No Pain, No Gain: No cut and run as the minnows are looking good
Saturday 17 March 2007
Deciding when to pocket a profit - or accept a loss - can be one of the most difficult exercises facing an investor. I have been wondering just how much longer my two star performers, Myhome International, a franchise group, and Prezzo, a restaurant chain, can continue to deliver.
Both have contributed lavishly to the No Pain, No Gain portfolio. Myhome was picked up at 15.5p and stood at 78.5p at the time of writing. Prezzo has gone from 17.25p to 77.75p.
In the eight years of the portfolio's existence I have made some daft sell decisions. For example I dumped Mears at 71.5p, congratulating myself at the time because the shares had more than trebled the portfolio's money. They have since hit 380p. Anglo Pacific is another I allowed to escape. I sold at 15p; imagine my dismay as the price topped 160p.
So my hesitation over selling high flyers is, perhaps, understandable. But it is impossible to win them all and as stock market professionals are fond of saying: "It is never wrong to take a profit."
Still, Mears and Anglo Pacific haunt me. Particularly as I regard the portfolio as a buy and hold exercise. Consequently I will hang on to Prezzo at least until I digest next month's profit statement. It should make appetising reading; I do not anticipate having to sell. And I have decided to stick with Myhome, following an intriguing piece of research on the company.
Equity Development suggests pre-tax profits in the 12 months to the end of September should nudge £1.9m, against £734,000 last time. For next year a figure approaching £4m is predicted. The shares are, therefore, selling at 25.5 times this year's projected earnings and 12.5 times next. Quite a high rating but one, I feel, that does not fully reflect the explosive growth Myhome is expected to generate. Equity's analyst Andy Edmond reckons the shares should hit 100p.
Myhome paid Equity to undertake the research. Paid-for coverage is an established feature of the small-cap world. Many brokers shun stock market tiddlers when undertaking research. They feel the small fry do not produce enough share trading to justify the cost of conducting a detailed probe. So investors in junior companies are often denied any analytical study. So firms such as Equity perform a much-needed service.
However, it is not difficult to see the dangers that could lurk in paid-for studies. The temptation to produce a blue-sky offering just to please a demanding client company is obvious. I have frequently been impressed by the quality of sponsored research and I am not aware of any attempted abuse. Equity has researched Myhome in the past and its forecasts have proved reliable and perceptive.
Myhome was created by the Unilever detergent behemoth. After developing an expensive computer infrastructure it decided home cleaning did not fit with its other operations and sold to a rival residential cleaning business run by Russell O'Connell.
For a couple of years the enlarged company - aiming for the "cash rich, time poor" fraternity - jogged along fairly quietly. But in the past few years O'Connell, underpinned by Unilever's computers, has expanded, spreading into gardening, car and oven cleaning and bathroom and kitchen refurbishment. Other activities, such as carpet cleaning or plumbing, are likely to be added,
Franchising is the name of the O'Connell game. The group now has around 300 franchisees and is actively recruiting. It is now developing ventures in Australia, Ireland and Spain.
At the turn of the year Myhome shares were elevated from Plus to the Alternative Investment Market (AIM). The price has since touched 86p, helped no doubt by a meeting with private client stockbrokers.
My decision not to cut and run has also been influenced by the presence of Nigel Wray and Stephen Hemsley on the shareholder register. They took part in a £7m cash-raising exercise with serial investor Wray collecting 15.4 per cent and Hemsley 5.6 per cent.
Both are also involved in the highly successful Domino's Pizza franchise spread, where Hemsley is chief executive. Wray and Hemsley are already sitting on handsome profits; they paid 40p a share. The cash injection and the duo's franchising know-how should be of immense benefit to the highly ambitious and talented Myhome management.
Under new state pension rules we will all be much worse off
Interest-only mortgages return to give more flexibility to borrowers
Scam alert: make a big noise to beat the crooks
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Five Questions On: GB Energy's new tariff
- 1 iPhone 7 (or iPhone 6S) leaked pictures show similarities to older model — but Apple is fixing the biggest issue of all
- 2 David Cameron refers to 83-year-old Labour MP Dennis Skinner as 'Jurassic Park'
- 3 Alton Towers Air breaks down: 80 people stuck on broken down Monorail during heatwave
- 4 'Help me I'm trapped in a factory' messages keep being found on bottles of vitamin water
- 5 German ethics council calls for incest between siblings to be legalised by Government
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
Day In a Page
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.