No Pain No Gain: Years of dedication and patience are rewarded after a bumpy ride
Saturday 18 January 2003
The no pain, no gain portfolio has enjoyed a relatively cheerful degree of corporate action since it was born nearly four years ago. Two of its three long-standing Footsie shares have generated take-over excitement. There was the bruising free-for-all when Punch Taverns and Whitbread indulged in an uproarious battle for the Allied Domecq pub chain. And, in its endeavours to become a global beer player, Scottish & Newcastle splashed out £1.2bn for the Hartwall brewing group, taking it into the Russian market.
But, reflecting my preference for the stock market's undercard, much of the activity has been pretty small stuff – like the construction group Galliford taking over its rival, Try, or Burtonwood Brewery buying a near 100-strong pub chain. Only on one occasion has a constituent been on the receiving end of a bid. Montana, an aspiring restaurant group, was the target. It was swallowed, in what turned out to be a profitable exercise for the portfolio, by Hartford, now largely a bars group but then nursing ambitions to become a major force in London's ever revolving eating-out business.
Now, however, we are in the big time. Safeway, my third long-standing Footsie share – my other Footsie stock, Six Continents, arrived late last year – has at long last collected the bid every City man (and his dog) realised was probably inevitable. It was one of my first recruits, joining the portfolio in April 1999. I alighted on the supermarket chain because of its (then) recovery potential and the perennial chance of takeover action. It duly delivered on the trading front.
My 1999 bid candidates were Wal-Mart, the US retail behemoth that subsequently descended on Asda, and Royal Ahold, a Dutch group. Now Safeway is the prize in a three-way battle. Wal-Mart has, like J Sainsbury, declared its interest in bidding, provoked into action by Safeway's acceptance of a cheapskate offer from the Wm Morrison supermarket chain.
I am, of course, pleased my long-term dedication to Safeway has been rewarded. It has been a bumpy ride, requiring considerable patience. Indeed, if I had adopted a stop-loss formula, the shares would have long ago been kicked out of the portfolio. I paid 248.5p; the price subsequently fell to below 160p, then went above 400p as the chief operating officer, the Argentinian Carlos Criado-Perez, an ex-Wal-Mart executive, inspired an impressive trading recovery.
But in the past six months or so the shares have lost ground. Although it appeared to me that the Criado-Perez magic was still producing results, Safeway was subjected to an intense City whispering campaign. Talk abounded that its revival was running out of steam and margins were being squeezed. It was wide of the mark. Still, with the shares weak it is perhaps not surprising that the chairman, David Webster, decided to open the bidding process by negotiating the Morrison offer.
However, I am not at all impressed by the terms of the all-share bid. It seems the Yorkshiremen at Morrison are attempting to extend their cut-price policy to the stock market. Quite clearly, monopoly considerations permitting, Safeway is worth much more than Morrison has put on the table. However, as Mr Webster no doubt intended, its bid has forced Sainsbury and Wal-Mart into action.
But shareholders may be unwise to merely sit back and watch the fun. In the present frenzied supermarket climate Safeway should command more than 300p a share – perhaps nearer 400p. But the company may not fall to the highest bidder. Political influences could prompt one of those absurd compromises that would leave everybody relatively happy except the poor, much-maligned shareholder. Morrison's adventure raises few, if any, monopoly considerations; Wal-Mart and Sainsbury know they have a monopoly fight on their hands.
There is still the chance of another bidder entering the fray. After all, Safeway probably represents the last chance of a supermarket carve-up in this country and a Continental group or even a venture capitalist could still be interested in barging in, particularly as Safeway is still underpriced.
On present form it seems unlikely that any of the three current protagonists will enjoy a complete victory. Morrison does not face monopoly problems but it is likely to be so heavily outgunned that its best hope is a dignified retreat. Perhaps it will collect a portfolio of stores as a consolation prize. For Safeway is finished. It is likely to be broken up, with Asda, Sainsbury and, perhaps, even Tesco, taking on its outlets.
The high level of uncertainty makes it unlikely I will wait until it is decided which brands occupy which Safeway shelf space. I will be happy to settle for a reasonable profit. Indeed, a level comfortably above 300p will be enough to tempt the no pain, no gain portfolio into selling.
Will your credit card rewards be scrapped following new EU rules on charges?
How planning can make your travel cash go further
What would happen if you put a statistician in a casino with £1m?
Simon Read: 'The fight must go on over equality on expat pensions'
Pension freedoms: How to deal with cold calls from scammers
- 1 Avengers: Age of Ultron: Nearly 700 German cinemas refuse to show movie
- 2 Man cooked alive with 12,000 pounds of tuna
- 3 X Factor in crisis as numbers of people auditioning plummets
- 4 General Election 2015: Stephen Hawking says he will vote Labour
- 5 Baltimore riots: Furious mother marches her son home live on TV
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
EU exit would hit UK economy much harder than neighbouring countries, study finds
Andrew Lloyd Webber: Phantom of the Opera writer mocked after issuing a warning about Ed Miliband and Nicola Sturgeon
General election 2015: Labour will toughen hate crimes legislation surrounding Islamophobia
iJobs Money & Business
£30000 - £38000 per annum: Recruitment Genius: They are a financial services c...
£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...
£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
Day In a Page
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
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, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
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 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 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.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
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.
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.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
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
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads