No Pain no Gain: Why I'm calling time on pub and hotel giant Six Continents

I have checked out of Six Continents, the hotels and pubs giant that had little difficulty surviving the unwanted attentions of entrepreneur Hugh Osmond. With the tax year ending, it seemed an ideal time to quit and lock in profits.

By selling I am going against the long-haul policy of the no pain, no gain portfolio. Indeed, 6C was my last recruit, joining in October last year. Normally I would have held on, particularly as it seems destined to attract even more corporate action. But two influences prompted me to indulge in a little short termism.

One is the fragile state of the stock market; the other is that if I had held on to the shares, I would probably have had to pump in more cash. Achieving a profit of 77p a share is, I realise, no big deal.

But in these volatile conditions, the stock market adage that it is never wrong to take a profit comes to mind. In this tax year, the portfolio has snatched handsome gains. Don't forget it sold two stalwarts, Mears, a support services group, and Inter Link Foods, a cake-maker, bringing a near-£15,000 gain in. But another share ditched, Gowrings, a car repair and Burger King fast-food restaurant chain, incurred a loss of nearly £1,800.

Even before my modest profit on 6C, I was above the capital gains tax threshold. Gowrings helped reduce my liability but I would still face an uncomfortable bill.

I have said the no pain, no gain portfolio is a simple exercise; in a bid for transparency even dealing costs and dividends are disregarded in my calculations. It follows then that the demands of the taxman are also blissfully ignored.

But if I were to be faced with a capital gains tax bill, I would not be short of distressed, loss-making shares to unload to reduce the demand. Profile Media is nearly a write-off; nightclub and trendy bars chain Springwood is not all that far behind.

But without a need to cushion a tax liability it seems worthwhile hanging on to my two disasters. They have, admittedly, caused far too much pain. But I am an eternal optimist and having shipped so much punishment it seems preferable, although not necessarily sensible, to hold on.

My other reason for selling relates to my policy of putting £5,000 into each constituent as part of my bid to keep the portfolio as simple as possible.

Assuming 6C manages to reach its demerger date next month without attracting a takeover bid, I will be left, on present form, with stakes in the region of £2,800 in each of the standalone companies, Inter Continental Hotels and the pub side, Mitchells & Butlers.

So, to retain the £5,000 ceiling, I will have to sell one of the shares, which would complicate and undermine the £5,000 requirement, and top up the remaining holding or buy to bring the two in line with the rest of the portfolio. Selling seems the simplest policy.

Mind you, I am convinced I am giving up a potential profit. Mr Osmond's attack highlighted 6C's vulnerability. The ease with which he was defeated was due to the inadequacy of his bid – too much paper, not enough cash – rather than any great merit in the 6C defensive argument.

As standalone companies, Inter Continental and M&B will be brutally exposed to takeover marauders. Word has it that a host of hoteliers, with or without venture capitalists in tow, are circling Inter Continental. And predatory VCs seem certain to attack M&B, the name of a famed old Midlands brewer swallowed by Bass before it relinquished its brewing heritage and transmogrified into 6C.

And the ubiquitous Osmond may continue to haunt the 6C men whom, as the battle raged, he described as "muppets". I think it unlikely he will attempt to buy the hotel arm; but the 2,000-strong pubs chain must appeal to him.

After all, it is behind the bar that he has achieved his greatest triumphs. He acquired the old Bass tenanted-pubs estates and then went on to buy the Allied Domecq pubs chain after an uproarious knock-about battle with another former brewer, Whitbread.

Although his skills have been honed on tenanted pubs and their particular needs, he must look forward to the chance of translating his financial talents to the managed pubs that make up the M&B spread.

The departure of 6C means the portfolio is left with 13 constituents. I must admit to being a trifle superstitious and I will feel rather uncomfortable until I recruit another member.