John Phelps’s portfolio

CLYDESDALE Bank owner CYBG came under the cosh in the stock market last week after Panmure Gordon became the sixth major stockbroking firm to issue a “sell” note on its shares in the past few months.

The analysts claim that CYBG is one of the least attractive of the so-called challenger banks because its low growth and consistent restructuring costs remind them of the behaviour of the dominant players in the financial industry.

The stinging criticism left the shares down more than five per cent at one time although they staged a slight recovery after Goldman Sachs took a lukewarm “neutral” stance on the shares at their lower levels. At this stage, we are happy to bet against the crowd of experts by holding on to our notional investment in the shares in anticipation of a medium-term bounce as short-term selling begins to dry up.

Happily, the CYBG performance was balanced by a sharp rise in the value of our notional holding in Lloyds Banking after directors announced a special dividend to accompany news of its best profits performance in a decade.

The recovery was due to loss-elimination and increased efficiency rather than any increase in the underlying business at the bank although analysts look for growth to come from its pending £1.9 billion acquisition of credit-card provider MBNA.

The banking sector provided the main interest in a generally flat week which saw the total value of our four investment portfolios virtually unchanged.