No Pain, No Gain: Our Man's Portfolio: Chew over a tasty chain
Wednesday 18 August 1999
When the portfolio acquired a taste for the little restaurant chain in March the shares were 182.5p. So a 157.5p a share gain in less than six months is a result. But should I cash in, or stay with the enlarged group?
I recommended Montana because it was an intriguing young company which could have an exciting future. It was started by Mr Finch, a former investment banker who scored by spotting the early potential of nursing homes.
The shares were floated at 35p two years ago. They made steady headway, boosted in April when three prominent institutions pumped pounds 960,000 into the group at 200p a share. The Montana concept of American-themed, up- market restaurants has appealed to the London palate. It has five London restaurants with number six to open next month.
Mr Finch, who will be chief executive of the enlarged group, appears to have felt inhibited by the low-profile Ofex existence and clearly believes a move to AIM will improve the investment image and make it easier to raise cash for expansion. A year ago Hartford, then a traditional shell, acquired the Pharmacy whose investors include the artist Damien Hirst, spin-doctor Matthew Freud and businessmen Nigel Wray and Nick Leslau. It has not covered itself in glory since. But the arrival of Mr Finch in what is, in effect, a reverse takeover should improve its performance.
With the merger seemingly a done deal - shareholders with more than 50 per cent of Montana's capital have signalled their acceptance of the Hartford terms - the group is set to emerge as a powerful player in the fragmented restaurant market. On Ofex, Montana's shares are standing at 290p, reflecting some doubt about the strength of Hartford shares on AIM and, perhaps, illustrating some of Ofex's trading limitations. But with SG Securities underwriting a pounds 3.5m placing of its new consolidated shares at 62.5p, the 340p price is a realistic valuation at this stage.
The question that outside Montana shareholders have to answer is whether they want to stay with the enlarged group, holding Hartford shares, or cash in by selling in the market.
There is no rush to decide. Although a counter-offer would seem out of the question you cannot be completely certain until the formalities are completed. My inclination is to reserve judgement until the long merger process is almost complete. But whether I stay with the group, which expects to obtain a full listing next year, or not, the portfolio needs another fledgling. These shares are not for the proverbial widows and orphans but they do add a little spice to the proceedings.
It will be difficult, perhaps impossible, to alight upon another quickfire hit like Montana. But Ofex, and to a lesser extent AIM, have an assortment of bright young hopefuls which will either attract a bidder or develop into one of the more powerful players of the next millennium. It would, of course, be foolish to buy merely to get a little 'un on board
Allied Domecq is another portfolio constituent demanding a decision following the sale of its pubs estate to Punch Taverns. Much of the consideration is in cash paid directly to Allied shareholders although some Bass shares are on offer. I will, nearer the completion date, decide whether to stay with the slimmed-down Allied, accept any Bass shares and what do with the cash.
- 1 Which country would be hardest to invade?
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
- 4 Uploading pictures to find out how old you are gives Microsoft the right to post them wherever they want
- 5 Royal baby born: Unsuspecting parents walk out of the Lindo Wing to be greeted by media circus
Which country would be hardest to invade?
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
The man who filmed the Freddie Gray video has been arrested at gunpoint
Nepal earthquake: Many survivors receiving no help despite relief effort
Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
Indonesia executions live: 'Hysterical' families heard prisoners being shot dead by firing squad
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
EU exit would hit UK economy much harder than neighbouring countries, study finds
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...