No Pain, No Gain: 'We need two more winners for our pleasantly plump portfolio'

Although comfortably in the black, the no pain, no gain share portfolio could do with a little re-energising. I am still seeking replacements for City of London Group and Springwood, the loathsome twosome I abandoned last week. A few shares have attracted my attention, but I need a little more research before any decision.

After all, I do not want to recruit another couple of duds. And, even if the stock market is displaying growing confidence, it is still all too easy to alight on five-minute wonders that cannot stand the pace.

For the time being, I am stuck with 13 constituents. In the next month or two, I am due to lose the Safeway supermarket chain. There surely can be no question that a takeover bid will materialise, although all the signs indicate it will not be a particular generous affair.

Galliford Try, the building and construction group, is another likely to depart. Indeed, I feel rather vexed that it has rejected two indicative offers - at 51p and 54p - from Rok Property Solutions. With its construction side still a drag on the successful housebuilding operation, the group is showing an element of arrogance in turning down the Rok overtures.

After all, the bids, in cash and shares, were pitched at prices yet to be achieved by Galliford's shares and comfortably above asset value. The shares have fallen to near the 40p mark, at which I have said they will be dumped. Unless Rok, or another group, attempts a strike the shares will struggle to stay above my sell-by level. I have, it seems, two options with Safeway. I can sell now and record a modest profit or wait until the William Morrison supermarket group makes its signalled buying move.

The portfolio is a long- term Safeway shareholder. Indeed, it is the longest-serving member, having been recruited a month or so after the launch in 1999. It has been a roller-coaster ride, with the shares topping 400p and falling at one time to about 150p. The price is now 290p compared with the 248.5p I paid. The stock market seems to think Morrison's chief, Sir Ken Morrison, who enjoys a reputation for watching the pennies, will offer around 300p a share. Most will be in shares but he is likely to sprinkle a little cash around.

Mind you, Safeway is worth more than 300p. But thanks to Whitehall's farcical meddling, Sir Ken has been accorded an unchallenged run with other supermarket chains warned off.

Many had expected Safeway to lie down and die during the bid turmoil, but it has performed remarkably well. Michael Webster, Safeway's chairman, and its charismatic chief executive Carlos Criado-Perez, have prevented their staff being afflicted by any siege mentality by offering special bonuses. Consequently trading - and profits - have held up to a surprisingly degree.

The Safeway men have also demonstrated they are not meekly surrendering. They have secured planning permission for 17 new stores and put pressure on Sir Ken by seeking offers for the 53 supermarkets the merged group must sell. I will hold on to Safeway for the next few weeks. If Sir Ken is still dillying and dallying I will sell, hopefully near the 300p mark.

It is pleasing to report that the portfolio is about £24,000 in the black, having gained further ballast from the steady improvement in sentiment in recent weeks. I enjoy searching the undercard for possible share tips, but I try not to ignore blue chips. Besides Safeway, two other Footsie stocks feature, Allied Domecq and Scottish & Newcastle.

Allied recently rolled out encouraging figures and deserves its place, but Scottish has been a bitter disappointment. The shares almost touched 700p a few years ago but have since been below 300p. The group has, foolishly, sold its 1,500 pubs to concentrate on a role as an international brewer. By dispensing with its retail encumbrance it has left itself wide open to a takeover bid. Heineken is emerging as the favourite.