Derek Pain: Patsystems sell-off has left me counting some heavy losses

No Pain, No Gain

Takeover bids, real and rumoured, are providing a little excitement for the no pain, no gain portfolio. Unfortunately, worthwhile rewards are conspicuous by their absence, although I have not given up hope of eventually realising a reasonable gain from this activity.

Two constituents are involved. For Patsystems it is all over bar the shouting, with a bid having collected acceptances for more than 90 per cent of the capital. But at TEG, the other member under surveillance, the action has just started and could result in a profit.

However, the portfolio has lost heavily on its Patsystems investment. It paid 24p a share; the take out price is a mere 14p. Mind you, it is debatable whether the derivatives software supplier is now worth much more. It was for much of last year, as the company appeared to be trading well with the shares near 20p.

In the summer Patsystems splashed out £12.6m acquiring a US equities and options software business. Fortunately for the Americans, much of the consideration was paid in cash, not shares.

It was in October that Patsystems intimated it had encountered trading problems as, in these straitened times, customers reduced demand for cutting-edge technology. Then the collapse of US broker MF Global, and difficulties at other securities houses, compounded its problems.

As I discussed in November, a strike from ION Trading, an Irish-based company, was a distinct possibility. ION had been a persistent buyer of Patsystems shares, maintaining a presence not far below the bid-triggering 30 per cent holding.

The offer appeared a few days before Christmas. It did not bring much seasonal joy to the portfolio or, I suspect, most other shareholders. But with ION's stake standing at 27.9 per cent, and directors and others accepting, the offer always stood a strong chance of succeeding.

I had hoped for a degree of resistance from shareholders that would, perhaps, have forced improved terms. After all, Patsystems, with its derivative operations, represents a nice fit for ION which specialises in bond software. But it was not to be. With Patsystems' AIM presence due to disappear and ION talking about acquiring any outstanding shares, the portfolio has belatedly and reluctantly accepted.

Still, I believe TEG will be more rewarding. The group, providing technology for disposing of organic waste, was recruited in November at 8p a share. As I write, the price is around 8.5p, having nudged 10p.

A strategic review prompted Keir, the construction and property group, and a company called Bridges Ventures, to make exploratory inquiries that "may or may not" lead to a bid.

In case any other company is interested in acquiring the group, TEG has now, in effect, put up the for sale sign, but is keen to stress that other deals, such as parties taking stakes in some of its operations, are also possibilities.

Stockbroker Brewin Dolphin recently suggested the shares are undervalued and put a 22p target price on them.

Two other constituents have produced trading updates. Marston's, the brewing and pub group, rolled out a cheerful report, but Animalcare, recruited with TEG, offered more cautious tidings.

Famed for such traditional beers as Pedigree and Brakspear, Marston's revealed it enjoyed "strong" trading over Christmas and the New Year. And covering a 16-week period, its managed house sales were up 5 per cent and the franchised and tenanted estate recorded a 3 per cent increase.

The brewing side also did well. Animalcare, supplying veterinary medicines, indicated that its half-year results may be disappointing – with turnover down 10 per cent – but believes full-year figures will match expectations.

Avation is the other constituent in action; it has leased two more aircraft to Australian airline Skywest.

The Animalcare statement pushed the shares below the portfolio's buying price, whilst Marston's is marginally in the money. Avation is showing a reasonable profit at 105.5p against 83.5p when recruited.

The departure of Patsystems has reduced the portfolio's strength to 13, a number I like to avoid. I will, therefore, be adding to my little collection of shares and hope to return to the 15 mark before my next quarterly review, due next month.

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

Life and Style
A teenager boy wakes up.
life
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
PROMOTED VIDEO
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
Sport
Husain Abdullah returns an interception off Tom Brady for a touchdown
nflLeague has rules against 'sliding to ground on knees'
Life and Style
tech
Extras
indybest
Life and Style
food + drink
News
i100
News
i100
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Arts and Entertainment
film
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

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    SQL Developer (Stored Procedures) - Hertfordshire/Middlesex

    £300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...

    Day In a Page

    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?
    Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

    Homegrown ballerina is on the rise

    Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
    Education, eduction, education? Our growing fascination with what really goes on in school

    Education, education, education

    TV documentaries filmed in classrooms are now a genre in their own right
    It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

    It’s perfectly reasonable to negotiate with villains like Isis

    So why don’t we do it and save some lives?
    This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

    Is a sub-2-hour race now within sight?

    Dennis Kimetto breaks marathon record
    We shall not be moved, say Stratford's single parents fighting eviction

    Inside the E15 'occupation'

    We shall not be moved, say Stratford single parents
    Air strikes alone will fail to stop Isis

    Air strikes alone will fail to stop Isis

    Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
    Witches: A history of misogyny

    Witches: A history of misogyny

    The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
    Shona Rhimes interview: Meet the most powerful woman in US television

    Meet the most powerful woman in US television

    Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
    'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

    Endangered communities photographed 'like Kate Moss'

    Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style