Derek Pain: Unexpected gains ease the portfolio's pains
No Pain, No Gain
Saturday 12 September 2009
The stock market revival is at last making a realistic impression on the no pain, no gain portfolio. Eight constituents – compared with only two not so long ago – are showing gains and some of the walking wounded have managed to narrow their deficits.
But into every life, as the old song goes, a little rain must fall. Private & Commercial Finance, a hire purchase group, last week slumped to a new low of 6.75p after it was forced into a deeply discounted share placing.
So, PCF joins my other horror shares. Although Pubs 'n' Bars, the 100-strong pubs chain, has more than doubled from its bottom of the barrel level, it is still only 7p (after hitting 10p) against my 23.5p buying price. And Green CO2 has performed even more disastrously, standing at 1.25p compared with the 27.5p the portfolio lashed out six years ago.
Lighthouse, the wealth management group, is another to have eroded the portfolio's wealth, although not so substantially. The shares are 10.25p against a 17.5p buying level. Maybe interim figures, due later this month, will offer a little inspiration?
Still, despite my mishaps and other dreadfuls dotted around, the stock market performance has exceeded most expectations. My own guess was that shares would begin their recovery towards the end of the year. So their gain, from a low base, has certainly been quicker – and more substantial – than I envisaged. Further progress could be made in the months ahead although it would, at this stage, be foolish to become wildly optimistic even if more mega deals appear.
Don't forget many of the more astute players have probably yet to bank the profits they have made since those dismal days in March. However, institutional investors appear more bullish than for a long time and are more likely to hang on to the shares they have acquired.
The portfolio's profit now tops £96,000, with past successes making a major impact. Its still a long way from the peak of nearly £150,000, hit in those balmy days before the stock market – and the world's economy – tumbled off the cliff. Still, it has made significant progress since March when the return was £77,000.
I have yet to decide what to do about PCF, although I will probably dump the shares. I do not relish embracing another penny dreadful. I held on to Pubs 'n' Bars and Green CO2 for too long. Then there was little point in realising the small cash pots that remained. But a hat-trick of disasters has such a doleful ring that I do not think the portfolio should suffer such an indignity.
PCF's inability to raise £2.3m by offering new loan notes to replace expiring paper is not entirely a surprise, although chairman Michael Cumming must regret his comment that "a significant number" of loan note holders were rolling over their interests into the new issue. In the event, only £389,000 was raised – despite a 10 per cent coupon and the possibility of converting into shares at 25p.
To help plug the cash gap, the group has placed shares at a heavily discounted 6p, raising £1.35m. It is still short of all the necessary replacement cash. I would have been more sympathetic if the board displayed its confidence by taking a substantial role in the placing. But it appears that only the chief executive, Scott Maybury, took up shares, and he subscribed for only 166,660, lifting his stake to 2.94 per cent. Tony Nelson, the deputy chairman, put £10,000 into the loan note issue.
PCF remains profitable although it is expected to make little, if any, progress this year, producing around £200,000. A sharp improvement is likely next year with, perhaps, £900,000 possible.
The group has long-standing bank funding although it is having to pay more for its cash. However, the loan note fiasco, besides heavily diluting existing shareholders, will impact on its ability to build its business.
It all adds up to a subdued outlook. When I descended on the shares I viewed them as a recovery play. Initially I was not disappointed. But I am now.
There has been some encouragement from Whitbread, the leisure group. It has revealed that the recession is not hitting it as hard as many suspected. And its shares have responded dramatically.
- 1 Husband creates spreadsheet detailing wife's 'excuses' for turning down sex
- 2 Saneie Masilela, 9, marries Helen Shabangu, 53 years his senior, for the second time
- 3 UK pirates will get four warning letters a year
- 4 Why I'm on the brink of burning my Israeli passport
- 5 Is Gideon Levy the most hated man in Israel or just the most heroic?
Malaysia Airlines flight MH17 crash: 'Nine Britons, 23 Americans and 80 children' feared dead after Boeing passenger jet is 'shot down' near Ukraine-Russia border
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
- < Previous
- Next >
iJobs Money & Business
£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...
£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...
£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...
£70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...
Day In a Page
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar