Derek Pain: 'Helped by a few outstanding performers, portfolio hits a high'

The portfolio's overall profit has, for the first time, topped £150,000

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The Independent Online

Although shares have provided something of an up-and-down display in the past three months, the No Pain, No Gain portfolio has achieved a new high.

In April the FTSE 100 index was riding at a peak. Yet with the Greek tragedy and a few other adverse influences, the stock market has endured some debilitating sessions. Still, the portfolio's overall profit has, for the first time, topped £150,000, thanks to a few constituents.

There have, of course, been a few under-achievers. Besides the long-term disaster that is SnackTime, and the more recent slacker Stock Spirits, I was disappointed in the past quarter to see Whitbread slip below 5,000p for the first time since February. The shares at one time nudged 5,500p.

Mears, the support services group, is another that has drifted from its record. Last year the shares topped 540p; they are now around 424.5p. A slowdown in new contracts is partly responsible, but there are also worries that government cuts could eventually affect the business. Still, last week's shareholders' meeting was relatively cheerful, with talk of a "solid trading performance". The chief executive, David Miles, admitted new contract bidding opportunities had been "subdued", but added: "I am excited by a number of material opportunities that are now reaching an active bidding stage."

The group is splashing out £11.3m on the loss-making home-care business of Care UK, making it the second- largest provider. The takeover has been described in the City as "short-term pain for medium-term gain".

Three of this year's acquisitions by the portfolio are showing modest gains. Only Safestay, running upmarket hostels, is in the red, and its decline is marginal.

I still enjoy a cash kitty, despite my four ventures into the stock market. The departure of Spirit Pub Co, falling to a takeover by Greene King, produced a handsome profit. But on my other sell, Alkane Energy, I lost nearly half of my £5,000 investment.

The portfolio relies entirely on capital gains. Dividends, which would have been substantial during its 16-year existence, are ignored. After all, the portfolio has embraced some high yielders in its time. They include Scottish & Newcastle (now swallowed by a continental twosome of Carlsberg and Heineken) and, now rejoicing under the name Grafenia.

At one time Grafenia shares were noted for their returns, once nearly 12 per cent. But with profits under pressure as the group grappled with the development of hi-tech printing, shareholder payments were sharply reduced. Although the group is still finding life hard, it announced this week that profits had improved and the dividend will be raised 12.8 per cent to 1.5p a share. The shares once touched 75p; they are now around 19p – offering a 5.6 per cent yield. The decline reflects the dividend climbdown and lower profits.

Rough calculations suggest the portfolio's total dividend income could have topped £35,000 if I factored them in. It is also fair to point out that dealing costs, which can be heavy as I don't use the internet, are ignored as well.

I feel that by excluding dividends and trading costs, the portfolio is much easier to follow and contains a certain degree of transparency.

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