No Pain, No Gain: 'It's time to say good riddance to a couple of portfolio losers'

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It is an unhappy farewell for two no pain, no gain constituents. I've decided to swallow my pride (and losses) and dump the shares of City of London Group and Springwood. Accepting defeat is rarely an enjoyable experience. Still, I think it is better to lick my wounds rather than soldier on in the hope these two bombed-out shares will stage a recovery.

City of London was bought at 117.5p, Springwood at 131.5p. The damage to my wallet is substantial, with the shares sold at 46p and 13.5p respectively. The only redeeming feature is that the losses have largely been included in my recent updates.

So the portfolio's profit is little changed. I am looking around for suitable candidates to replace the loathsome twosome. And I do not intend to dilly-dally. The portfolio now consists of 13 constituents. As a superstitious old soul, I do not enjoy presiding over such an unlucky number and intend to break the spell as soon as possible.

But I could easily avoid the embarrassment of unlucky 13 by dispensing with my other horror share, Profile Media. I do remain hopeful that its management will salvage something for shareholders. In addition the portfolio has suffered such a sickening loss that the time to sell has passed.

Recently, the price strengthened, with the shares featuring on occasions in the daily list of major movers. Although in percentage terms they did well, it was only a penny or so and at the 4.5p touched, at best, the loss remains embarrassingly large. The flurry of interest stemmed from Profile's admission that it was in talks to sell some operations.

I should have sold City of London much earlier. In the madcap internet boom the shares topped 900p. Foolishly, I held, even during their ragged retreat. The group, I felt, had a more sophisticated internet approach than most. It had three ventures, each seemingly with a realistic future. And it cleverly ring-fenced its exposure. Even so, at the end of the day two of its internet investments were mothballed and the third sold at a disappointing price.

Overall, City of London is being obliged to absorb painful losses. It is easy to criticise the management, headed by a one-time Fleet Street hack, John Greenhalgh. Yet it behaved far more responsibly than many hi-tech players. As far as the portfolio is concerned, the real villain of the piece is, of course, yours truly, who so lamentably failed to sell when the shares were in the stratosphere.

Today, CoL is left with a small, loss-making public relations business that seems to have suffered as group management wrestled with the internet involvement. The company is little more than a cash shell. In a letter to shareholders Mr Greenhalgh concedes that under Stock Exchange listing rules City of London is no longer a trading operation but will henceforth be regarded as an investment company.

It is a rather more impressive shell than many former internet stars. Its investment portfolio is worth about £6.5m before borrowings of some £3m. Still, unless Mr Greenhalgh can produce a scintillating deal, the group appears to face a mundane future. During its 15 years or so as a quoted company, it has displayed the occasional inclination to flex its muscles. But until it heard the siren call of the internet it was generally content to jog along as a public relations group, ploughing profits into its investment portfolio.

I am not interested in shells or near-shells. They are hit or miss. I sold Paramount when it unloaded its pubs and became a shell. It was in the wilderness for a few years before this year alighting on the restaurant chain, Groupe Chez Gerard. It could be years before City of London ventures forth again.

Springwood is a sadder case. The shares were flying high as the veteran night-club entrepreneur Adam Page slowly developed the group. Then he had a rush of blood and went, at the wrong time, on a shopping spree. Now Mr Page has departed and the group's banks have a dominant say in its future.

I cannot see Springwood regaining its past glory and would not be surprised if it became the subject of a knock down sale. I hope not. Its Zanzibar concept is one of the best, some would say the best, in what has become a beleaguered industry. Although there is an argument for sitting tight and waiting to see what happens I have, reluctantly, decided to walk away.

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