Money: Star names have to go

SHARE CLUB

There are now around 4,000 share clubs in Britain, meeting regularly to pool cash and invest in shares. For the past year we've followed the fortunes of the Reservoir Dogs, a group of London friends.

Our first meeting after the AGM proved a rather more cautious affair following news of the 41 per cent annual increase in the value of our shares. We decided it was time to do some pruning of the portfolio.

Our first priority is to balance up our portfolio by not having it too weighted in favour of one share - so we decided to sell half our stake in ARM, a stellar performer from the hi-tech sector. We also considered selling some of our shareholding in Oxford Glycosciences but, as the shares are only just above the price at which they floated on the stock market two years ago, we reckon there's a lot more value left in them yet.

Next up for consideration was Carlton Communications. We worry that Carlton's involvement in ONdigital is not going well. Carlton is gambling that its stake in ONdigital will be the group's salvation in the internet-driven multimedia age.

Carlton makes stacks of money from duplicating cassettes and processing cinema film, both of which are under threat from the digital warriors. Carlton has also had big problems in its TV companies, even though they're very successful. Sadly, ONdigital looks to have more than a few troubles. We decided to sell.

But media is important so we decided to buy another television company, Border TV. Border isn't cheap, but it is interesting. Sooner or later ITV will be composed of just two big TV companies, and neither of them will be Border.

Although its TV arm will be taken over, Border also has a huge investment in radio. We like radio, which is going to be transformed by the advent of digital technology. It will make someone huge amounts of money.

We have also decided, with much regret, to sell our shares in the Rolls- Royce aerospace group. We only bought these a few months ago but, despite a pretty steady stream of excellent news, the share price has slowly deflated by as much as 10 per cent. We really do think Rolls-Royce is a great company but you have to ask some tough questions: if the Rolls-Royce share price falls at the height of a five-year-long bull market, when will it pick up? Deep down, I suspect the City just doesn't like companies that invest huge sums in R&D and go head-to-head with giant American competitors. We may think it's callous and short termist but it's City sentiment that determines share prices.

To our two other big transactions. Neither Dialog, the information company, nor TransTec, the engineer, has done us proud. What to do with them? Choice one is to dump them - but when the share price is so low we won't get much back. And anyway, we still (sort of) believe in both companies.

Choice two is to leave them as they are and hope they'll pick up. Choice three is to take a gamble. Double your stake and double your chances of big gains. We've decided to double the admittedly reduced value of our holdings in both companies.

The logic is simple though risky. If we're right, these companies' share prices will swing back up sharply when a) Dialog finally deals with its debt problems and b) TransTec finally produces some interim results which show that it still can make decent profits in a recession.

The Far East has always interested us, and we've wanted ways of buying into the recovery story there. The one country that seems to be going great guns in reorganising itself fast and shedding idle businesses is South Korea. There aren't many ways of getting exposure to the market other than through unit trusts. Save & Prosper's fund is one of three focused on Korea and has the best performance.

All of which leaves us in an interesting situation: we have lots of cash. So what should we do with it?

A recent monthly broker's summary from Killik & Co said it all for us. Killik tends to stand on the rooftops and shout very loudly about growth- oriented shares like ARM or Psion, but even it has been counselling extreme caution. It is better, the thinking goes, to have a large pile of your money in cash ready to pick up bargains. The first key barrier Killik identifies is the 6,000 FT-SE 100 mark. When that's broken, it expects a bottoming out at around 5,700, triggering a whole load of buying opportunities.

And there are plenty of shares on our watch list. Stat-Plus, a steady, reliable stationery company supplying the legal world, is interesting, as is an investment trust concerned with hi-tech venture capital start- ups, Prelude. But there's nothing to lose at the moment from keeping your powder dry and waiting for bargains to present themselves.

n We are looking for other investors, in share clubs or not, to join a campaign to get directors of failing or fallen companies to answer for misleading private investors. Contact us at thedogs@theupside.com

We have also established our own website, as well as a centre for other share clubs to swap info and tips. Visit the Dogs section of www.theupside.com

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • 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.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions