No Pain, No Gain: Time's up for English Wines Group, one of my 'walking wounded'
Saturday 16 October 2010
The tremors at Nighthawk Energy have helped prompt an agonising and perhaps sceptical reassessment of the No Pain, No Gain portfolio. My little investment exercise remains comfortably in profit but it could be embracing too many "walking wounded". I realise I am often slow to ditch a share. My inclination is to wait and see whether prospects improve. Sometimes they do, sometimes they don't.
When the stock market is deep down in the dumps – such as early last year when the Footsie seemed to be moving perilously close to 3,000 points – the temptation to sell can be overwhelming. But it would have been foolish to have succumbed, as this week's Footsie levels indicate.
I am not necessarily opposed to drastic selling action. Some observers feel the outlook for the world economy is so gloomy that investors should escape from the stock market while it is still possible. Others do not agree. It is, of course, a multitude of views that create a market – any market.
The portfolio is carrying what I would describe, in share-price terms, four "walking wounded" constituents. In addition to Nighthawk, which I discussed last week, I count Lighthouse and Private and Commercial Finance (PCF), both AIM-traded, and English Wines Group (EWG), a Plus share, as my endangered species. By a narrow margin, I decided to hold on to Nighthawk, although the shares are a long way from my 44p buying price.
I am also retaining Lighthouse. Although the shares have nearly halved, the accountancy group is profitable, dividend-paying and cash-rich. I am less convinced by PCF. It is making money – but not as much as some expected – and has not paid a dividend for five years. Last week some loan notes, offering 8 per cent, were converted into shares at 76p against a ruling price of around 6p. An astonishing deal. I suppose the note holder needed cash or felt there was no chance of the shares improving. Perhaps both influences prevailed.
I am not selling PCF, although, like Nighthawk, it could merely be a stay of execution. But I am dumping EWG. The shares have been a bitter disappointment. The portfolio invested in May 2007 at 20p, watched the price fizz up to 26p, and then suffered the torment of the shares slipping to 11.5p; as I write they are 13.5p.
Although the decline is not so sharp as PCF and Nighthawk, the profits outlook is far from encouraging. I had expected the company to be handsomely in profit by now – probably notching up more than £1m. But it has failed to deliver. Last year's profits were £62,000 and it recently uncorked a £63,000 half-time loss. A contributor to the setback was interest payments on a loan stock that will cost the company around £88,000 a year.
The notes, carrying an 8 per cent interest rate, were issued last year. It was one of those private placings from which the body of shareholders was excluded. Directors and a few others subscribed.
I hope EWG manages to increase quite dramatically its level of return, otherwise the loan, which is convertible into shares, will continue to have a sobering influence on what should be a promising enterprise. After all, consumption of English-produced grape wines is increasing and EWG complains demand outstrips its ability to supply. When I enlisted the shares, I realised it was a long-term investment. But the lack of progress has been quite debilitating.
The portfolio has one other Plus share, NCI Vehicle Rescue. It has performed quite well. The problems confronting the fringe Plus market, illustrated by its owner's "penny dreadful" share price, are being addressed. The outlook certainly seems a little brighter than a few months ago. Even so, I am reluctant to get too engrossed. But NCI does not deserve to stand in isolation and I believe the portfolio should accommodate at least one other fringe share.
I have therefore alighted on Rivington Street Holdings, a financial group I discussed in August, as the replacement share. RSH was recruited at 27.5p.
Finally, fully listed portfolio member Marston's: the brewing group last week rolled out an encouraging trading statement, indicating that year's profits should emerge at around £72m. The big question is: will the dividend be cut? We will know in early December.
Independent Partners: See how much you could save by switching credit cards. Compare now
Simon Calder looks at communities fighting back against the poachers
Arsenal 1 Everton 1: Substitute equalises with six minutes to go
booksGeese, gorillas, grandads... and growing up
food + drinkMichelin-starred Tom Sellers on being this year's hottest property
- 1 Hundreds arrested as Canadian police smash worldwide paedophile ring
- 2 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 3 The man who made Femen: New film outs Victor Svyatski as the mastermind behind the protest group and its breast-baring stunts
- 4 Mass murder in the Middle East is funded by our friends the Saudis
- 5 Japan cracks down on leaks after scandal of Fukushima nuclear power plant
- < Previous
- Next >
iJobs Money & Business
£25000 - £50000 per annum + Benefits + Bonus: Harrington Starr: C++ Server Dev...
£300 - £350 per day: Harrington Starr: Leading Electronic Trading Software Ven...
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...
Day In a Page
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden