Derek Pain: The portfolio is ready to bring in some fresh talent
No Pain, No Gain
Saturday 09 January 2010
The no pain, no gain portfolio managed to claw back some lost ground last year with profits recovering to nearly £98,000, against 2008's £79,000. But the gain is still well below the peak of £150,000, hit in those halcyon days before the credit crunch devastated the stock market.
I hope further recovery will occur this year. My forecasting record, however, could be regarded as pretty poor – and even though I suggested Footsie would end last year at around 5,300 points, that was more by luck than judgement. A reasonable undershoot, you may think, particularly as most projections were shrouded in gloom.
I am not wildly optimistic about 2010's possible performance. A year of "taxation, taxation, taxation" is likely to hit consumer shares. Still, I believe the index may approach 6,000. Peering into the future is a hazardous exercise and the observation that there are only two kinds of forecasters – those that don't know and those that don't know they don't know – springs to mind in this prediction season.
The portfolio has suffered a number of severe setbacks in the past few years. However, past successes and its wide spread of interests have allowed it to stay comfortably in the black, despite the savage mauling shares encountered before last year's surprising rally.
Following the demise of Pubs'n'Bars, the portfolio is down to 14 constituents. I plan a fresh injection of talent but my first action this year is to dump Green CO2, now called Green Compliance, at, I'm afraid, a substantial loss.
I touched upon my disillusionment with the company in 2009's final column. Nothing has happened since to reduce my dismay at the treatment of existing shareholders in its controversial capital reorganisation.
When shares hit turbulence I am prepared to hang on, hoping for recovery. But the portfolio's Green stake is now so tiny that there is little, if any, chance of it ever becoming a worthwhile holding. So there seems no point in holding on.
The departure of Green, formerly Wyatt, means the portfolio starts the year on unlucky 13. I hope to escape from such an embrace as soon as possible. There are a number of shares under the microscope, including two Plus-quoted companies, Bluehone, a financial group, and NCI Vehicle Rescue, a roadside breakdown service.
Plus has made striking headway since it commenced dealing in all AIM shares in August. Trading volume has ballooned as more market men use its facilities for dealing in AIM stocks.
Since it was launched almost 11 years ago, the portfolio has embraced three Plus shares. English Wines Group remains a constituent; so does Printing.com, although it subsequently switched to AIM. Myhome International represents the disaster element. Although the portfolio actually made money on the shares, the company went bust after moving to AIM.
Three AIM constituents have reported in the festive break. Hargreaves Services issued an upbeat trading statement ahead of interim profits, due next month. SnackTime produced half-year pre-tax profits of £809,000 (£171,000) with the operating figure up a less impressive 11 per cent at £2.3m. However, Private & Commercial Finance, the hire purchase group, continues to struggle, although interim profits of £121,000 were in line with expectations. For the full year the group should manage about £220,000, which compares with £930,000 achieved a couple of years ago. Still, the shares have their attractions, particularly if the group manages to return to winning ways next year when stockbroker Westhouse Securities believes profits could top £1m.
The shares appear to be stuck in a rut at 8p. But if the recovery predicted by Westhouse materialises they should shake off their malaise.
Another stockbroker, Daniel Stewart, has a 15p target price which is near to net asset value. Unfortunately the portfolio lashed out 19.5p. I was, following last year's £1.4m placings, tempted to unload the shares. But PCF has been around a long time and it has a certain resilience about it. The portfolio's involvement is, unlike its stake in Green, still reasonably substantial and there is a case for staying on board – at least for the time being.
Finally, Mears, a fully listed constituent. It is endeavouring to expand its home care division with a £27m share exchange bid for Supporta. Whether it has the field to itself remains in doubt. A US group, Allied Healthcare International, could counter the Mears strike.
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