Derek Pain: Patience is a virtue, whether prices are flying or falling

No Pain, No Gain

My decision to hang on to Avation shares seems to be paying dividends. The aircraft leasing group has at last produced the trading performance that justifies its place in the no pain, no gain portfolio and the investment is once again showing a profit.

I descended on the shares at 83.5p in January 2011. They subsequently topped 120p but some rather disappointing profits and then an unexpected cash call sent the price to around 65p. Should I keep the shares or subject them to the old heave-ho? I must admit I came near to dropping them but, perhaps more by luck than judgement, I retained the stock. The price is, as I write, 90.5p and I expect it to go higher.

As I have remarked many times, patience is a virtue in the investment game. A few weeks ago I mentioned that sticking with Mears, the support services group, when the shares looked friendless, had paid off.

Avation, dubbed in some quarters as a rent to fly operation, has an international profile. The shares have a full London listing, yet the yearly shareholders' meeting is held in Singapore; the group has strong links with Australia and is now reporting in US dollars. The switch from pounds to dollars – another development that caused me some dismay – occurred in May only because the "primary functional currency" is dollars for lease revenues and debt obligations.

The Australian connection is extensive. Many of its 23 aircraft are leased to a "down under" airline, and Avation was once part of SkyWest, an airline now merged with Virgin Australia. Avation arrived on what is now the fringe ISDX share platform at a mere 4p a share. I believe it is the only company ever to achieve a direct move from ISDX (or Plus as it was then) to a full stock market listing.

The currency switch could confuse some shareholders but the resultant pre-tax figure of $14m (around £9.3m) is by far the group's best ever display and is well ahead of stock market forecasts and represents a substantial advance from what was admittedly low flying profits, published at £5.2m, last time round.

Stockbrokers Liberum and WH Ireland are among those impressed. The former believes the shares are cheap and Ireland has upgraded its forecasts although its target price remains at 125p.

Even so, Ireland analyst Raymond Greaves says the outlook is "very positive" and expects the next set of profits to hit $18.1m with $22.3m likely in the following year. He also expects dividends, increased to 1.78 cents a share, to be improved to 2.5c for 2014, and reach 3.1c in 2015.

Avation did seem subject to quite considerable share selling pressure. But I note that chairman Jeff Chatfield, an experienced company airman, has been a keen buyer and lifted his interest to 20.19 per cent. And the Oceanwood Capital fund has just over 18 per cent.

Another portfolio member has rolled out details of impressive trading. The Spirit Pub Co, taking in such chains as Chef & Brewer and Fayre & Square, confirmed a sunshine-inspired fourth quarter performance. The group's managed pubs lifted sales by 4.1 per cent and the leased estate showed a marked improvement with turnover up 2.2 per cent and income down 0.4 per cent compared with a 2.1 per cent income drop last time. The group seems set to meet stock market profit expectations of around £55m when it reports on its year's trading next month.

Stockbroker Panmure Gordon has a 110p target price on the shares. Last month I reported that Numis Securities is looking for a more modest 85p. The price is now around 75p. The portfolio recruited the shares at 42p two years ago, shortly after the group split from the still struggling Punch Taverns.

I did once toy with the idea of including Punch in the portfolio. Although heavily indebted there are strong hopes it will be able to do a deal with the spread of organisations that now own its debt. Talks have been dragging on but the fact they are still ongoing could be a bullish sign.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind-the-scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
i100(and it's got nothing to do with the Great British Bake Off)
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
news It's not just the world that's a mess at the moment...
footballPremiership preview: All the talking points ahead of this weekend's matches
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Mario Balotelli pictured in his Liverpool shirt for the first time
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

    Data Scientist (SQL,Data mining, data modelling, PHD, AI)

    £50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

    SAS Business Analyst - Credit Risk - Retail Banking

    £450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

    Project Manager - Pensions

    £32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

    KYC Analyst, Birmingham - £200-£250 p/d

    £200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

    Day In a Page

    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone