The previous year Wotton saw pharmaceutical company Clinigen, registrar Equiniti and software provider Proactis all fall to private equity buyers.
After UK inflation this week fell closer to the Bank of England’s 2pc target, both fund managers hope interest rate cuts will soon follow. History suggests smaller company shares could rally after six years of being buffeted by economic fears and ignored by investors.
“When rates start tickling down that will start a period of decent performance,” said Staveley.
Wotton, whose investments are valued at 8.5 times profits compared to 11 to 12 times a few years ago, believed small-cap stocks could bounce back quickly.
“When small caps recover, they significantly outperform and by a greater amount than they underperformed on the way down.”
Questor believes both investment trusts are worth backing as is Odyssean, also part of Harwood Capital, which at £207m is the largest fund fishing in micro-caps.
Its shares, up just 8pc since we tipped them in June 2022, spiked this week on a bid for XP Power, the electronic components manufacturer in which it is 9pc invested.
With their stock picking proven and the sector returning to favour, this is the time to ‘hold’ Strategic Equity Capital trading 6pc below net asset value and Odyssean on a small 2pc premium above NAV.
To these we add Rockwood Strategic which charges 1pc a year and a 10pc performance fee of gains over 6pc, a price worth paying to gain access to a neglected corner of the UK market.
Questor says: buy
Ticker: RKW
Share price: 267p
Gavin Lumsden is editor of Citywire’s Investment Trust Insider website
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