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
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Chuck Norris pictured in 1996
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power