Derek Pain: Holt's been both a winner and a loser
No Pain, No Gain
Saturday 25 August 2012
Bob Holt, the 57-year-old chairman of Mears, has managed to achieve the contrasting feats of both making as well as losing money for the no pain, no gain portfolio.
Shares of the support services group were first enlisted in its early days. They were recruited at 23p and sold at 84p. A nice little earner as TV's Arthur Daley might have said. Four years ago the shares were repurchased at 272p.
As I write they are just above that level but I still have high hopes they could get up a new head of steam. After all, last week's interim figures demonstrated that Mears' social housing and home-care interests are comfortably surviving the recession. Pre-tax profits edged ahead to £11.1m and the interim dividend lifted 7 per cent to 2.3p a share.
There is no doubt that Mears has, overall, been a highly profitable investment. It could have been even more rewarding. For after I sold the shares – the stock market was then looking a bit dodgy and I was off on an extended holiday – the price rolled on to 385p. But it is pointless back jobbing. If I totted up the amount of cash lost because of unfortunate decisions I suspect I would be suicidal.
Despite the current share price being so far from its peak, there is no doubt that Mears represents a Holt success story. When the company came to the stock market in 1996 it was valued at only 10p a share and enjoyed a yearly turnover of £12m. In its last, full-year revenue was £589m.
Mr Holt, a former chief executive of Tottenham Hotspur football club, has, it must be admitted, cashed in on Mears' success. He had a significant stake when the group floated. Now his interest is modest. Earlier this year he sold two million shares (which included 1.5 million of option stock) at 250p a pop.
However, it is in his role as chairman of Green Compliance, formerly Wyatt, that Mr Holt has embarrassed the portfolio.
I descended on the-then online recruiter, nine years ago at 27.5p. After a succession of deals, the group failed to make it and three years ago indulged in two cash-raising exercises. The first call, as Wyatt became Green CO2, took it into home improvement kits; then, with the company subsequently assuming the name Green Compliance, it raised £10m with Mr Holt putting up £1m.
The portfolio eventually escaped with just £200 remaining of its initial £5,000 investment. Since it departed, Green's shares have continued to experience a rough ride. They are now just 10.5p, capitalising the business at £3.2m.
According to the five-year chart on the ADVFN website, Green has, allowing for capital changes, fallen from more than 1,000p.
Mr Holt must have lost heavily. He is quite a substantial shareholder. But he remains upbeat. Although the company made an operating profit of nearly £2m in its last year the pre-tax result was a £3.7m loss.
He believes Green, which has grown through a string of acquisitions, has emerged as "a credible new player" in the business of fire, pest and water compliance.
Mr Holt adds: "We have a focused business operating in profitable market sectors and a management team that is committed to driving shareholder value..."
Green relies partly on discretionary spending which is under pressure in these fraught days. Mears does not; its earnings are more sheltered. Besides steadily increasing its social-housing network, the group seems to be benefiting from the failure of some of its rivals to perform adequately. It has won two London deals following the sudden termination of contracts, and managing director David Miles seems to expect more such opportunities to appear.
Mr Holt is a charity walker. His Footprint Foundation has raised around £500,000 for vulnerable young and old. Last weekend he was in South Africa where he is involved in an orphanage. But he still finds time to head both Green and Mears as well as another quoted company, Inspired Energy.
I have pondered recruiting Inspired but felt that although Mr Holt is a winner and loser I should stick with the net £8,460 he has so far contributed to portfolio funds. And, who knows? I might score again with Mears.
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