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Although the FTSE Small Cap Index stands at 1,746.69, against 2,368.57 a year ago, and the FTSE 100 at 4,057.7 (against 5,203.4), there have been encouraging signs of late that investors might regain some value in their smaller company shares.

The prodigious 198.7-point jump in the blue-chip benchmark on 15 October restored a certain amount of confidence, and proved there is still life in the marked down market. October was punctuated by the usual raft of warnings, woes and corporate worries, but many stocks have fallen so far they now look like attractive bid targets. And, as ever, there was no shortage of strong small cap stories.

Waning on warnings

Let us get October's bad news out of the way first. HP Bulmer, maker of Strongbow and Scrumpy Jack cider, plunged 69p to 126.5p after finance director Alan Flockhart was shown the door, following hot on the heels of chief executive Mike Hughes. Full-year profits to April were also revised downwards in the fifth profit-warning of the past nine months. This left the company in breach of most of its banking covenants. At 126.5p, the price was more than 300p below its 52-week high. It has since fallen to 121.5p.

Also under pressure were shares in Waterman, crashing from 85.5p to 56.5p in the period following its final figures to June. The support service-listed group's pre-tax profits came in at £3.9 million, compared with analyst estimates of £4.2-£4.4 million. The directors said public/private finance initiative-related work continues to be strong, but the commercial sector has seen a reduction in commissions. With operating margins on private sector work healthier than on public, future profits could be hit.

Sygen and Fisher go fishing

Several stocks stoked up investor interest with marine-related acquisitions. Sygen International swam 2.5p upstream to 50p, against a 52-week low of 37.5p, after reeling in Mexico's largest shrimp breeding stock business, Super Shrimp, for £2.9 million in cash. The food producer and processor-listed venture's core business is the provision of genetically superior pig breeding stock. But the deal will speed up the development of its existing shrimp breeding business, SyAqua, the firm's first foray into a species other than pigs. Last month the California-headquartered play pleased the market with full-year profits up 40 per cent to £13 million, on sales of £164.7 million.

Transport-quoted James Fisher agreed to buy marine services venture Rumic for a maximum £4 million. Rumic manages and operates the UK Submarine Rescue System, including a round-the-clock response team in Glasgow, under a long-term deal with the Royal Navy running until 2005. The deal broadens Fisher's longstanding relationships with the Ministry of Defence, Navy and nuclear industries and will help grow profits at the marine support services division. The shares have performed well, rising from a 12-month low of 79.5p to 149.5p.

Among the small cap companies in the general retailers sector, some soothing comments on trading, along with interim figures to 27 July, buoyed men's outfitter Moss Bros by 3.5p to 33.5p. In the first half pre-tax losses narrowed from £3.9 million to £3.7 million. The new management team said that in the 11 weeks since July like-for-like sales were lifted 7 per cent, boosted by a decline in 'dress down Fridays' and a revival in men's suits for both work and social occasions.

Bids and buy-outs

Retail buddy William Baird eased off 0.75p to 14.25p, despite receiving an audacious bid from Aim-listed Jacques Vert. At 14.25p, Baird has a market value of just £17 million and the board admitted there was a commercial logic to combining the two groups. But shareholders are being advised to take no action for now, since the board still believes the offer undervalues Baird's contribution to the enlarged group.

Over in the real estate sector, fledgling outfit Chesterton International clipped ahead 11 per cent to 21p on revelations of a possible management buy-out. The London-based outfit said one of the parties in the takeover talks was a management team that did not include board members. Chesterton reported pre-tax losses of £6.1 million for the year to June, hit by a £4.6 million restructuring charge, on turnover of £167.2 million.

Shares in leisure club operator Crown Sports received a shot in the arm following an unsolicited 5p cash bid from a company owned by chairman Jeff Chapman. The bid values the business, which has been sold down to 4.75p, from a 52-week high of 21p, at £14.5 million.

On a high note, LA Fitness flexed its muscles with a 40 per cent rise in pre-tax profits to £7.8 million for the year to July. The figures were brought forward to stem the damage from a prior profit-warning by rival Fitness First, which saw shares sold down across the saturated gym club sector.

Leisure-listed Holidaybreak, hopped 12.5p to 588p, ahead of its promotion to the FTSE-Mid 250. The travel company takes the place of Arcadia Group, the retailing empire snapped up for £850 million by Bhs billionaire Philip Green.