No Pain No Gain: Farewell to an old friend, but we're still ahead

 

The no pain, no gain portfolio has been forced to sell the shares of Hargreaves Services, the coal-to-transport group, following their fall to 700p last week. Earlier this year, the price comfortably exceeded 1,200p and I was happily congratulating myself on picking such an outstanding stock. Then came a profits warning – and many shareholders watched miserably as their rewards evaporated.

It is, however, with a degree of sadness that I have ended Hargreaves role. After all, it is the longest-serving constituent, having been recruited more than five years ago at 417p. But after the group surprised – even shocked – the stock market with a downbeat trading bulletin earlier this year I warned that, to preserve at least some of the portfolio's dwindling profits, I would sell the shares if they hit 700p, With the price slumping to 675p, I had to deliver on my promise. This week Hargreaves produced year's pre-tax profits up 16.8 per cent to £43.1m with a 14.8 per cent dividend increase to 17.8p a share..

The profit warning, however, related to the group's Maltby coal mine in South Yorkshire. Its problems had little impact on the figures just announced but will damage the current year's out-turn. There is even the possibility the mine will be mothballed or closed. With Hargreaves regarded as a glamour stock such difficulties – no matter how well they are handled – produce a savage investment reaction. The stock market, it is often said, does not take prisoners. Clearly the Hargreaves crash is another example of the relevance of this battle-scarred observation.

Still, I may not wave a final farewell. Before the Maltby problems emerged, some City analysts were predicting the shares could go on to hit 1,500p. In view of Hargreaves' then-impeccable profits performance, such thoughts were realistic. So, if I get the impression the group is set to recapture its old exuberance, I will think about re-recruiting the shares.

Until Maltby's problems emerged, the management had covered itself in glory and there is no reason to suspect the group will not recover from a rather humiliating reversal of fortunes.At one time, Hargreaves rivalled Booker, the cash and carry chain, as the portfolio's most profitable investment. But Booker has had the field to itself, with Whitbread, the leisure group, taking second spot as its shares more than doubled.

Booker continues to thrive. A half-time trading statement indicated that sales had advanced 3.3 per cent with a sharper increase recorded in the second quarter. Cash in the bank grew from £59m a year ago to £70m. Of course, the hurdle facing the group is Makro, the loss-making cash and carry chain, acquired earlier this year in a £140m deal.

The Office of Fair Trading has still to pronounce on the get-together and, consequently, Makro's performance is not consolidated. Chief executive Charles Wilson describes trading at the former German owned business as "challenging" and it has already been indicated that it could be a short-term drag on Booker's progress.

The shares have been in fine form recently, although there is just a hint the interim trading statement has reminded some investors about the problems at Makro. The shares had reached 98p – and, I suspect, many were waiting for the magic 100p to be breached – but there is, as I write, a shade less exuberance around the stock. Still at 94p, the portfolio is recording a handsome gain from the 24.5p paid in January, 2009. As I have pointed out in the past any investor who followed the portfolio into the shares should consider selling at least half their holding, thereby locking in a profit and enjoying a free ride with the remaining stake.

But enough harping on success. The portfolio has suffered some savage losses that have restricted overall profits. Even so, a package of shares offers investors a degree of protection against the ups and downs the stock market frequently endures. In the portfolio's 13½ years' existence, there have been some appalling losses, yet it is comfortably in profit.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
News
REX/Eye Candy
science
News
A photo of Charles Belk being detained by police on Friday 22 August
news
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

    £40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

    C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

    £45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

    DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

    Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

    Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

    £50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

    Day In a Page

    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone
    Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

    What is the appeal of Twitch?

    Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
    Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

    How bosses are making us work harder

    As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
    Manufacturers are struggling to keep up with the resurgence in vinyl records

    Hard pressed: Resurgence in vinyl records

    As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
    Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

    A tale of two writers

    Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
    Could a later start to the school day be the most useful educational reform of all?

    Should pupils get a lie in?

    Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
    Prepare for Jewish jokes – as Jewish comedians get their own festival

    Prepare for Jewish jokes...

    ... as Jewish comedians get their own festival
    SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

    A dream come true for SJ Watson

    Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
    10 best cycling bags for commuters

    10 best cycling bags for commuters

    Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
    Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

    Paul Scholes column

    Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
    Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

    Kate Bush shows a voice untroubled by time

    A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
    Robot sheepdog technology could be used to save people from burning buildings

    The science of herding is cracked

    Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
    Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

    This tyrant doesn’t rule

    It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?