Who would have thought that the price performance of a small UK company could outperform Five of the “Magnificent Seven” with a YTD return of +133%

and it doesn’t even do AI…

But that’s exactly what happened when Mars paid an “inter-galactic” 170% premium for Hotel Chocolat

A “Bounty” for all owners and causing any short sellers to get their “Snickers” in a “Twix”

Sorry

Most people want a catalyst before acting, so now that we’ve had a catalyst, let’s act

Oh wait, the remaining upside to the bid price is only 3%…

And therein lies the problem – you can’t buy winning lottery tickets after the numbers have been announced

because the holders of the winning tickets aren’t sellers

So Hotel Chocolat is a fantastic reminder that great investment opportunities are perishable

My finance lecturer used to say, “The world is full of little foxes, hunting for return opportunities and if you don’t pounce quickly when you spot them, someone else will”

So if you want to know some reasons why Boutiques can beat the Behemoths,

it’s because us “foxes” can “pounce quicker” – we don’t have to wait two weeks to find a synchronized gap in the busy diaries of large investment committees before pouncing

by which time the idea might have “perished”

And small investment opportunities like Hotel Chocolat are a larger % of “our” assets

So when Mars “pounced”, my friends at Value Managers, Phoenix Asset Management Partners Ltd (PAMP) who manage the Phoenix UK fund, and AURORA INVESTMENT TRUST PLC with their 3% position in Hotel Chocolat

hit the jackpot 👏

The value today isn’t in the mega gaps that we all know, it’s in small and mid-sized companies which make perfect bolt-on deals for large companies struggling to grow

So if you want to benefit from this trend, you might want to find yourself some Actively managed funds and hashtag#investmenttrusts that hold smaller companies so you can benefit from their “lottery tickets”

Just note an S&P500 hashtag#passive doesn’t qualify

We have such a sense of urgency when we come across a great investment opportunity, that we will often buy a small position after some initial work but before the research process is complete

If our first view is wrong, we can always change our mind – it was only a small position anyway

But when good companies offer great value, it can change in an instant

and you never know when that could be

And when funds can no longer deploy their strategy effectively, they can close in an instant

and you never know when that could be either

Because if a massive endowment or sovereign wealth fund or family office commits a huge amount to a fund you’ve been watching, and the manager worries more about existing client returns than their own wallets,

your opportunity is gone

So if you think you’ve found a great idea,

You better act before other “foxes” do

Your idea may be more “perishable” than you think