The no pain, no gain portfolio starts the New Year in good heart and, judging by the plethora of bullish comments floating around, should make further progress during 2004.
I am, of course, with the bulls. Shares are remarkably cheap. Last year witnessed the end of the deeply depressing bear market that for three years devastated prices.
During this year, I would expect the FTSE 100 index to top 5,000, the level I predicted it would end last year. I was disappointed my unbridled cheer for the now departed 2003 was not fully realised but at least my optimism, if rather heady, was not entirely misplaced.
I have decided to lock in a modest profit on Safeway, the supermarket group about to sink into the smaller trolley of its rival, Wm Morrison. The portfolio's longest-serving member was recruited in recognition of its takeover potential. But I was looking for a rather more generous bid than Morrison's tight-fisted exercise.
Safeway is worth much more than the £3bn the bidder is offering. Still, the Yorkshire group cannot be faulted for gratefully accepting the cut-price bargain Westminster has presented it on a plate. New Labour-inspired silliness is responsible, and again we have witnessed commercial logic destroyed by political nonsense.
My £5,000-a-time rule would create difficulties if I accepted the Morrison cash and shares bid. I would have to buy more Morrison shares to accommodate the cash element.
There is also a question mark over Morrison's ability to swallow such a huge acquisition. So I have decided to bale out, pocketing a modest profit by selling at 282p.
Safeway's departure will again reduce the portfolio to the dreaded 13 constituents, so I have been casting around for additions. Bright Futures, offering equipment for the aged and disabled, is one I have been monitoring. But my enthusiasm has been blunted by a flurry of director sales and one corporate backer sold out completely.
The company emerged from a cash shell and I can empathise with the desire of its early supporters to lighten their loads. But I was disconcerted to witness Stephen Harpin (chief executive) and Lance Hickman (finance director) unloading, even if they remain significant shareholders.
The shares are 8.5p against 12.5p when I discussed them last month. I have not altogether abandoned interest and there could still be some mileage in them. The company is expected to hit break even for last year, with forecasts of a £275,000 profit this year. Mark Watson-Mitchell at SQC Research has a 20p target price on the shares.
I am still keen on Printing.com, the Ofex-traded online printer. I hear a research note is being prepared, which I would like to see before deciding whether to add the shares to the portfolio. Another share I find intriguing is Ofex, the AIM-traded company that runs the fringe share market.
Merrydown, the cider and Shloer soft-drink group which for a time hit 100p, is now the portfolio's star performer but the likes of Burtonwood Brewery, Galliford Try, the builder, and S&U, the consumer credit group, are others sporting handsome gains.
Owing to the £5,000-a-share structure of the portfolio I cannot top-slice. take some profit by selling part of a holding and retaining the rest, thereby enjoying a free ride. But I would not attempt to discourage any portfolio follower from disposing of, say, half their stakes in our high-flyers.
After all, it is never wrong to take a profit. I have, by the way, still got a sell instruction on Galliford at 40p.Reuse content