The Investment Column: Kick back and relax with M&B

No sign of Clinton take-off on the cards - New tricks will take time to work at debt-hit HHC

Buying Mitchells & Butlers shares is the investment equivalent of settling down with a pint of real ale in the armchair of your favourite local boozer. Kick back, relax, in the knowledge that the company is being well managed, and sup on a warm but not too fizzy dividend.

Buying Mitchells & Butlers shares is the investment equivalent of settling down with a pint of real ale in the armchair of your favourite local boozer. Kick back, relax, in the knowledge that the company is being well managed, and sup on a warm but not too fizzy dividend.

The company owns 2,000 pubs, including well known high street chains such as All Bar One and O'Neill's, and restaurant venues such as Harvester, but the bulk are mainly suburban and residential locals.

This diverse portfolio helps it avoid the hangover from competition on the high street, which led to thumping profit warnings from JD Wetherspoon and Regent Inns. With food now making up a third of sales, M&B benefited from the bad weather this summer (which made a Sunday pub lunch an appealing way to keep dry) just as it did well last summer (when people guzzled beer to keep cool).

Head bartender is Tim Clarke. He has done a little financial cocktail shaking, raising debt secured on half the property assets and returning £500m of the proceeds to shareholders. But mainly he has focused on improving the operating performance of the group. He has got more out of his managers and staff to offset rising employment costs. He has run clever price promotions to snare new customers without, in the round, having to reduce prices by more than 1 per cent. And he has used the extra buying power from those extra volumes to improve the terms he gets from his food and drink suppliers.

A trading update yesterday proved sales are still on an upward trend and the virtuous circle intact. And that is before any uplift the company is able to generate from refurbishing or rebranding its operations.

Further securitisations of the estate could make more cash available for shareholders or for acquisitions (perhaps of JD Wetherspoon, perhaps of Whitbread's poorly performing pub restaurants). Either way, the company is likely to continue at its sedate pace, and the 3.6 per cent dividend is worth having.

Settle in for the long term.

No sign of Clinton take-off on the cards

There simply aren't enough Clinton Cards shops in the UK. The high street cards, wrapping paper and gifts chain has 747 outlets so far, but reckons we can stand another 250 - so it is snapping up leases across the UK's high streets and shopping centres at a rate of 40 a year.

It is a good business, still dominated by the Lewin family which founded it, with Don as chairman and the son he named the business after, Clinton, driving the expansion as managing director. Thanks to improvements to the range of cards on offer, the pair have squeezed out an extra 2.2 per cent in sales from the stores on top of the boost from extra selling space.

Pre-tax profit for the half-year to 1 August was £2.6m, up 18 per cent and ahead of forecast. But the company makes 90 per cent-plus of its profit over the festive season, so it is the ghost of Christmas Yet To Come which haunts the shares.

We tipped them a year ago and, while they breached £1 at one point, they are now back roughly where we started at 86p. There are a couple of reasons to be more cautious at this point this year.

The first is a worrying rise in stocks of as-yet-unsold cards on the company's books. These might work their way through the system in due course without the need to flog them off cheap, but it can be a warning sign of problems to come.

The other concern is that the opening of a few stores currently slated for just before the Christmas rush might be delayed, knocking out a vital first trading period.

New investors should hold off for now.

New tricks will take time to work at debt-hit HHC

Highbury House Communications has been a dog of a stock. A new management team hopes to teach it new tricks.

HHC was built up with the aim of creating a new power in magazine publishing, but its titles are not, in the main, anything you are likely to have heard of. They are also mainly in decline. Worse, the group has built a mountain of debt that now equals more than twice the value of its equity.

The rescue plan from Mark Simpson, the new chief executive, is in its infancy. It involves a fire sale of the business publishing arm to concentrate on a stable of niche consumer titles which include Real Homes, Fast Car and Front, an also-ran of the men's monthlies market. In this core business, in the first half, circulation revenues fell 3 per cent and advertising fell 7 per cent. The situation will be slow to stabilise since falling circulations may have to be reflected in reduced advertising rates.

Don't think yesterday's below-forecast results, additional profit warning and asset write downs will be the last of it. The new finance director hasn't even got his hands on the numbers yet and there is a lot of internal restructuring to try to carry out in the second half.

There is a way out of the mess - if the company can persuade its bankers to renegotiate debt covenants - but reinvigorating the core titles is too far off for shareholders to throw Mr Simpson a bone yet.