Derek Pain: Terrible twosome gave the portfolio a rocky few weeks

No Pain, No Gain
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The Independent Online

It's been a rocky few weeks for the no pain, no gain portfolio. The performance of two constituents has been decidedly worrying, and although others made progress, the retreat of the terrible twosome created a penetrating wound.

Step forward Clarity Commerce Solutions and Mears. For a time I thought NCI Vehicle Rescue had crashed too, but its reverse was apparently a mysterious mistake. Clarity issued a profits warning and Mears is the subject of a bear raid, while NCI would seem to be the victim of an unattached website. Clarity and Mears are now below the portfolio's buying price and their continued membership must be called into question.

I suppose Clarity's difficulties should not come as a surprise. The retail environment is deteriorating and more and more shop chains are warning of difficult times. Clarity, providing software for leisure and retail activities, was not particularly encouraging at its halfway mark when it managed to turn a £400,000 profit into a £663,000 loss. Orders taking longer to be clinched was one influence, but there were then hopes that much of the ground lost would be made up in the remainder of the year, which ended with March. Well, although Clarity won some impressive contracts, it is still a question of delay bringing dismay. It seems that none of the key deals being negotiated have evaporated and, therefore, benefits could flow in the current year. The shares were recruited two years ago at 29.5p; they have since hit 50p, but are now, as I write, looking dejected at around 21p.

Last month I expressed my belief that the unexpected share slide that greeted Mears' results would soon be reversed. Unfortunately, the decline has continued. From a year's high of 326p, and around 300p when the figures were released, the shares now bump along at a miserable 245p or so. Some analysts were disappointed with the results, particularly the treatment of pension cash.

There is also talk of margin pressure, plus a slowdown in the home care business. And famed short seller Evil Knievil, aka Simon Cawkwell, chipped into the debate on the website: "I am told that the chances are they [Mears shares] see 200p sooner than they see 300p. Interestingly Bob Holt, Mears' chairman, has not climbed into the shares; he would if he thought them cheap."

But the support services group, which reported peak underlying profits of £31.3m, is not without City support. A number of analysts have produced encouraging comments, expecting further progress. One stockbroker firmly on Mears' side is Canaccord Genuity, which has reiterated its buy recommendation with a 389p target price. I hope CG is on the ball. The portfolio paid 272p.

NCI, a roadside assistance and vehicle recovery group, is traded on the Plus share market. Much to my surprise I have discovered there is an official-looking website that has no connection at all with Plus Markets Group, the company that runs the fringe market. Strange as it may seem I was directed to the unofficial site by a woman at PMG when it was revamping its internet presence around the turn of the year. And this off-beat webpage has caused me considerable grief. Without any share trades (the last was at 30p in January) and not a whisper from NCI, the site's ups and downs pages showed that NCI had plunged from 30.5p to 14.25p. Yet on PMG's own sites the price remained at 30.5p. It appears that 14.25p was a rogue price, completely fictitious. It remained in place for some days, before being changed to the more realistic 30.5p on Monday and then, rather strangely, reverting to that unfathomable rogue level.

I note that a former constituent, English Wines Group, was also hopelessly out of line. The PMG sites priced the shares at 12.5p, yet the unattached rival had 23p a pop. EWG's last reported trade occurred last month, with shares changing hands at around 11.5p.

An unauthorised rival is always welcome. But it should get its facts, in this case share prices, spot on. I have not established whether the unattached internet pages carry any weight when it comes to dealing. I suspect not. But it features advertisements from Plus constituents and stockbrokers. The mystery site has yet to respond to my approach.

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