Market highlights perils of assessing your portfolio

No Pain, No Gain
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Stock market volatility often makes a mockery of portfolio valuations. A splendid example occurred last week when I discussed the ups and downs of my little share collection. For the sake of conformity, the prices used are those ruling at the end of trading on a Monday. Yet, by the end of the week some constituents were much higher and some slightly lower.

Of course, the share prices in last week's quarterly No Pain, No Gain portfolio valuation must stand. Therefore in the past three months its value fell by more than £4,000. But I cannot resist the temptation to point out that, had I delayed my calculations, the humiliating retreat would not have happened.

Booker, the cash and carry chain, and Hargreaves Services, the coal to transport group, were the main influences. Both produced exhilarating trading bulletins. At a more subdued level and merely reflecting a sudden change in the stock market mood, leisure group Whitbread and pubs chain Spirit finished the week higher. Among those to give a little ground were Mears and Rivington Street Holdings.

Since chief executive Charles Wilson and his team moved into Booker in 2005, the transformation has been dramatic. When the ex-Marks & Spencer man arrived he was accused by one prominent retailer of, in footballing terms, moving from AC Milan to Scunthorpe United, for the cash and carry chain seemed to be going nowhere. Now it is riding high, enjoying a stock market capitalisation of £1.151m. And, according to one Sunday newspaper, the revival man has no plans of quitting. He is quoted as saying: "Everyone knows I am not on the market...I'm more interested in taking Booker forward than another turnaround opportunity." Besides putting through two successful acquisitions in this country, Booker is attracted to India where it has one warehouse operation going well in Mumbai and is due to open in another Indian city, Pune, this week. A second Mumbai venture opens in December.

In an upbeat trading statement, that clearly surprised a gloom and doom stock market, Mr Wilson reported half-year sales up 8.5 per cent (with a like-for-like figure of 6.5 per cent) and a second quarter uplift of 7.6 per cent. The once highly-indebted group now has £58m in the bank. Half year profits will materialise next month. The shares, 67.9p when I reviewed the portfolio, are, as I write, around 75p (after 77p following the figures). Hargreaves shares rose from a portfolio-related 885p to comfortably top 1,050p. Results came in better than expected. Underlying profits were up 20.7 per cent at £46.7m with clear pre-tax profits emerging at £36.9m (£30.7m). The year's dividend is 14.8 per cent higher at 15.5p a share. Chairman Tim Ross says he views the long term future "with confidence". Europe was the star performer with operating profits recording a remarkable 106 per cent increase. Stockbroker Charles Stanley has a 1,155p target price on the shares.

The performance of Booker and Hargreaves underlines the difficulty of assessing portfolios. For many valuations an overall average price over a period of time is adopted. I do not intend to adopt such long-winded exercises. My calculations, despite last week's experience, will remain based on end-of-session prices.

Another constituent offering trading results was SnackTime, the vending group. Its shares edged ahead a few coppers. Although it was possible to detect a profit of a little over £1m, the basic results suffered from reshaping costs following take over activity. The group, which provides vending machines to a variety of businesses, as well as a range of publicly-funded centres, acquired a company called Vendia for almost £11m, satisfied mostly in shares. Putting the two together made sense as SnackTime largely operates in the snack and cold drink market while Vendia is a big power in hot drinks. But restructuring costs have taken their toll with the combined group suffering a £2.2m loss at the pre-tax level. Still Blair Jenkins, the chief executive, warned at the time of the deal it would not be earning enhancing immediately.

Although in this austerity age, SnackTime will not find life easy the company, assuming no more special costs, should achieve pre-tax profits, believes stockbroker Arbuthnot, of £1.5m this year.

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