How the 2011 Bargain Share portfolio fared

Ambrian Capital (AMBR)

Aim: Investment bank

Share price: 9.25p

Bid Offer-spread: 9-9.5p

Market Capitalisation: £9.9m

Website: www.ambrian.com

It has proved an annus horribilis for natural resources investment bank Ambrian Capital. A year ago, the company appeared to be in recovery mode and I was tempted in by a share price trading well below NAV of 32p including 17p a share in net cash. This should have protected the 1.5p a share dividend and provided a decent yield, so when the board axed the interim pay-out in September it came as an almighty shock. It also prompted a vicious sell-off that has depressed the share price to such an extent that the company now only commands a market value of £9.9m – below the £11m cash pile at the end of June.

Since then the disposal of investment banking subsidiary Ambrian Partners for £5.8m and the £4.3m proceeds from the sale of its London Metal Exchange futures and options brokerage business will have bolstered the coffers. The company also has an investment portfolio, worth £4.2m, consisting of mainly small cap commodity companies.

So although Ambrian's will be hit by huge write-downs when it releases results showing heavy losses in March, the shares are now trading less than my calculation of pro-forma cash. I rate the shares a hold.

Polo Resources (POL)

Aim: Mining investment company

Share price: 3.16p

Bid Offer-spread: 3.15-3.18p

Market Capitalisation: £71m

Website: www.poloresources.com

Commodities investment company Polo Resources has proved an incredibly frustrating holding as, having advised buying the shares at 5.2p last February, and banked a special 2p dividend in September, we are more or less breaking even despite the progress the company has made.

In fact, Polo has now taken control of Nimini, a company whose prospects are situated in the central-west Kono region of Sierra Leone and includes the Komahun Gold Project, which has an indicated mineral resource of 370,000 tonnes and an inferred mineral resource of 3.1 million tonnes. Results from a drill programme, announced last week, revealed high gold grades recovered and demonstrate the project's potential to host large-scale gold mineralisation at commercial values.

Polo also invested a further $5m (£3.2m) last week to up its stake in Signet Petroleum, a company I have discussed at length in the past. Signet has interests in exploration rights for hydrocarbons in four African countries: Tanzania, Burundi, Benin and Namibia. All four licenses are exciting, especially in Tanzania where Signet holds an 80 per cent interest in Hydrotanz, a company which has a production sharing agreement on the North Mnazi Bay.

In addition, Polo is looking at ways to unlock value in its holding in GCM Resources, a company developing the Phulbari coal deposit in Bangladesh. Polo owns 15.2m shares in GCM valued at £11.9m, or the equivalent of 16 per cent of its own market value.

Given the enviable track record of Polo's management and the fact that a large chunk of Polo's assets are in cash reaped from successful investments, the shares remain a buy priced 30 per cent below NAV of 4.56p a share.

Terrace Hill (THG)

Aim: Property development and investment

Share price: 12.5p

Bid Offer-spread: 12.25-12.75p

Market Capitalisation: £26.2m

Website: www.terracehill.co.uk

Shares in Aim-traded property developer and investment group Terrace Hill have underperformed the market and at 12.5p are priced on less than half the company's last reported EPRA triple NAV of 26.6p a share, albeit that was 23 per cent below the figure in September 2010.

The decision to sell off its residential portfolio over the next 12-18 months led to part of the asset write-down as the company plans to redeploy its capital into the commercial market where it specialises in food retail and office developments. In the last two years Terrace Hill has completed three large foodstore schemes at Bishop Auckland, Manchester and Helston and has a current development programme totalling 652,000 sq ft of new space including a new 50,000 sq ft Sainsbury store in Sedgefield announced last week. This highlights the healthy demand in this niche area of the property market even though Tesco's decision to rein in its store expansion has dampened investor sentiment.

So with a £240m pipeline in place, the shares rate a recovery buy on less than half NAV and one that should be driven by the sale of the residential portfolio which will highlight the value on offer.

Noble Investments (NBL)

Aim: General financials

Share price: 188p

Bid Offer-spread: 187-189p

Market Capitalisation: £28.4m

Website: www.nobleinvestmentsplc.co.uk

Shares in rare coin and stamp dealer and auctioneer Noble Investments are at an all-time high after the company's New York auction of ancient Greek coins last month raised a bumper $25m (£16.2m). The news prompted analyst Eric Burns at WH Ireland to upgrade his EPS forecast for the year to August 2012 from 17.2p to 19.7p. This is the fourth earnings upgrade in the past 12 months. Mr Burns also expects the full-year dividend to be raised from 4.7p to 5p, which means the shares, at 188p, are rated on only nine times earnings estimates and offer a prospective yield of 2.7 per cent.

These estimates are not without foundation as Noble's subsidiary, AH Baldwin, has been chosen to auction two significant coin collections this year, including the Bentley Collection of over 1,200 coins which will be auctioned in London between May 2012 and May 2013. Baldwin will also be auctioning off a collection of more than 4,000 Classic Islamic rare coins, with the first auction taking place during the London Islamic week in April.

With interest in rare coins and stamps on the rise, especially from wealthy buyers in the Far East, Noble's earnings upgrade cycle has further to run and I continue to rate the shares a buy.

Victoria (VCP)

Home furnishings

Share price: 350p

Bid Offer-spread: 345-360p

Market Capitalisation: £23.9m

Website: www.victoria.plc.co.uk

Manufacturing and supplying carpets has been anything but a thread-bare business for Victoria which has been enjoying a significant profit recovery in recent years. In fact, broker Arden Partners predicts that EPS will increase by 12 per cent to 18.6p in the 12 months to April 2012 and pencils in a further rise to 21.2p next year. It is also a business that has led to some corporate activity which culminated in the board putting the company up for sale last month.

BDO has been appointed to conduct the formal sale process with the aim of realising maximum value for shareholders. I expect some serious offers to be tabled, especially as the asset-backed company has the benefit of a lowly-geared balance sheet and strong cash generation to pay down borrowings taken on by any acquirer. We don't have long to wait either as all parties need to submit bids by the end of this month.

True, a consortium holding 46 per cent of the shares disagree with the board's decision to put the company up for sale, so it will be interesting to see what their reaction is to the offers when they come in especially if any come close to the company's last reported NAV of 565p a share. I advised buying Victoria shares at 230p a year ago, although most of you would only have been able to buy at 255p, since when we have banked 9.5p a share of dividends and seen the price rise to 350p. Await news on the bids for the company.

Pilat Media Global (PGB)

Aim: Business management software

Share price: 25p

Bid Offer-spread: 24.5-25.5p

Market capitalisation: £15.0m

Website: www.pilatmedia.com

Pilat Media Global is fairly unusual in being dual listed on London's Alternative Investment Market and the Tel Aviv stock market, but it is a company that continues to attract the attention of stakebuilders.

Following a buying spree in the autumn, Eurocom Investments, a company in which Pilat's non-executive director Alex Rabinovitch is a 49.9 per cent shareholder, now holds a 21.87 per cent stake in Pilat. It is not alone as SintecMedia, a private company also engaged in the development and marketing of business management software for broadcasters, has upped its stake to 23.9 per cent. It's easy to understand why as the business is very profitable and on an underlying basis made operating profit of £1.3m in the first nine months of last year.

The company also has a strong balance sheet and net assets of £18.6m included net cash of £3.8m at the end of September. To put this into perspective Pilat only has a market value of £15m so strip out the cash pile and those operating profits are being valued on a single digit earnings multiple.

Admittedly, the market has yet to react to the stakebuilding as a dispute with Fox Television cast a cloud over the shares. However, this has now been settled and Pilat has received an $850,000 payment from Fox and its insurers which will boost that cash pile further. In my view, the derating in Pilat's shares is completely overdone and I continue to rate them a buy.

Bargain Share Portfolio 2011 update

Shore Capital (SGR)

Investment bank

Share price: 19p

Bid Offer-spread: 18.5-19.5p

Market capitalisation: £44.9m

Website: www.shorecap.co.uk

Investment group Shore Capital, a specialist in principal finance, equity capital market activities and alternative asset management, has been hit by a triple whammy of events.

Firstly, given the extremely challenging market conditions in the second half of last year, only one of the 11 funds it manages was in positive territory by the year-end. To make matters worse, when the company reports full-year results next month it will have to take a write-down on its £5.2m investment in Puma Hotels after it agreed a standstill agreement on lease rental payments with the hotel operator Barcelo. Profits will also be hit by a budgeted loss on the controlling interest in German telecoms business Spectrum which was acquired last year.

Admittedly, investors have already reacted to the news and the company is now valued at £45m, 40 per cent below its last reported NAV of £74.6m although that discount will narrow after the write-downs. The shares also yield 5.5 per cent and with founders Howard and Graham Shore large shareholders it will be a sign of their confidence whether the final dividend of 0.625p is held next month. Ahead of those results I rate the shares a hold.

First Property Group (FPO)

Aim: Property fund manager

Share price: 17.6p

Bid Offer-spread: 17-18p

Market Capitalisation: £19.3m

Website: www.fprop.com

Shares in European property fund manager First Property Group have held up pretty well considering the turmoil in the eurozone.

Operationally the company continues to prosper from having 71 per cent of its £274m assets under management in Poland, a country whose economy grew by around 4.2 per cent last year. The main risk to the business is a weakening of the zloty against the euro because most tenants pay their rents in euros so any currency weakness would equate to a rental increase and would dampen demand. However, after depreciating over the summer when the eurozone crisis was at a critical stage, the zloty has strengthened almost 7 per cent against the euro since December as markets warm to the European Central Bank’s major efforts to ease the banking sector's liquidity crisis in the region.

The fundamentals case to buy the shares is healthy, too. Marking First Property's two directly held commercial office properties in Warsaw to market value adds around 20 per cent to its reported NAV of £16.8m and means the shares are priced 3 per cent below adjusted book value. The asset management business continues to trade well and EPS rose over 60 per cent to 1.6p in the six months to September 2011. This prompted broker Arden Partners to upgrade its full-year pre-tax profits by 25 per cent to £3.8m to give EPS of 2.5p which means the annual dividend of 1.06p is covered almost 2.5 times.

Trading on only 7 times earnings estimates, priced below book value and yielding 6.0 per cent, the shares remain a medium-term buy.

PV Crystalox Solar (PVCS)

Solar-wafer manufacturer

Share price: 5.2p

Bid Offer-spread: 5.18-5.2p

Market capitalisation: £21.6m

Website: www.pvcrystalox.com

Investors turned off the lights at solar-wafer manufacturer PV Crystalox Solar after the company revealed last summer that strong downward pressure on selling prices – resulting from aggressive cost-cutting by larger Asian rivals – would lead to a second-half trading loss.

The short-term outlook remains poor and don't expect any improvement in trading volumes to offset the impact of lower selling prices. However, the share price derating has been so severe that the company is now only capitalised at £21.6m, an eye-watering 90 per cent below the June 2011 NAV of £244m. Most of those assets are in plant, equipment and inventories and although the net cash pile of €41.3m (£34.4m) will have been depleted by trading losses, and assets will take a severe write-down when the company reports next month, I still believe the business can trade through this difficult period as it tries to realign its cost base. The shares are a speculative buy at a bombed-out 5.2p.