Derek Pain: Ignoring warning signs to sell has left me wrong-footed
No Pain, No Gain
Saturday 10 March 2012
Shares have enjoyed a fairly cheerful run since Christmas, and the stock market's progress has to some extent been reflected in the performance of the no pain, no gain portfolio. It has scored a quarterly gain of around £3,000 to just over £101,000, but I had hoped for a much more impressive result.
Some of my stars – such as Booker and Hargreaves Services – have continued to perform, but a couple of stocks have sadly let the side down.
Still, I suppose, any advance is not to be sniffed at but what I find particularly disappointing is that I had plenty of warning that the culprits were not faring too well. A glance at their respective share prices indicated problems ahead. I should have sold; stupidly I ignored the signs and held on.
Indeed, I have also been wrong-footed by NCI Vehicle Rescue, a Plus-traded stock, and sold at the turn of the year. I felt there was a danger the company was not trading well and unloaded, locking in a small profit. The subsequent interim report was quite encouraging and the shares have since held their value. I should have retained NCI and sold my other Plus constituent, Rivington Street Holdings, a financial and software conglomerate. At the time I dropped NCI, the Rivington share price was recording a 1p gain at 28.5p. Last year it topped 50p. The shares are now 20.5p.
Its a similar story with SnackTime, the vending group. At one time the shares were approaching 200p. Since my last quarterly review they have been decidedly uncertain, falling more than 20p before a profit warning sent them crashing to an all-time low of 35p. They have since climbed to 51.5p, helped by some director share buying. The group advised that profits would be "materially below" expectations. Before the warning the City had looked for profits in the region of £1.4m. Now such a result is just a pipe dream.
Rivington also posted an exceedingly cautious report. In December it produced downbeat profits and indicated it was finding the going tough. Now, in a later update, chairman Jim Mellon has deepened the gloom by revealing the group is trading "significantly behind budget" and interim profits will be "substantially reduced". It seems the full-year's figures are unlikely to offer much comfort.
The group is still heading for AIM, with the proposed move upmarket forcing it to change its accounting policies, a development that has impacted on profits. Sale of its corporate finance arm for £3m to be paid in stages is still awaiting Financial Services Authority approval. As I reported earlier, Rivington is carrying out a review which could well lead to further disposals.
Of course I am not happy with either SnackTime or Rivington. Both have suffered severe setbacks and, particularly in the case of SnackTime, the portfolio is uncomfortably out-of-pocket. Playing in the small-cap area can, of course, be richly rewarding; it can also be risky and damaging. For the time being I intend to stick with the two shares. But their performances will be carefully monitored and at the first sign of further trouble they will be dumped.
Whitbread, a Footsie stock, is another portfolio constituent to report in the past few weeks. Its display was not great, suggesting a slow down at its important Premier Inn budget hotel side. But the decline was nullified by improvements at its pub/restaurants and Costa Coffee operations. The group is still growing and seems extremely confident. Pre-tax profits for the year are expected to emerge at £315m, up from £271.2m, although analyst Simon French at stockbroker Panmure Gordon has reduced his 2013 forecast by some 5 per cent to £329m.
The portfolio has existed for just over 13 years. Although it was a gradual build up, the average yearly gain works out at around £7,700. Much of its progress was achieved before the devastating financial crash. Since then, small caps have taken a hiding as investors avoided the stock market's riskier elements. And takeover bids, which were a source of much early joy, have now become quite rare.
Still, as Clem Chambers, who runs the ADVFN City website, observes, private investors have moved back into shares.
Small investors, I believe, are invariably keen buyers when shares are in the ascendancy. They should, of course, be more active when the stock market is in the doldrums – that's when real bargains lurk.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Cyclist in Russia narrowly misses being hit by car and lorry
- 2 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 3 What are your fingerprint words?
- 4 Gary Lineker involved in Twitter row after presenter rubbishes claims he will be warned by BBC over foul-mouthed tweets
- 5 Pink Floyd new album: Band unveil cover art for first record in 20 years
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
Labour Party conference: Ed Balls to set out plan to freeze child benefit to balance books
iJobs Money & Business
£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green