Derek Pain: I'm hungry for more, but the cupboard's bare

No Pain, No Gain

I have failed on the recruitment front. The no pain, no gain portfolio is down to a dozen constituents, against the 16 I favour. Takeovers and disillusionment have taken their toll, and my inability to alight on any newcomers this year has intensified the squeeze.

In recent months I have hunted high and low for suitable shares. With the stock market on something of a roller-coaster, any nimble-footed investor should, in theory, discover a few bargains. But small caps, once the building blocks of the portfolio, remain, with a few exceptions, totally unloved. And they are likely to stay out of favour in the months ahead. Bigger stocks are more mixed and possibly offer better prospects. But most I have examined have failed to entice me.

Indeed, a couple have suffered. Wm Morrison, the supermarket chain, has given ground since I hesitated about its inclusion, and Lamprell, the oil-exploration back-up group, has endured a horrendous time with losses unexpectedly appearing. The shares slumped from comfortably above 300p to around 75p; they are, as I write, 103p. A lucky escape, then.

I also contemplated Restaurant Group, which runs such outlets as Garfunkel's and Frankie & Benny's, but eventually dismissed the idea as it would make the portfolio's eating-out element too substantial.

It already embraces three groups with restaurant interests: Marston's, Spirit Pub Co and Whitbread. I remain convinced these three offer a rewarding future. Each is showing a profit, with Whitbread nearly doubling the portfolio's money. I see that Nomura Securities has a 2,220p target on Whitbread, against a portfolio buying price of 1,105p.

With its emphasis on outlets at busy centres such as airports and leisure parks, Restaurant Group is in a fine position to continue to prosper and would have made a splendid addition to my collection.

Smaller groups I have looked at and discarded include Noble Investments, the successful coin and stamp dealership, and the recruiter Matchtech. I looked again at a former constituent, the Prezzo restaurant chain, but reached the same conclusion that excluded the Garfunkel's group.

I have even toyed with enlisting shares on the fringe Plus market, in spite of the Rivington Street Holdings disaster. The uncertainty over the future of Plus persuaded me to hold off. With the inter-dealer broker Icap now in control and prepared to develop Plus, I may once again venture forth into an area that by its very nature is more risky than Aim, the junior stock exchange platform that has, nevertheless, managed to produced a sad procession of losers.

I do intend to expand the portfolio. It is merely taking longer than I expected. Possibly more top-flight shares will be introduced. After all, an old favourite, the caterer Compass, has performed well with Richard Cousins as chief executive. And Aviva, the insurance giant now being revamped by its chairman, John McFarlane, could prove a longer-term winner. The group still awaits a new chief executive to implement the McFarlane-inspired changes.

These are early days and there is many a slip 'twixt cup and lip, but the Compass revival under Richard Cousins is a fine example of how a once-slumbering business can be re-invigorated under new management. In addition, Aviva is blessed with a heady dividend yield which could, of course, be reduced, but not lost altogether, as reality sets in.

Still, there is little to enthuse about in the stock market. Small caps are unwanted and blue chips this year have flattered only to deceive. The Footsie is below the best level achieved last year and some distance from the 6,500-plus points hit a little before the financial crisis threatened to destroy the very fabric of our society.

There is no doubt that the world's economy – including Britain's – is struggling and the euro crisis remains a festering sore. Even so, the upper echelons of the stock market continue to provide investors with, in these low-interest-rate days, some handsome dividends.

Many shares look cheap. But there must be a chance that the important dividend influence will not survive if economic conditions and the plight of the euro continue to deteriorate. Therefore, we are in special-situations territory – and that applies to blue chips and to the mostly neglected small caps.

voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
voicesSiobhan Norton on why she eventually changed her mind
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Life and Style
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    PMO Analyst - London - Banking - £350 - £400

    £350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

    Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

    £300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

    Insight Analyst – Permanent – Up to £40k – North London

    £35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

    Test Lead - London - Investment Banking

    £475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

    Day In a Page

    Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

    Noel Fielding's 'Luxury Comedy'

    A land of the outright bizarre
    What are the worst 'Word Crimes'?

    What are the worst 'Word Crimes'?

    ‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
    Can Secret Cinema sell 80,000 'Back to the Future' tickets?

    The worst kept secret in cinema

    A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
    Facebook: The new hatched, matched and dispatched

    The new hatched, matched and dispatched

    Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
    Why do we have blood types?

    Are you my type?

    All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
    Honesty box hotels: You decide how much you pay

    Honesty box hotels

    Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
    Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

    Michael Jamieson: Why weight of pressure rests easy on his shoulders

    The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn