No Pain, No Gain: Booker carries all before it to help me end a volatile year on a high


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The Independent Online

The No Pain, No Gain portfolio is set to end the year on a firm note.

Although the stock market has this week suffered a relapse, my little collection of shares should achieve its highest gain for some time.

Don’t forget that dividends (and dealing costs) are ignored. If they were included, rough calculations suggest the portfolio’s total reward as it heads for its 16th anniversary would be at a new peak.

Some past constituents, such as Scottish & Newcastle, Goals Soccer Centres and Merrydown, have made valiant contributions. Of the present batch Booker, the cash-and-carry chain, Essenden, the tenpin bowling group, and the leisure giant Whitbread have recorded substantial gains. So has the Spirit Pub Company, which, as takeover events unfold, is due to disappear into the maw of brewer Greene King in the first half of next year.

There remains the possibility of a counter-bid, with C&C, an Irish-based beer and cider group, the most likely to intervene. However, Spirit has made it clear it supports the Greene King offer.

Booker has made a remarkable revival since the shares were hammered by the supermarket price war and the big boys’ fixation with convenience stores. It was felt in many quarters that this two-pronged attack on corner shops – important customers of Booker – would knock their trading returns and possibly encourage some shop proprietors to scan supermarket shelves rather than seek bargains at cash-and-carry warehouses. Not only has Booker fought off such a danger but its appeal to caterers has continued to flourish, as have its various delivery services.

For some time, Booker has been the portfolio’s outstanding performer. But I must confess to worries when the shares fell from a peak of 176.5p in March – when the supermarket price war erupted – to around 115p in September. I even contemplated the unthinkable, selling my most successful investment. I’m glad I held on.

But I am not pleased I stuck with TEG, the environmentalist, and SnackTime, the vending machine group. TEG shares are suspended although SnackTime has returned after a brief share freeze. There is still a chance TEG will stage a comeback, but the last bulletin was not encouraging, containing the doleful comment “there may be little or no value remaining in the equity”.

At my last review TEG shares had nearly halved from the portfolio’s 8p buying price. They have now been written off, a setback to some extent although offset by the profitable sale of Findel, the home-shopping group. After allowing for the purchase last month of Fulham Shore, the aspiring restaurant chain, the portfolio’s cash resources are around £15,000. They will be bolstered when I give Spirit shares the old heave-ho, probably in the new year.

Its been a volatile year for the portfolio, which has to some degree mirrored the ups and downs of the stock market. During the year insurance broker Brightside was the subject of a profitable takeover bid. Besides Fulham, the other newcomer, Stock Spirits, recruited in April, suffered the indignity of following up its arrival with a profit warning. But the shares have recaptured quite a chunk of the slide that greeted the announcement. A profit warning also emerged from Mears, the support services group and long-time portfolio constituent, hitting the shares quite savagely.

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