No Pain, No Gain: Stock market bull run is no fun for this investor

The No Pain, No Gain portfolio has, sadly, failed to reap any benefit from the stock market's recent bull run. Since I last discussed its performance two hitherto profitable constituents have fallen into the red; one of them collapsing quite alarmingly.

Lennox is the source of my dismay. The food and drink distributor operating in Spain has had an appalling time, with an unseemly boardroom bust-up followed by a pathetic set of interim figures. Not surprisingly the shares are pale shadows of their former selves. They are now 33.5p (after crashing to 22p) against 64.5p when recruited. It is difficult to see things getting much better.

Peter Voller, the ousted chief executive, still sits on 21.54 per cent of the capital and has probably been deterred from selling his stake by the slump in the share price. Until cleared the overhang will remain a drag on the shares. Clearly Lennox is an uncomfortable setback for the portfolio. Should the shares fall further - say to 20p - they will be sold without further ado.

The group managed a profit of only £93,000 at the half-year stage. It looks as though it will struggle to reach the £1.7m produced in its last full year. I am surprised by the upbeat nature of its interim statement. It is impossible to ignore the feeling that the Lennox management is more than happy with the display. But, worryingly, it offers little guidance on likely second-half profits.

The Lennox setback has contributed to the portfolio's profit shrinking to around the £72,000 mark. With the stock market enjoying something of a charge - FTSE has topped 5,500 points - such an outcome is disappointing. Still the occasional hiccup is to be expected and although Lennox and one or two other constituents are causing some anxiety I am not at the moment planning any major changes. Indeed with the stock market seemingly in good form there must be every chance that the portfolio will resume its profits progress.

Its true that the economy is encountering a few stresses and strains but shares remain cheap and in these low interest rate days many provide enticing yields. It is not difficult to alight on major companies, with solid records and reasonable prospects, offering handsome returns, often above four per cent. Shares of the portfolio's two FTSE constituents, the brewer Scottish & Newcastle and support services group Rentokil Initial, are on at least four per cent yields.

Rentokil, endearingly referred to in the stock market as the "royal rat catcher", remains at the centre of one of the most fascinating and outrageous takeover bids the City has ever witnessed. Sir Gerry Robinson's pursuit of the group has been well documented and I do not intend to dwell on the manoeuvring taking place.

Suffice to say I will probably stick with the management, although I could be tempted to snub both predator and defender and snatch a modest profit.

I will not be a party to supporting Sir Gerry's exorbitant signing on fee. I appreciate that as chairman of the drinks group Allied Domecq, he helped the portfolio to a handsome profit when Pernod Ricard mounted a £7.4bn takeover. But his efforts at Allied, where he behaved as a conventional chairman, have little in common with his machinations at Rentokil.

Besides Scottish and Rentokil my only major player is Stagecoach, the bus and train group. I am pleased to see that its shares have recovered from a poor run that took them down to nearly 100p. At 112.5p, they also offer a sound yield - 3.1 per cent.

Yields are not so important down among the smallcaps where most of the portfolio's cash is invested. The stock market undercard contains a host of relatively young and (hopefully) growing companies. Many cannot afford to pay dividends.

If their resources are sufficiently strong that they are able to grow and reward shareholders at the same time then investors get the best of both worlds. Of the portfolio members six do not pay dividends (although one is promising its first distribution) and two have recently joined the dividend list but have so far been content with modest payments.

Dividend payments play no part in my calculations when charting the progress of the portfolio. My shares sink or swim on their stock market display.

On the other side of the equation I should point out that dealings costs are excluded and I rely on the mid-market price. I realise that this formula can sometimes give me a modest advantage over other investors but it was chosen for a very good reason - old fashioned and often-neglected transparency.

cash@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
i100
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
Arts and Entertainment
The Queen (Kristin Scott Thomas) in The Audience
theatreReview: Stephen Daldry's direction is crisp in perfectly-timed revival
Sport
football
Finacial products from our partners
Property search
  • Get to the point
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

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power