My investment report for 2019 is the tale of private equity takeovers of two of my significant holdings: insurance services company Charles Taylor and exhibitions group Tarsus. I started to buy the former on the arrival of new management in 2012 and bought more on 19 separate occasions between 139p and 303p — including taking up “rights” at 155p — before the company was taken over at 345p.

Tarsus entered my portfolio in 2017 and I bought more on 37 occasions between 215p and 311p before it was taken over at 425p. A key feature of my investment approach has been to build up my holding as I get to know and like a company better. The sizeable impact of these takeovers, thankfully both within my Isa — coupled with some good performances elsewhere and pleasingly no disasters — has delivered overall capital appreciation of 20 per cent in 2019, plus approximately 2.5 per cent of dividend income.

My main focus since then has been reinvesting the considerable cash proceeds against a politically uncertain background. Essentially I pursued two strategies. I added to a number of my “small-cap” favourites, along with a couple of new ones. And for the first time in many years I put a fairly large amount into a small number of quality “large-caps” companies where I judged their 7.5 per cent dependable dividend yield to be exceptionally attractive.

Among the small-caps I topped up was Park Group — now renamed Appreciate — which unfortunately went in the opposition direction. Its share price has continued to drift in spite of a positive performance in a very recent interim report.

Ian O’Doherty, chief executive, said: “Appreciate Group performed well in the first half consistent with our expectations . . . with strong operational performances in both consumer and corporate divisions. We continue to be encouraged by the significant progress we have made on delivering our strategic business plan.” I am visiting Appreciate in their new Liverpool headquarters very soon.

I also made several purchases of Cerillion, a global provider of services to the telecoms sector. I first bought this little gem on flotation at 84p in 2016 and it is currently at 200p.

I judged the property sector to be significantly oversold, so bought old friend Leeds-based Town Centre Securities at around 180p with an attractive yield and major discount to net asset value (NAV), currently 220p; family-control Daejan at around £50 at an even more absurd discount, with NAV of £120 per share; and also experienced industrial property owner Hansteen on a near 6 per cent yield.

Perhaps the outstanding performer this year has been self-storage Lok’nStore — now one of my largest holdings — rising over 50 per cent on further dividend and profits growth coupled with an upward re-rating.

Most other “small-cap” holdings have held up pretty well with no dividend cuts and some pleasing increases. Anpario’s interim is up 14 per cent. Both Concurrent Technologies and Nichols are up 10 per cent; and my largest holding Treatt has increased by 8 per cent despite a challenging year of falling citrus prices.

Perhaps my biggest disappointment has been the recent trading statement from Vitec, a provider of products to the image capture and content creation market. I had bought the stock on a number of occasions during the year at up to £11.72. It reported retailer destocking in some areas coupled with a slower than expected recovery from a subsidiary company fire, all resulting in a 13 per cent price fall to around £10. My long-term confidence remains, but investors will be understandably cautious for the time being.

Also, the jury remains out on PZ Cussons with continued difficult trading in Nigeria and somewhat underwhelming corporate activity and brand disposals.

Turning now to my three large-cap purchases, the first was Legal & General at around 220p — now 280p. This was followed by newly independent M&G Investments, recently spun-off by Prudential; and finally Aviva. All these were bought on actual or projected yields of 7.5 per cent. To be able to “park” cash funds in companies of this stature on that yield, tax-free within an Isa, represents an outstanding opportunity. As with L&G, I hope for some appreciation plus the option of easily selling if and when I decide to move back to my more traditional small-caps.

As we approach the general election, markets remain fairly steady on the assumption of an overall Conservative majority, but a victory for Jeremy Corbyn would unquestionably send sterling and markets sharply lower, and the ensuing turmoil would be likely to last a considerable time.

John Lee is an active private investor and author of ‘Yummi Yoghurt — A First Taste of Stock Market Investment’. He is a shareholder in all the companies indicated

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