Derek Pain: Small caps are unloved in City but their day will come
No Pain, No Gain
Saturday 10 December 2011
It's been a busy few weeks at the no pain, no gain portfolio with four constituents reporting profits or corporate activity. In some respects my15-strong collection of shares has not performed too badly although, like I suspect most investors in these volatile stock market days, there is disappointment at the behaviour of some stocks.
Research suggests many shareholders expect to reap rewards in the next six months. A survey aimed at examining the attitude of "the everyday investor" concludes that 36 per cent of them are looking for a positive return. The research was carried out by one of Britain's major investors, Legal & General, the insurance giant. However, small caps, which dominate my portfolio, remain unloved in the City. But, I believe, their day will come. And we may not have to wait too long for them to return to favour.
The profit announcements amounted to a little and large display. The vending machine group SnackTime is capitalised at just £12.1m, whereas the brewer Marston's is valued at a rather more heady £543m. SnackTime reported half-time revenues up 162 per cent, although pre-tax profits were down from £201,000 to £111,000. The fall is not surprising following an intensive bout of acquisition-inspired restructuring. New contracts continue to be won, and the stockbroker Arbuthnot is looking for a year's out-turn of £1.4m.
Marston's, brewer of such hand pump beers as Pedigree and Brakspear and owning around 2,150 pubs, rolled out a 9.4 per cent underlying pre-tax profits advance to £80.4m. It is holding its year's dividend, putting the shares on a yield of around6 per cent. In the 12 months the group achieved revenue growth of 4.8 per cent, and in the first eight weeks of its current year made further progress.
Like others in the pub trade Marston's, where L&G has increased its holding to 4 per cent, is finding the eating out market particularly enticing. In the past five years it has built around 50 pub/restaurants and now aims to establish some 25a year.
Unfortunately, the takeover action has yet to provide much joy for the portfolio. Patsystems, a supplier of derivative software, is now, as I anticipated, in the sights of its biggest shareholder, ION Trading. Unfortunately the indicative priceis only 14p a share. The portfolio paid 24p.
To pile on the agony the collapse of MF Global could be more wounding than at first thought. The busted US broker owes £900,000, and uncertainty remains about how much of the MF-related business Patsystems will be able to salvage. In addition it felt the need to make provisions of up to £1.3m against clients that are feeling the financial pinch. The group reckons 2012 resultswill be significantly better thanthis year's.
Another round of corporate action has occurred at Plus-traded Rivington Street Holdings, with an on, off and then on again disposal. At first it agreed to sell its financial advice side, Rivington Street Corporate Finance, to another Plus-traded group, Webb Holdings, run by the small cap specialist Peter Webb. Then the deal was called off when Rivington received a higher offer. It transpired the second strike was an in-house affair. A company called Peterhouse Capital, where Peter Greensmith, a director of RSCF, is the main shareholder, put a £3m bid on the table. The £3m is being paid in stages, with most of it inthe form of an 8 per cent secured loan note.
Rivington, planning a move from the fringe Plus platform to the Stock Exchange's Aim market next year, believes its corporate operation may not keep up its impressive profit performance, and is happy to accept £3m for a business acquired for £681,000 five years ago. The corporate operation, representing a host of Plus and Aim companies, achieved profits of £344,000 in the six months to February.
The portfolio has one other Plus stock, NCI Vehicle Rescue, recruited nearly two years ago at 25.5p. The shares are now around the 30p mark. I have been wondering whether to retain them. The last trading report was a little disappointing and various indications from the industry are not too encouraging. Should the shares be dumped, and with Rivington's proposed elevation, the portfolio would be in danger of existing without a constituent from the fringe Plus market for the first time since its early days.
How to get fit in minutes
Debt in Britain: Numbers seeking help on how to cope with mounting bills goes up by more than half in three years
Buyers beware of new-build home headaches
Simon Read: 'It went below the radar but you could be eligible for a tax break on your savings'
Women to lose benefits from contracted-out pension scheme
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 Replica Back to the Future Hoverboard released
- 3 Gamers confess the worst things they've done in The Sims
- 5 Modern society encapsulated in five seconds
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£18000 - £20000 per annum: Recruitment Genius: A Client Services Assistant is ...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Day In a Page
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station