Derek Pain: Don't underestimate individual investors

The stock market presence of private shareholders has never been so low. And there is little doubt it is set to decline even further.

Their weakening role is highlighted by figures produced by the Office for National Statistics. It seems that at the end of 2008, individuals accounted for only 10.2 per cent of the stock market, down from 2006's 12.8 per cent and a mighty 54 per cent when figures were first compiled in 1963. Overseas investors, with a 41.5 per cent interest, are the main force.

It is, perhaps, not surprising that the City has adopted an increasingly disdainful attitude towards the small, private shareholder. Some stockbrokers still look after their needs in fine style and run highly profitable operations. After all, 10.2 per cent must generate a lucrative flow of dealing fees. Small investors invariably pay more in dealing costs and, don't forget, those seeking paper share certificates have to pay extra for the privilege.

Yet the individual investor is left out in the cold. Unlike more powerful forces they do not enjoy intimate chats with directors, nor invitations to analyst meetings – or site visits as they are sometimes called these days. Very often, their only link is through the statutory information a company is forced to provide. With the travelling involved annual meetings are expensive and time-consuming – and often a waste of time.

The City is geared to the big investor – like pension funds, insurance companies and the now notorious hedge funds. It's the heavyweights it wants to accommodate.

In a commercial sense, its attitude is understandable. After all, why worry about a bloke with 1,000 shares when it might be possible to deal with one commanding millions?

Individual investors clearly get a raw deal compared with their bigger brethren. Such a lopsided system is not only unfair; it is clearly, to use a much despised phrase, politically incorrect.

Although the proportion of the stock market cake held by individuals is continuing to crumble it would be wrong to assume the private investor is in ragged retreat. Many now invest through investment companies, unit trusts and various funds. Increasing use of nominee accounts, a lamentable by-product of internet trading, must have also taken a toll on the individual count.

When measured in cash, individuals commanded a stock market stake worth, at the end of 2008, a not inconsiderable £117.8bn. At that date total value was £1,158.4bn. Shares were then, as the statisticians crunched the numbers, deep in the doldrums with the Footsie struggling to hold above 4,000 points.

The marginalisation of the small investor was illustrated by the bar-room brawl at pub chain Mitchells & Butlers. I have a few shares in the company, a legacy of the days when, as Bass, it was Britain's biggest brewer.

Although my stake might be a few pints short of a round, I expected to hear from the combatants. The board did not disappoint. I received probably half a dozen postal communications and even a telephone call from a pleasant person inquiring if I was up to speed with developments.

But from Joe Lewis, the Bahamas-based billionaire orchestrating the rebellion, not a whisper. Apparently he posted messages on an internet site but there was nothing as satisfying as a letter on my doormat.

In days gone by I could have expected an approach. But in this hi-tech age, when some campaign to end paper share certificates (and now paper cheques), I am supposed to hunt the web. Those without computers had no chance of a Joe missive.

Anyway, the Lewis camp decisively won the day. The pub chain, named after a once famous Midlands brewery, seems set for an interesting – perhaps more rewarding – future.

In my younger days I came across Mr Lewis when, with his father Charles, he ran a company called Hanover Grand. It had banqueting suites in London's West End and also took in some top restaurants of the day as well as a business specialising in providing for tourists.

It struggled in the 1970s slump when the economy was devastated by soaring oil prices and interest rates and another run (the so-called secondary banking crisis) of disasters among the money men.

Mr Lewis departed to sunnier climes – and made a fortune, from currency trading.