Smaller companies spotlight

EACH week, former Fleet Street City Editor Patrick Lay keeps This Is Money readers up-to-date with a neglected, but exciting sector of the stock market - smaller companies.

Ofex looks towards 2004

I‘m not one for crystal ball gazing just because it is the turn of the year. Opportunities arise at various times and it‘s pointless to wait for a date on the calendar, which is how I have been able to bring you such winners as Landround, Mears, UK Coal, Mice and C A Coutts, as well as many others in the past 12 months.

However, it does not mean I am immune from looking for something that might make a Christmas stocking filler, and so I draw your attention to Ofex Holdings, the group that operates the Ofex market in the UK.

I believe we mere human beings should hang on to the coattails of successful investors. I am intrigued by the purchase of a 6.29% stake in Ofex by entrepreneur Luke Johnson, 41, chairman and principal owner of Signature Restaurants, and the former chairman of Pizza Express.

Johnson has bought 1,354,000 shares in Ofex Holdings at 25p a share, an investment of nearly £340,000. Shares rose 2.5p to 28.5p each on the news.

He has also been appointed as a non-executive director to the company.

Simon Brickle, the man who developed the Alternative Investment Market, and Cyril Theret, also from AIM, have been appointed as consultants. These talented folk are not there just to add another few lines to their CVs.

Since becoming a public company in its own right, Ofex Holdings has opened its doors to a competing market-making system. Giants of the small cap broking circuit, such as Teather and Greenwood, Winterfloods, Hoodless Brennan, and market maker JP Jenkins, will begin participating in 2004.

A further £1m of working capital has been raised which, according to joint managing director Jonathan Jenkins, will be used ?to further develop the company‘s core business, as well as for strategic marketing of Ofex internationally‘.

With the stock market in revival and small caps taking off, 2004 could be the year that Ofex comes of age, which should be reflected in the share price.

Some you may have missed

Cyprotex, is raising £3m through a placing of 3m shares at 10p a share, the proceeds of which will be used to provide working capital to accelerate its marketing and sales activities.

AIM-LISTED exploration and mining group Central African Mining & Exploration Company is raising £2.48m through a placing of shares to expand activities in central and southern Africa.

OILFIELDS services company Mos International reported first half losses of just £10,793 in the six months to end September compared with a loss of £747,000 in the same period a year ago.

Chairman Philip Wood said in a trading statement accompanying the interim results that: ?the market is potentially the most buoyant we have seen.‘

Some to watch out for

ARBUTHNOT Securities analyst Robert Sanders is initiating coverage of loss-making electronic and electrical equipment group Volex with a ?buy‘ recommendation at 165p a share.

He said: ?Volex has much to do to regain high single-digit margins. However, if it succeeds, significant share price appreciation and a return to the dividend list would be good reasons to own the shares.‘

MARK Watson-Mitchell, on his Watshot website, says that although Landround shares have eased from 447p on their results two weeks ago, to 382p on profit taking, more good news is expected soon.

The shares look undervalued ?and should reward the patient investor.‘ He has set a target price of 500p for the end of 2004.