Derek Pain: Portfolio takes a quarterly dip amid market chaos

The no pain, no gain portfolio has suffered another disappointing quarter and with a brutal budget due next week I would not be surprised if further punishment is inflicted on my little collection of shares in the months ahead.

Mind you, the stock market has already experienced a pretty hideous time this year. Just how much the likely coalition measures have been discounted has still to be resolved but I expect unsettled days ahead with consumer shares likely to be major casualties.

It is, however, worth recording that many leisure and retail shares are already well below levels hit only a few years ago. For example, Marston's, the brewer and pub owner recruited last year, was approaching 500p in 2007. In earlier years the shares were even higher. They are now a mere 97.5p. The group is trading quite well and has ambitious plans for pub openings. It expects to open around 60 substantial, food-led outlets in the next few years. Yet, like most of its competitors, it could face acute problems if, as some suggest, the drinks industry is hit with sharply increased excise duties as well as a higher rate of VAT. Drink tax has escalated dramatically in recent years and many pubs are also still suffering from the smoking ban and recessionary influences, although improved food offerings have provided relief. But pub meals could be clobbered by any VAT increase.

Still, as a buy and hold investor relatively short-term discomforts have to be tolerated. A former chairman of the London Stock Exchange advised small shareholders, after an alarming share slump, to "put their heads down and let the wind blow over them". The chairman in question was Lord Ritchie of Dundee. He was speaking in the 1960s when shares, after a spell in the doldrums, suddenly suffered their biggest one day fall since 1938 with the then major measurement, the FT30 index, crashing 18 points to 261.3. It did not take long for the old chairman's remark to be proved appropriate as a sustained rally subsequently materialised.

The portfolio is now showing a profit of £96,000, down a little over £1,000 from its March calculation. Share price movements have not been severe but modest falls have hit some constituents. I remain fairly relaxed about my collection. English Wines Group is causing a little concern and, of course, the fates of my walking wounded, Lighthouse and Private & Commercial Finance, are never far from my thoughts. I am, however, encouraged by the possibility of Nighthawk Energy selling a stake in its Jolly Ranch field which I discussed last week. There have also been some interesting drilling developments on the Jolly spread.

Printing.com, the small items printer, is one to buck the trend. Its shares, stripped of the 2.1p final dividend, are a few coppers higher than the March level, no doubt reflecting an 8 per cent-plus yield. As internet tipster Tom Winnifrith points out a more realistic 6 per cent yield would produce a 52.5p share price.

G4S, the security giant, has also made progress. My newest recruit continues to feel the occasional nudge of takeover speculation. However, the only corporate activity I have detected is a modest expansion into Brazil with an acquisition that could cost £23.5m.

Hargreaves Services, the coal mining to transport group, has experienced an indifferent three months. The shares have wilted largely because of the uncertainty generated by its endeavours to buy the mines of UK Coal or even the entire group which embraces an extensive property portfolio. But the talks have been aborted, prompting stockbroker Brewin Dolphin to comment that investors should now refocus "on the underlying strength of the group". It reckons the shares are a buy and has a 955p target price.

The group's flirtation with loss-making UK Coal was announced in March. Hargreaves has considerable coal interests but only one deep mine. The acquisitive group has put through a series of takeovers in recent years but UK Coal was its most ambitious foray yet. Presumably any deal would have forced Hargreaves to issue bucket-loads of shares and such a possibility is rarely conducive to a strong share price. A little before abandoning talks with UK Coal, Hargreaves fixed up a coal supply agreement with Energybuild, an AIM-traded Welsh mining group that is in the process of being taken over by Canada's Western Coal Corporation.