No Pain, No Gain: One final opportunity for the weakest links

The portfolio has made modest progress since my February review, shrugging off a rather disappointing stock market performance.

The portfolio has made modest progress since my February review, shrugging off a rather disappointing stock market performance. Takeover activity at drinks David and Goliath - Merrydown and Allied Domecq - has more than offset modest weakness in a few constituents.

Merrydown's progress was inevitable, once the agreed takeover bid was rolled out. I have decided to hang on to the shares until the £36.7m offer goes through. It is going to be a long, tortuous process, as the cider and soft drink firm is surrendering its independence via a scheme of arrangement.

The offer, confirmed just after my last review, is 170p a share; the current price is 167.5p. It was 148p at the time of the last calculation. There is a temptation to ignore the odd 2.5p and sell, thereby harnessing our profit. I may yet decide to do so, but for the moment I am prepared to hang around and wait for the extra £350.

I commented on the continuing bid speculation surrounding Allied in my February portfolio review. Well, this week, what the stock market had for some time suspected emerged into the daylight.

Yes, Allied was in play and it could well be the victim of an American/French carve-up. The Allied action, which admittedly has been a long time coming, also influenced another constituent around which speculative rumours often swirl, brewer Scottish & Newcastle.

Overall, I remain relatively content with most constituents, although, as I have observed in the past, I am not entirely happy with some displays. I am beginning to feel that something of a shake-up would not come amiss, as I find myself tolerating a few long-time laggards.

My two latest buys, Georgica and Goals Soccer Centres, have yet to cover themselves in glory. Their performance tends to underline the difficulty of alighting on suitable newcomers. I do not regard either as short-term punts, so I am prepared to bide my time.

Profile Media remains my disaster share. The group appears in need of more capital and I would expect news of shareholders being tapped for more cash - or asset sales. It has fixed up an intriguing loan-repayment deal with the Barclays banking group and it would be a pity if lack of resources prevented it from keeping its side of the bargain.

The portfolio has lost most of the £5,000 it invested in Profile. And there seems little hope of its getting its money back. Still, with the loss fully written down, it seems pointless bailing out at this late stage just to collect £100. I should have sold ages ago, but I didn't. Until the shares slumped into the "penny dreadful" category, I had dreamt of a recovery. At one time, the group's rescue plan appeared not only realistic, but impressive. But the turnaround has yet to materialise.

Profile is the only constituent - past or present - where almost all the £5,000 stake money has disappeared. Overall, the portfolio is recording a £69,000 profit on a £170,000 outlay. Dividends - and I have often embraced high-yielders - are ignored in the calculations. So, too, are tax considerations and dealing costs. The portfolio was launched in February 1999. S&U, an obscure finance house, was one of my first recruits. The shares have turned out to be a sound investment. They have rarely been below my buying price, although the company suffered one nasty hiccup.

Door-to-door lending does not enjoy a particularly attractive image, but S&U has managed to avoid the pitfalls that have trapped some of its rivals. Its other main activity is providing car hire purchase, another area with its detractors.

The group's pre-tax profits last year rose 8.9 per cent to £9.8m. Again, the car side, a relatively recent addition to its operations, did well, pulling in £2m. This business is expected to achieve profits of about £2.45m in the current year.

S&U is one of my high-yielding constituents. And its income attractions were underlined by a 2p increase in the yearly dividend to 31p. Like so many family companies, it has always been quick to reward shareholders. It has one of the most progressive dividend policies on the stock market.