No Pain, No Gain: Tough times are dragging my portfolio into the mire

It's time for the No Pain, No Gain portfolio's quarterly review. I'm afraid there is once again an ominous amount of pain to tolerate.

Like, I suspect, many portfolios, big and small, my overall performance is bolstered by the fat achieved in the past when the stock market displayed rather more exuberance than it has since the credit crunch started to worry investors last year.

Sadly, few constituents have improved on their June valuation. Most have either suffered increased losses or had their gains trimmed. One, Rentokil Initial, was dumped, with the portfolio losing more than half its cash. Three shares, Booker, Pubs'n'Bars and Whitbread, were added.

My June star was Nighthawk Energy, the US-focused oil and gas group. It is still in the ascendancy but its gain has been reduced. The shares were earlier this year at 116.25p; they are now 83.5p, against 98.75p in June.

The group has felt the impact of the energy sector coming off the boil. But it remains a promising oil-and-gas play. Indeed, the latest bulletins from its Jolly Ranch sites in Colorado are encouraging. One recently drilled well is almost at the output stage with oil due to be trucked to a local refinery. David Bramhill, Nighthawk's managing director, believes the Jolly project could establish the company and its US partner, Running Foxes, as "significant producers". The Jolly development is only part of Nighthawk's American dream. It has numerous other US oil and gas fields and a few have already achieved production status.

I am convinced Nighthawk is among the best of the junior energy plays. Many of its projects are forgotten fields, abandoned when, after early success, it became increasingly difficult to extract the remaining oil or gas. With fuel prices so low the ventures became uneconomical. Since then, soaring energy prices and better equipment have transformed the profit and loss accounts of these old wells.

Booker, the cash-and-carry wholesaler that is planning a move from AIM to full listing next year, has had some significant share shuffling since its inclusion. Baugur, the Icelandic investment group sold its 31.4 per cent shareholding and two other major investors trimmed their stakes. Kaupthing, another northern banking group, has collected a 22 per cent interest.

Mears, the support-services group, is nearer to recovering the post-results fall I discussed last week. Its revival has been helped by some heavyweight research, with a target price of 390p mentioned.

Private & Commercial Finance, the hire-purchase group, has fallen sharply since the June update. I suppose the shares are weighed down by the sub-prime debacle, although the last statement highlighted a strong profits increase and said the company expected progress to continue. Surely if PCF has suffered a subsequent setback it would have alerted shareholders. Pubs'n'Bars is another that has relapsed. But its nervousness is not difficult to trace. The pub business is in the doldrums. Although the pub duo is heavily indebted my guess is that the falls are far too steep and the shares oversold.

Shares of franchise group Myhome International suffered the humiliation of being suspended this week. It is unclear whether a potential investor will be prepared to replace an £8m loan that Lloyds TSB wants repaid immediately.

The portfolio is now 12 strong. I would like to lift its composition to 15 and continue to monitor a number of possible additions. Although the performance of my current share collection is uninspiring, the portfolio remains in profit. It now claims, helped by the three additions, a near £99,000 gain.

The peak performance – £143,000 – was achieved last year. Since those halcyon days, small-caps have taken a brutal hammering. Even so, I find such erosion of capital difficult to accept. Nevertheless, I am fairly relaxed about most constituents and believe they will recapture at least some of their past glory.

But any stock market revival is unlikely to be just around the corner and I would not expect the portfolio to achieve much improvement until the City atmosphere takes a distinct turn for the better.