Derek Pain: Booker and Whitbread power my portfolio to heady heights

The No Pain No Gain portfolio is edging closer to its all-time peak, achieved just ahead of the financial crisis that devastated so many shares, particularly small caps where it is heavily involved.

My quarterly calculation produced a profit of just over £139,000, some £10,000 short of its best level. But for Monday's slump, the figure would have been higher. The gain works out at an average of more than £9,000 a year, a reasonable out-turn, particularly as my little collection of shares was allowed to evolve rather than adopt the "big bang" approach.

The past three-month performance has been helped, once again, by star constituents: Booker, the cash and carry chain; and Whitbread leisure group. Mears, the support services group, has repaid my faith by topping the 500p mark and little tenpin bowler Essenden has soared from a lowly 28.5p (showing a modest 4.5p a share profit at the last count) to 66p.

The portfolio is a long-term investor. It does not fancy jumping in and out of shares – an approach that enriches the City but often leaves the small-time investor sadly out of pocket. I must confess that I nursed thoughts of dumping Mears and even briefly toyed with the idea of relegating Essenden. Of course, I am glad I ignored such temptations.

But not everything in my garden is lovely. I have three loss-makers. SnackTime, the vending group, is down to 10.75p after Russian-backed take-over talks were terminated. The group is now moving to merge its three vending operations and could sell its Drinkmaster subsidiary, which produces sealed cups.

As I have said in the past, the deficit on the SnackTime involvement is now so large that it is no longer worth selling for the pittance the shares would fetch. I had hoped the take-over approach would secure a not too humiliating exit, but it was not to be.

Another casualty, environment group TEG, has lost more ground and may well suffer the chop. Animalcare, the veterinary products business, has announced solid interim figures with pre-tax profit up 3.5 per cent at £1.4m and an unchanged dividend of 1.5p a share. Stockbroker Panmure Gordon is enthusiastic, producing a 245p target price and declaring Animalcare is a "dividend-paying cash flow generative business offering defensive growth". Unfortunately, the shares have stubbornly refused to get anywhere near 245p, a level promoted for some time. Whitbread enhanced its position in the portfolio with a 14 per cent sales rise in a 50-week period; but Avation, an aircraft leaser, flew in with profits that were a below expectations.

Andy Harrison, Whitbread's chief executive, reported the leisure group was moving ahead on its three fronts – Premier Inn, the budget hotel chain, managed sales growth of 13.3 per cent; Costa Coffee was up 20.1 per cent; and even the pub/restaurants achieved a 3.7 per cent advance.

Avation's interim profits came out at $7.9m (£4.7m) against $6.9m. Revenue was up 21 per cent at $24.6m. The shares, above 150p a little while ago, are 120.5p. The company has fixed up a couple of refinancing deals that should help future returns.

As readers will know, I have become a little deflated over Brightside, the insurance group. New chief executive Paul Williams has arrived and hopes to fix up more partnership arrangements. The shares have recovered to just above my buying level. When take-over talk began last year the price moved above the rumoured take-out price of 27p. It has since been down to the 16p mark as bid talks faltered and were called off. Still, the would-be bidder remains a significant shareholder.

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

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