No Pain, No Gain: 'Some old portfolio villains are showing signs of life again'

No fewer than 13 constituents have, for one reason or another, been dumped from the no pain, no gain portfolio since it first appeared in 1999. Six were sold at a profit: the rest, unfortunately, failed to justify their recruitment. But I am pleased to see one of our "villains" appears to be staging a comeback and the shares, although still well short of our buying price, have put on a strong performance.

No fewer than 13 constituents have, for one reason or another, been dumped from the no pain, no gain portfolio since it first appeared in 1999. Six were sold at a profit: the rest, unfortunately, failed to justify their recruitment. But I am pleased to see one of our "villains" appears to be staging a comeback and the shares, although still well short of our buying price, have put on a strong performance.

Global Group, now called Canterbury Foods Group, has had a torrid time. Its problems started when it lost a contract to supply beefburgers to the giant Burger King fast-food chain. Already heavily indebted, it was in no condition to absorb such a devastating blow. Profits, at more than £6m, disappeared and the group slumped deep in the red. Last year it lost £2.3m, and was a further £3.4m on the wrong side in the first half of this year.

On the surface, hardly the recipe for a share recovery. But investors are pinning their hopes on new management and a much more lean and focused approach. As part of a reorganisation, Canterbury sold its successful meat-trading division, with the ubiquitous Vesty family supporting the purchasers, for £11.8m. A further £1.9m came from a cold-storage sale.

The cash went towards cutting the debt. The remaining business, making and supplying such staple ingredients of our food culture as sausages, meat pies and, still, beefburgers, was reshaped, becoming the group's sole activity.

A share consolidation and a move downmarket to the Alternative Investment Market (AIM) completed the new look. The portfolio lost half its money on Canterbury, bailing out at 10p a share. The shares are now 34p, equal to 3.5p in their old form. Clearly, it will be a long, hard slog to recapture past glories.

But the former Hazlewood Foods duo, Paul Ainsworth (chief executive) and Alison Everatt (finance director), appear to have made a sound, if unspectacular, start and my hunch is this particular Canterbury tale will improve with age.

Paramount, another former constituent, has also taken on a new life. The old pub company now owns the Groupe Chez Gerard restaurant chain. Its first results, since winning what was an acrimonious takeover, recorded a meaningless £800,000 loss. The new chief executive, Nick Basing, said the group was since operating profitably with like-for-like sales over a 77-day period up 0.5 per cent. Chez Gerard runs 23 restaurants, five having been closed by the new regime.

The shares have also retreated to AIM. Paramount's pubs were sold after Stock Exchange red tape blocked an ambitious bid to more than double the estate. Before getting the taste for restaurants, it endured a Spartan existence as a cash shell. I do not think investors have ever witnessed such a multitude of these quaint creations, operations with money in the bank but nothing much in trading assets. They drift along until the cash runs out or an unquoted business is discovered which wants a quick route to the stock market.

Busted flushes from the great internet burnout have helped swell the ranks of shell companies. Indeed, such is the competition among shells for suitable unquoted buys that Paramount alighted on Chez Gerard, which was an already-listed company.

Encouraged by its pub prospects, our portfolio descended on the shares at 15p. It sold when Paramount became a shell at 25p. The shares are now 22.25p, having been down to 13.25p this year.

I have chronicled the experiences of two old portfolio members as I ponder whether to retain Springwood, the night-club chain. The shares have not shown any exuberance since my comments last week. I am also wondering about City of London Public Relations.

Last week, I was unaware when I said I intended to keep the shares, that it had at long last sold its e-mail archiving business, where it has, in effect, a 75 per cent interest. It's a rather disappointing deal. The headline sale price is about £1.5m but only £428,000 is being paid up front. The rest should roll in from royalty payments. A 1 per cent stake in the buying company, the unquoted Connected Corporation, and other royalties are also part of the sale.

Now City of London's only trading involvement is its original City public relations operation, now small and loss-making. At the end of March, it had listed investments worth £5.6m. It is looking increasing like a cash shell and unless the chairman, John Greenhalgh, produces action soon there seems to be little point in hanging on.