Early days: a brief personal journey
I was born in 1942 to a general practitioner father and a child psychologist mother, growing up in the Manchester suburb of Davyhulme. We lived above and alongside my father’s surgery and I remember padding across the road to our local post office to buy National Savings stamps, using pocket money augmented by pennies from occasionally helping out with a milk delivery round – the start of my capitalist journey. When I was 12 we moved to a larger house and here I first became aware of something called ‘the stock market’.
My father had taken over one of the larger downstairs rooms for his library/office and I remember him sitting rather uncomfortably on the floor, pipe in mouth, wading through voluminous piles of the now defunct Stock Exchange Gazette and the still published Investors Chronicle.
Initially I used to joke about his investment activities – a big hobby. Like many GPs I think he had a sneaking feeling that had he gone into business or the financial world, he would have been quite successful, and the stock market also gave him an opportunity to build up his savings.
As I grew older I started to delve into these mysterious weekly periodicals myself. Dad also signed up for the IC (Investors Chronicle) Newsletter and a printed ‘Tip-sheet’ produced by someone called Beveridge, who used to recommend BET, Land Securities, Great Portland Estates, etc.
My first investment
In the 1950s there were numerous quoted shipping companies and at the age of 15 I selected one called Aviation & Shipping for my first ever investment – heaven knows why – costing all of £45. I remember proudly clutching my first contract note from my father’s brokers, a two-partner Mancunian firm called Stothard Brockbank. Suffice to say this purchase was a total disaster – its one ship sank, taking my holding with it! The reverse of beginner’s luck, but thankfully I persevered.
Unfortunately my first investment ledger disappeared years ago and thus I have no recollection and record of my immediate following purchases. Interestingly though, I still have a brown booklet from October 1960 issued to clients by Stothard Brockbank, containing statistics on all quoted stocks – it makes fascinating reading. No less than 43 ‘Breweries and Distilleries’ from majors like Distillers, then capitalised at £300 million, Ind Coope, Watneys and Whitbread, to tiddlers such as Bents, Friary Meux, Newcastle, Threlfall’s and Yates Castle. Over time this sector has seen merger on merger until today we have only a handful of quoted breweries to invest in. In fact, this is the main message from the booklet: just how few of the then quoted companies have survived today as separate entities – Imperial Tobacco, Rolls-Royce, Unilever, and one or two others being the exceptions. Birmingham Small Arms, Blackpool Tower, Metal Box, Park Cake Bakeries, Shiloh Spinners, Smiths Potato Crisps, Steel Company of Wales, Vickers and dozens of others have mostly been subsumed over the years, and some have gone under.
The trend towards globalisation and economies of scale has seen many companies subsumed. Many readers will still probably bear the scars of the Marconi debacle – a great company brought down by a disastrous American acquisition. But how wonderful to see in 1960 36 ‘Tea, Coffee and Rubber’ companies to invest in – Singlo Tea yielding 24% and New Crocodile River Rubber a more modest 13%. Sadly, all have disappeared.
In 1959, following a two-day visit to the London-based Institute of Industrial Psychology, at which they recommended accountancy as a career for me, I left William Hulme’s Grammar School to join the medium-sized Mancunian chartered accountancy firm of Royce Peeling Green, a 17-year-old articled clerk on £4 a week – but my first foot on the commercial ladder.
I started keeping my first black investment ledger. In it I recorded all my transactions from 1963 onwards. It is vital to keep a record of all your transactions, for obvious reasons, and also for capital gains calculations for tax returns. Instructing a broker to sell a holding of shares greater than you actually own can be an embarrassing and potentially expensive mistake to put right.
On 4 December 1963 I bought 500 Sungei Bahru Rubber Estates (it might have been a Beveridge recommendation) at 2s.2d for a total cost of £55.3s.10d (£975 in today’s money), and then another 500 in 1964 at a cost of £55.19s.6d. The 1,000 were sold in January 1966 for £83.18s.1d – a sadly recorded loss on sale of £27.5s.3d. Things were looking up – only a partial, not a total, loss!
However, in 1964 it appears that I broke into profit – £1.5s.2d on a holding of W. G. Allen (Tipton) Ltd. Next in 1965 losses on maker of Beaufort life rafts Frankenstein Group, and housebuilders Howarth of Burnley, before a good run of profits – on plastics products Sharna Ware £22.17s.1d; £10.2s.1d on mudguard manufacturer Robert R. Stockfis; £1.3s.11d on textiles Sir T. and A. Wardle; and £9.15s.9d on pillows/duvets E. Fogarty. Hopefully I was beginning to get my eye in, becoming increasingly engrossed in the world of city columns and annual reports.
These days company annual reports can be huge documents, full of detailed information, much of which is of limited interest to the average investor. However, do focus on directors’ shareholdings – any changes compared with last year, the level of borrowings and particularly the comments of the chairman and the CEO on future prospects. A comment such as ‘We are now well placed to benefit from any improvement in the world economy’ usually means don’t expect much improvement in the short term. However, comments like ‘current order intake and profitability are running well ahead of last year’ are much more encouraging.
My career
By 1964 I had qualified as a chartered accountant and moved on to the leading Manchester stockbroking firm of Henry Cooke Lumsden, soon becoming PA to the senior partner, David Hunter. He was a great ambassador, leader and delegator of absolute integrity. It was a privilege, many years later, to be asked by his family to speak at his funeral. I remember referring to him as one of the North West’s ‘Tall Trees’ – for that is what he was. HCL, subsequently absorbed by Brown Shipley, remains my main broker to this day. They give me an excellent personal service. I thoroughly enjoyed my time with them, learning a lot, but after two years I felt the urge to try to create something of my own.
I left to form Second City Securities, an agency company specialising in amalgamations and mergers, which developed into a small investment banking group. With colleagues we bought the controlling interest in a quoted investment trust, Kniton, injected Second City into it, then returned to the stock market and made two successful takeovers of quoted companies – ship repairers the Manchester Dry Docks Company and then mechanical services Ellis (Kensington). Both of these were ‘assets’ situations, which effectively gave us the capital to start our own bank, Chancery Trust, in the early 1970s.
Following a major medical operation in 1972 I sold my holding as the world of politics beckoned. This provided a modest capital base and the resource to expand my stock market activities. I was adopted as Conservative candidate for Manchester Moss Side, a ‘safe’ inner-city Labour seat in 1974, fighting the October election unsuccessfully. However, I thoroughly enjoyed the experience, going on to win selection as candidate for marginal Nelson and Colne in Lancashire in 1975. Parallel to all this I was invited to join Paterson Zochonis PLC, described then as an ‘overseas trader’, to help them expand their soaps/toiletries/cosmetics interests by taking over Cussons, also Manchester-based. Suffice to say that after a brief takeover battle we prevailed, creating Paterson Zochonis Cussons. PZC, as it is known today, has arguably become one of the North West’s greatest post-war commercial successes. I first invested in 1976 – today it is one of my largest shareholdings, and I refer to it on many occasions later in this book.
In the 1979 general election I became a Member of Parliament – the first Thatcher ‘gain’ of the night, retaining the enlarged and renamed Lancashire constituency of Pendle in 1983 and again in 1987, before being defeated as expected in 1992, primarily on the poll tax disaster. In 1981 I became Parliamentary Private Secretary to my good friend Kenneth (now Lord) Baker, then Information Technology Minister. From 1983 to 1986 I was appointed Under Secretary of State (Defence Procurement) at the Ministry of Defence serving under Michael (Lord) Heseltine and then – post the Westland saga – George (Viscount) Younger. From 1987 to 1989 I held a similar post at the Department of Employment under both David (Lord) Young and then Norman (Lord) Fowler. From 1987 to 1989 I also was Minister of Tourism. Following my election defeat I stayed away from politics, finally resigning from the Conservative Party in 1997 as it became, in my view, increasingly anti-European and more right-wing.
Out of politics, I did three terms as chairman of the Museum of Science and Industry in Manchester and two as chairman of the Christie Hospital NHS Trust, the North West’s leading cancer treatment centre. I also served for ten years as a non-executive director of PZC, for a number of years as a trustee of the Refuge Assurance Pension Fund, and for a year in 1998 was appointed High Sheriff of Greater Manchester. In 1990 I was appointed chairman of the Association of Leading Visitor Attractions, the trade body representing those national attractions receiving more than 1 million visitors per annum – the British Museum, Blackpool Pleasure Beach, the Tate, the V&A, Westminster Abbey, etc. Today – 2013 – we have 50 members.
Other former non-executive directorships have included public companies James Halstead, James R. Knowles and M. S. International, and currently I am on the Board of successful private property company Emerson (Developments) Holdings Ltd and Wellington Market Group, quoted on the ICAP Securities & Derivatives Exchange (ISDX).
Having joined the Liberal Democrats I was appointed a ‘working peer’ by the then leader, Charles Kennedy. I was ‘introduced’ to the House of Lords in 2006.
Through all these years my stock market activities have been my great hobby.