Derek Pain: Mears should have made me more than a few coppers

No Pain, No Gain

Since I re-recruited Mears, the support services group, nearly two years ago, the shares have failed to provide the no pain, no gain portfolio with much enrichment.

Not the fault of the management, I hasten to add. Profits have continued to move ahead, and even the most casual observer would get the impression that the group is doing all the right things.

Yet the shares have failed to respond. Since September they have occasionally topped 300p, but seem more content hovering around the 270p/280p range. With the shares, as I write, at 280p, the portfolio's profit is just a few coppers.

To some extent this lacklustre performance stems from my own timing. If I had delayed my purchase a few months I could have picked up the shares at a much lower price. At one time in 2008 it slipped below 200p. But back jobbing is an unrewarding exercise. Initially the shares joined the stock market rally but now seem stuck in a rut.

Last week the group confirmed what most suspected: that 2009 was a record-breaking year. And chairman Bob Holt pointed out that Mears' main operating areas, social housing and home care, "are defensive markets where spend is largely non-discretionary and afford us substantial immunity from bad debts".

The group had not, he added, experienced "any work delays", although, I suppose, the subsequent deep freeze may have had some impact. With the order book continuing to grow, the stockbroker Panmure Gordon has rolled out a three-year profit forecast. It expects £23.3m for the year just ended; £30.3m this year; and £36m next.

Social housing, featuring contracts with an array of public bodies, is Mears' main occupation. But domiciliary care is growing rapidly. It made its first move into the care business nearly three years ago, when it took over Careforce in a £22.2m share deal. Since then it has mopped up localised operations. Now it is taking over Supporta, a widely spread home care group.

The Supporta board has backed the Mears share exchange strike which values the company at around £27m. At one time it looked as though Mears could face a challenge from a US group, Allied Healthcare International. But the American threat evaporated. Any chance of a counter-offer disappeared when this week Mears declared that it had acquired acceptances representing more than 50 per cent of its target's capital.

The deal, when finally completed, will make a dramatic impact on Mears' care business. The combined operation will be capable of successfully bidding for bigger – and longer – local authority contracts. Some 75 per cent of Supporta's income is derived from home care, with the rest coming from such interests as document handling and land and property management. I would not be surprised if Mears eventually sells these odds and ends.

Mears believes home care fits snugly with social housing, and on occasions there are opportunities for joint programmes as more and more organisations develop and strengthen their outsourcing operations.

PG is one of a number of stockbrokers that believe the admittedly generously rated shares should be higher – around 330p. Last month Collins Stewart suggested a similar price. But its target appeared to be based on the group's domiciliary care operation. And that estimate preceded the Supporta bid.

Indeed Collins observed that Mears was "well-placed to take a leading position in the consolidation and evolution of the domiciliary market".

Mears shares were first recruited in the early days of the portfolio. They were floated in 1996 at 10p. I had hoped to pick them up at 18p but a sudden surge forced me to pay 23p.

Later when I was about to go on an extended holiday, I decided to cash in some high-flying portfolio stocks. With the stock market then looking decidedly uncertain, I worried that they could suffer during my absence. So I unloaded Mears at 71.5p and another strong performer, Inter Link Foods.

Mears survived the turbulence in some style. And the shares went on to hit 380p. Inter Link prospered for a time. I sold at 365p against a 196p buying price and watched the shares climb relentlessly to 775p. But then it all went pear shaped and the once-thriving food group crumbled, eventually going bust.

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

News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
News
Cumberbatch was speaking on US television when he made the comment (Getty)
people
PROMOTED VIDEO
Life and Style
tech
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Sport
football
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
Sport
cyclingDisgraced cycling star says people will soon forgive his actions
News
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
people
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
music
News
i100
News
Lena Dunham posing for an official portrait at Sundance 2015
people
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Sport
Bradford City's reward for their memorable win over Chelsea is a trip to face either Sunderland or Fulham (Getty)
football
News
Lars Andersen took up archery in his mid thirties
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

    Ashdown Group: Client Services Manager - Relationship Management - London

    £30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

    Recruitment Genius: Credit Controller / Customer Service

    £18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

    Guru Careers: In-House / Internal Recruiter

    £25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Day In a Page

    Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

    Auschwitz liberation 70th anniversary

    Woman sent to three Nazi death camps describes surviving gas chamber
    DSK, Dodo the Pimp, and the Carlton Hotel

    The inside track on France's trial of the year

    Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
    As provocative now as they ever were

    Sarah Kane season

    Why her plays are as provocative now as when they were written
    Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

    Murder of Japanese hostage has grim echoes of another killing

    Japanese mood was against what was seen as irresponsible trips to a vicious war zone
    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea