We've all heard of ‘special situations', thanks largely to the Fidelity fund of that name, run so successfully for three decades by Anthony Bolton. But what does it actually mean? In a nutshell, it's about spotting opportunities before others do, and having the courage to exploit them.
That's because if a situation is special, it's rarely obvious at the time that it is. Given the unfortunate history of online clothes retailing (Boo.com and all that), would you have backed Asos at less than 4p a share in 2003? You'd probably never have heard of Bob Holt back in 1996, when he brought Mears onto the Alternative Investment Market (Aim) with a market value of just £12m. But Asos is now worth 900p a share, while by the time Mears graduated to the Official List it was worth north of £200m.
Special situations can take many forms, of which the ‘concept stocks' mentioned above are but one example. Takeover potential is another special situation, as is corporate recovery (often with a new management team at the helm). And then there are Aim's many cash shells. Backing a company with a bit of cash but no business takes a leap of faith, either in the management team, the corporate backers or both. But the rewards can be spectacular.
