Last week I acquired a copy of Richard Farleigh’s much acclaimed book, Taming The Lion, which includes “100 secret strategies for investing” based on his experiences as a very successful investor. I was struck by his comment: “Small companies offer more opportunities than large companies.” I have long held this view.

The majority of the investments in my self-invested personal pension (Sipp) are in small companies. Recently, the newsflow from those companies seems to have greatly increased.

On November 10 Westmount Energy announced that it proposed to return 50p per share to shareholders. As my Sipp has a modest stake in Westmount this means I should soon have yet more cash to add to the Sipp’s already large cash pile. Westmount is a small independent oil and gas company listed on Aim. It had accrued its surplus cash by selling its royalty interest in a North Sea exploration licence and by disposing, at a fat profit, of part of its holding in another oil company, Sterling Energy.

At long last there appears to be some action at several pharmaceutical firms from which I had almost despaired of ever making a profit. On November 14 SkyePharma announced that “following a recent unsolicited approach from a third party”, the company’s board had “decided to review all of its strategic options” including “offers for the company as a whole”.

On December 8 it reported it had received “a number of expressions of interest, both with respect to individual assets owned by the company as well as potential cash offers” for the entire company. The board hoped “swiftly to ascertain whether these expressions of interest can be translated into firm proposals capable of being recommended to shareholders”.

My Sipp first bought shares in Provalis for 9.1p each in February 2004 and increased its holding at 8.5p per share in October last year. Unfortunately, one of the company’s products, a diagnostic test for diabetics, experienced “teething problems” and the share price dropped dramatically earlier this year. On November 16, Provalis announced it was “implementing the results of a cost review” which would “significantly reduce cash outflow” in “the short and medium term”. The scope of a “strategic review” had also been widened to “consider all strategic and funding options available” to the company and “how best to maximise value for shareholders”. At the annual general meeting on December 1 the company reported that the US and central cost bases had been cut substantially.

The best news of all was from Protherics. I had bought its shares for my Sipp in December 2003, paying 56.5p, and added to the holding by subscribing for more shares on a one-for-10 basis in a fundraising exercise at 48p per share in July 2004. The performance of Protherics has been lacklustre for much of the time since. On October 21 the share price was just 46p.

The original attraction to me of Protherics was that as well as its Digifab treatment for digoxin toxicity and its highly successful CroFab treatment for snakebites, the company had a number of products in its “development pipeline”. These included an angiotensin vaccine for the treatment of high blood pressure and CytoFab, a treatment for severe sepsis. I thought these developments looked promising with the potential to transform the company’s fortunes. On December 8 Protherics’ share price leapt to 81.5p with the announcement of the company’s interim results and, more importantly, news of a licensing agreement with AstraZeneca for the “global development and commercialisation” of CytoFab.

Protherics stated that the agreement had “a potential total deal value, excluding royalties, of approximately £195m to Protherics, including an initial payment” by AstraZeneca of £16.3m. In addition, AstraZeneca would “make a £7.5m equity investment in Protherics, to be paid in cash, at 68.24p per share” which means Astra Zeneca will own 4.3 per cent of Protherics’ enlarged share capital.

Payments “worth up to £171m” would be paid to Protherics “upon the achievement of milestones” in the development of CytoFab. All clinical development work for CytoFab would be undertaken by AstraZeneca. Protherics would also receive royalties of 20 per cent of net sales of CytoFab and receive additional payments in return for “the commercial supply of the product”.

Kevin Goldstein-Jackson is an active private investor writing about his own investments. He may have a financial interest in any of the companies and trading strategies mentioned.