No Pain, No Gain: Received wisdom fails to predict a pubs bonanza

The stock market, as befits a long established institution, is awash with well-meaning advice, purporting to offer investment guidance. "Never average down" and "Always adopt a strict stop-loss policy" are two of the most widely quoted. Yet anyone who blissfully ignored those two overworked pieces of investor folklore would have made a killing if they had played in the shares of a company in one of the most unfashionable corners of the City.

Old-style pub chains, where the licensee rents or leases the property, are enjoying an investment boom. Yet the atmosphere is much more sober at the other extreme of the drink retailing market - trendy bars and nightclubs. The shares of Enterprise Inns and Punch Taverns are riding high, as investors ignore huge debts and concentrate on what seems to be an infallible trading formula. But high rents and soaring staff costs, as well as tight margins and tough competition, have devastated the shares of the high-street groups, once the darlings of the stock market. The Government's ill-directed attempts to curtail so-called binge drinking are also creating difficulties for them.

A number of chains, such as Old Monk and Springwood, have gone belly- up. SFI, the Litten Tree group, struggles in the unquoted wilderness, and Yates fell to a cheapskate takeover bid. The shares of other leading players Luminar and JD Wetherspoon are depressed, a long way from their peaks. But in the past few months, the shares of Regent Inns, known for its trendy Walkabout and Jongleurs outlets, have nearly tripled. They are now 87p against only 30p in October.

Timing is everything in the stock market. And any investor indulging in a little Regent action could easily have come a cropper. But from the autumn of 2003, when the shares last topped 100p, there have been splendid opportunities to average down and reap a handsome reward. All it needed was a little courage. I'm afraid I lack such a quality and the Regent romp escaped me. But spare a thought for any investor lumbered with the stop-loss mentality (the idea is to lock in a loss at a predetermined level, usually 20 per cent below the buying price). They were mostly cursing their luck as the shares staged their merry recovery.

It is surprising that in this electronic age, the stock market still clings to time-honoured saws. They are often contradictory. "It's never wrong to take a profit" and "Always leave something for the market" stand oddly against such phrases as "Always let your profits run but cut your losses". I suppose the most absurd of them all is "Sell in May and go away, buy again on St Leger Day". That may have had some substance years ago, when the rich left the country to spend their summers in the south of France. But it has absolutely no relevance in today's climate. If there is a message to be assimilated from the conflicting nature of this time- honoured but surely discredited guidance, it is that flexibility is the essence of sound investment and rigid rules should be ignored.

Regent is one of those companies that enjoyed a staggeringly successful early stock market life. It then fell from grace - not once but twice. In the distant past, shares nudged 400p before an accountancy hiccup sent them stumbling and led to new management.

For some time, it looked as though Regent had got its act together and the shares topped 200p in 2001, with profits coming in at pounds 14.6m. But then trading deteriorated and a chain that had clearly over-expanded felt the pinch. A rights issue had little impact and profits slipped away with a pounds 6.6m loss last year. Banking agreements were broken and the final dividend axed. The old management departed and new faces arrived. Regent's shares hit an all-time low.

But the newcomers, Bob Ivell and John Leslie, previously with Scottish & Newcastle, seem to have turned around Regent's fortunes. Trading has improved and the stock market is hoping for further cheer when the interim figures are rolled out next week.

Although the Ivell/Leslie contribution has been significant, it has, I suspect, had only a marginal impact on the shares. Much of their recent strength stems from takeover hopes. Financier Robert Tchenguiz had built a 13 per cent stake, and there are stories that he plans a bid or wants to engineer a deal, perhaps merging Regent with his unquoted pub empire. Regent is an intriguing recovery play - almost suitable for the No Pain, No Gain portfolio. But without corporate action the shares look to be ahead of events - unless next week's results prove to be outstanding.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
PROMOTED VIDEO
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
Sport
sport
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there