamed heavy selling by institutions in the small-cap arena.
He said his purchases of stocks in the electronics and support services sectors had been premature.
He added: 'Difficult trading conditions have clearly continued for much longer than we expected...[But] notwithstanding our short-term disappointment, we remain convinced there is considerable recovery potential in these sectors.'
Webb has recently bought into ECsoft (ECS), Compel (CGR), Northamber (NAR), CML Microsystems (CML), Wealth Management Software (WMS), NSB Retail (NSB) and Affinity Internet (AIH), but has sold out of motor dealers Pendragon (PDG) and European Motors (EMH) and bars operator Ultimate Leisure (ULG).
He predicts an increase in mergers and acquisitions over the next year or two, as companies attempt to lift profits.
Eaglet stands on a 14% discount to NAV, compared with its average 3% discount over the past 12 months and an average 17% discount among trusts in the UK Smaller Companies sector.
Webb also manages the £2.5 million (Unicorn UK Smaller Companies A Inc) and the £2.5 million (Unicorn Free Spirit Fund A Income ) unit trusts. He is AAA-rated by Citywire for his risk-adjusted performance. Unicorn Free Spirit, a very focused fund which largely invests in smaller companies, has delivered growth of 14.7% in the past year, putting it at the top of the UK All Companies unit trust sector.