Healthcare lifts Ethical Portfolio

After last month's setback, the Portfolio has resumed its pattern of strong gains. It turned in a decent performance in a strong market environment.

Last time round the Portfolio was up 155.5% since inception. The market over the same period was up 17.3%. This time the Portfolio

is showing a gain of 167.2%. The market is now up 21.3% since inception. We've had a 12 percentage point gain in the Portfolio versus a four percentage point gain for the index.

On a total return basis since inception, the index is up by 45.9%. There have been no dividends in the Portfolio this time round.

Renewable Energy Holdings (REH) has been one disappointing feature. I suspect there is a major fund raising around the corner and I have no doubt that this is the reason for the past month's rather dismal showing.

On the plus side, Vindon Healthcare (VDN) has finally come to life. I have a personal holding in this stock and I don't mind admitting that, prior to the company's recent results, I was getting so frustrated with the lack of movement in the stock that I was considering selling.

It is one of the perennial problems with smaller companies. Often even the best ones lack sufficient market exposure for their virtues to be fully reflected in the price. It creates a buying opportunity for the astute stock picker, but you sometimes have a long wait before anything much happens. I've been caught like this before and sold out just before a major upswing in the price. So when I find myself thinking like this, I generally hold off doing anything for a few months.  

Vindon expands

This approach has paid off with Vindon, which recently achieved some highly positive press coverage ahead of its results. These showed the group's expansion plans to be well on track. One of the attractive things about this company is not only that it has a profitable niche business, but also that it is increasingly generating recurrent income from renting out its own on-site stability storage space to pharmaceutical companies.

When the business was family-controlled, it stuck simply to dealing with the pharmaceutical business. Now it is branching out into other areas like blood banks, food testing, and evidence storage for the police and criminal justice system. A move to larger premises next year should give it room to allow these new areas to take off.

I said last time that I was looking for another stock to add to the Portfolio. Unfortunately I have not made much progress in this direction - I want to check out some of the interesting opportunities I have unearthed a little more thoroughly before committing the Portfolio. The stocks we have at present appear to be working well together.

I am looking in areas related to hospitals and nursing homes, but I won't say any more than that at this stage. If that seems coy, it's because I am not wholly convinced it is really going to be worth committing any new money to the market over the next few months. The market more often than not has a summer lull, and if this pattern holds in 2007, (as I think it might) then we have nothing to lose by staying in cash for the time being.