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.

yourmoney@independent.co.uk

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

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee