Derek Pain: After a few difficult months, prospects are brighter now

 

It is always a little disturbing when a constituent of the No Pain, No Gain portfolio, which had been happily in profit, slips below my buying price. But I believe there are extenuating circumstances behind Alkane Energy's fall from grace.

The power group has been quite active on the deal front in recent years. However, the latest expansion involved a share placing – often a dispiriting influence – and represented a big swallow for a business then capitalised at less than £50m. To pile on the pressure, the largely institutional placing was a rather convoluted exercise that excluded most, if not all, private shareholders.

So the shares have given ground. As I write the price is 37.5p against the portfolio's 40.75p and a recent high above 50p. However, I think Alkane is still worth supporting and expect the shares to move back into the black. I note that the share tipping website, t1ps.com, rates them a buy.

Alkane is, in effect, a play on the country's power supply. And last week's £12m acquisition of three power response companies strengthens its position. The group supplies general power as well as offering a fast response when shortages occur. With the danger of blackouts looming in years to come, the business could help illuminate some of the threatened lights- out sessions. Much of Alkane's electricity comes from converting methane gas from abandoned coal mines.

The group preceded its expansion with a trading update that revealed output in the first half-year was down but a strong second half was anticipated. The decline was largely due to a shut-down at one of its former coal mines – the Maltby colliery in Yorkshire – which has since resumed production.

In May, in a deal with Egdon Resources, the group disposed of its shale interests in exchange for 18 per cent of Egdon's capital. The sale produced a one-off £9m profit.

Two other constituents have reported trading, one very upbeat, the other not quite so cheerful. Essenden, the operator of 29 bowling and entertainment centres, scored a 6.1 per cent sales advance in the first 26 weeks of its year. Taking a 28-week period, the gain was 7.1 per cent. Chief executive Nick Basing was worried the World Cup would hinder trading; his fears proved groundless.

The shares were recruited at 24p; they are now 74p.

Findel, the home shopping and educational supplies group, was not so lucky. It actually reported a 2.2 per cent sales drop but said its bottom line calculations had improved because of stronger margins and cost savings. Its main subsidiary, Express Gifts, a mail order operation, managed a 6.2 per cent advance.

But trading elsewhere, such as the Kleeneze doorstep seller, was less satisfactory – although overall the group thinks this performance, which occurred in its quietest period, will not blunt the expected year's display.

Findel is one of the constituents that has not excelled in recent months. In March the shares hit 320p but later fell to 238p; they are now 253p. The stock was recruited at the equivalent of 142p.

Coincidentally, March was the month when my star performer, the Booker cash-and-carry chain, began its decent from a 176.5p peak. Essenden also plateaued above 100p in what was to emerge as a painful month for the portfolio.

However, Essenden's retreat to 74p is explained by its decision to exchange its ISDX traded loan notes for shares. The move almost certainly prompted some note holders to sell their resultant shares.

yourmoney@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'