Hyperactive

This will likely save chief executive Richard Glynn from getting the sack, an outcome that looked a good bet 12 months ago. It also means shares in Ladbrokes will stay in the Bearbull Income Portfolio even though their price remains well below my stop-loss level. Two years ago I was dim enough to pay 162p for each of the fund's 12,000 shares, but today the stock is offered at 134p. That price generates a 6.6 per cent dividend yield, based on 2014's promised pay-out of 8.9p, and prompts the thought that it would be a good entry level if Ladbrokes really is now a recovery play.

That depends on the extent to which its focus can switch from systems installation and cost-cutting to growth led by marketing and product innovation. Certainly, the company's bosses are much more upbeat than a year ago, although Mr Glynn always talks a good story. Even so, in the UK's high street, where Ladbrokes has about 2,250 shops, life will remain a competitive grind, squeezed between the competition - chiefly William Hill (WMH) - regulatory threats to gambling and the decline of horse racing and dog racing. Management's response is to close underperforming shops - 29 in the first half on the way to shutting 50 during the year - and install new gaming machines as rapidly as possible. Ladbrokes installed 9,000 machines at a break-neck pace in time for football's World Cup and increased its self-service betting terminals - a key means of attracting younger punters into betting shops - by 350 to 1,700.

Nor is it yet certain Ladbrokes has turned its digital side into a growth engine. True, it produced decent figures in the first half - across its UK digital operation, customer sign-ups grew 37 per cent year on year and active accounts were up 9 per cent. Better still - though from a low base - active mobile accounts grew 74 per cent on the year and amounts staked via mobile rose 105 per cent; as a result, turnover from mobile platforms now exceeds amounts staked via desktop computers. Yet, as Mr Glynn acknowledges, mobile-using customers are difficult to keep happy. They promiscuously flit from platform to platform, continually demanding the stimulation of innovation.

Despite this, the Ladbrokes dividend hardly looks threatened and could grow modestly. Look at it this way - this year's promised pay-out costs £82m; in contrast, even in the past two trouble-strewn years Ladbrokes has generated average free cash of £122m. With the company in some sort of recovery mode, cash generation should rise - especially as capital spending may drop - leaving scope for dividend growth. There may be enough implied growth to warrant a fair value around 160p a share. Maybe that's insufficient to justify buying, but it's adequate reason for hanging on, especially as the share price may swing above fair value once recovery mode is clear.

Besides, by Bearbull's standards, I have been dealing hyperactively. As I indicated last time (Bearbull, 22 Aug), I have sold the income fund's holding in Vodafone (VOD) and lightened the one in GlaxoSmithKline (GSK). In addition, for the third time I have trimmed the holding in Carr's Milling (CRM); this time selling £9,000-worth of stock at 1,729p apiece. The price has been tailing off since May but - after its meteoric rise of the past five years - may have more averaging down to do. Anyway, I have a stop-loss to sell the remainder at just over £15.

Meanwhile, I have added holdings in currencies fund manager Record (REC) and aircraft charter specialist Air Partner (AIP) as detailed in the table and explained in the magazine of 22 August. Had I dealt before that issue was published, I would have paid about 15 per cent less. Blame my laziness for that, but readers who want to follow suit may want to see if the prices of the two drift off, although Air Partner's first-half results are due on 23 September.

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