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Guest Blog - Investors Chronicle Growth Seminar

12/10/2016

5 Comments

 
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The Guest Blog below comes from a good mate of mine who attended an Investors Chronicle event recently in London. Very kindly he offered it up for a wider Audience and now he is extremely famous, but in an Anonymous kind of manner !!

Anyway, a huge (and Bold) THANK YOU on behalf of all WD readers to ‘you know who you are’.

It’s very much appreciated, WD.


I attended this seminar because I opened a self-select stocks and shares ISA about two years ago and I am now trying to learn as much as I can to ensure I don't lose my money! 

There were four speakers at the event held at the Financial Times Building, Southwark Bridge, London. Two were representatives from Investment Trusts and two were writers from the Investors Chronicle.

1) Harry Nimmo - Standard Life Investments UK Smaller Companies (OEIC and Investment Trust)
This fund has an extremely impressive track record and has returned over 500% between 2003 and 2016.

The fund invests in companies with a market cap of less than £1.7bn. The fund believes that smaller companies have greater potential to grow than the already huge FTSE100 companies. The fund therefore consists of a mix of FTSE350 companies and AIM stocks.

Algy Hall from the Investors Chronicle has reposted a blog on the Investors Chronicle website: 'How to invest like a small-cap star' (28/9/2016) which explains Nimmo's investment strategy:

http://www.investorschronicle.co.uk/2016/09/28/comment/chronic-investor-blog/how-to-invest-like-a-small-cap-star-tgyOt0sXRgygY4DQc5NU6H/article.html

The fund identifies various themes which they believe are possible hot growth areas. These are currently:
  • Companion animals (Dechra Pharmaceuticals, CVS)
  • Listed IFAs (Brooks MacDonald, Mattioli Woods)
  • Digitisation of Government processes (Kainos, Gamma)
  • Internet security/Regulation (NCC, FDM)
  • Premium food and drink (Fevertree and Cranswick) 
  • Global/UK brands (Ted Baker, Joules). 

2) Algy Hall - Investors Chronicle
Algy Hall is the Tips Editor at the Investors Chronicle and also contributes the weekly stock screening article. He is a big fan of Jim Slater's book ‘The Zulu Principle’ [Editor's note: You can find a copy of this in ‘Wheelie’s Bookshop’ - ideal Xmas present to yourself !!] and spoke about the importance of the Price-Earnings -to-Growth (PEG) ratio. 

The PEG ratio attempts to assess what investors are being asked to pay for both a company's current earnings today and for the anticipated growth of those earnings in the future. 

According to The Zulu Principle if a company has a PEG ratio of less than 1 then it is worth researching further.

Two things to bear in mind:
  • Similar to a low PE ratio, a low PEG ratio may also be an indication of a bombed out, poor performing company. 
  • Ensure you check that the company is not cyclical.

The PEG ratio should only form a small part of the overall investment case and these other factors should also be considered before reaching a purchasing decision:
  • Cash conversion
  • Strong return on capital
  • Good margins
  • Momentum (earnings and price)
  • Director buying
  • Confident outlook
  • Attractive dividend yield and dividend record
  • Sales growth driving earnings growth
  • Balance sheet strength.

3) John Baron - Investors Chronicle Investment Trust columnist
John Baron spoke about the global economic environment and the current investment risks and opportunities. 

He has six Investment Trust (IT) portfolios. The breakdown of two of the portfolios (income and growth) are published monthly in the Investors Chronicle. 

His growth portfolio consists of 20 ITs split over the following areas: 
  • Bonds
  • UK shares
  • International shares
  • Themes (Biotech, energy, mining, commodities, technology, private equity)
  • Commercial Property.

He has returned 195% since 2009 and 13.9% so far this year. 

His thoughts on current opportunities and threats:
  • Reduce bond holdings. 
  • Go overweight into smaller companies. 
  • Be selective and add to commodities and precious metals - Golden Prospect Precious Metals (GPM). 
  • Biotech offers good long term opportunities - International Biotechnology Trust (IBT).
  • Technology - Herald (HRI). 
  • Commercial property is good - Standard Life Property Income (SLI) and TR Property (TRY).
  • Be careful geographically: USA is too expensive at the moment, Japan is ok - JPMorgan Japan Smaller Companies (JPS).

4) Catherine Flood - Scottish Mortgage Investment Trust PLC (Baillie Gifford) 
Catherine Flood spoke about the Scottish Mortgage Investment Trust which attempts to identify excellent companies and then stick with them regardless of how big they get (a classic Warren Buffet buy and hold strategy). The Trust therefore holds companies like Amazon, Tesla and Facebook.

She identified the various areas that the Trust was looking to invest in. These are:
  • Online retail
  • Changing media habits
  • Internet of things
  • Transformational healthcare
  • Great western brands
  • Energy
  • Changing model of enterprise IT. 

The trust has returned 92.2% over 5 years and 239.4% over 10 years.

Their biggest holdings are: Amazon, Illumina, Inditex, Tesla, Tencent, Baidu, Facebook, Alibaba, Alphabet, Atlas Copco, BASF, Netflix, Apple and ARM.

6 Things that I learnt from the event
  • For an investor with limited funds Investment Trusts provide an ideal tool to invest in specific sectors of the market.
  • Because Investment Trusts invest in many different companies they provide more diversification (and possibly less risk) than individual stock picking. 
  • The Investment Trusts mentioned above are actively managed and therefore they research every company they invest in so I do not have to. 
  • It is important to pay attention to the overall make up of my investment portfolio. In particular sector, geographical area and the weighting of each individual holding. 
  • I need to take care to ensure my future purchases are from a growth area of the market. 
  • Keep buying small companies.

Hope you found this helpful, regards Anon.



Related Blogs
In Anon’s article above he mentions the PEG Ratio - the WheelieBlog below gives more detail about this:

http://wheeliedealer.weebly.com/blog/valuation-valuation-valuation-bursting-for-a-pe-part-2-of-3
5 Comments
mr catflap
13/10/2016 11:02:38 am

Thanks for the guest post.

How does one acquire an invite to these events?

Do you get to ask speakers questions at these events. Presumably there is tea and biscuits afterwards and the opportunity for casual conversations with the speakers?

Reply
WheelieDealer
14/10/2016 12:03:28 am

Hi mr catflap, thanks for your feedback - I received the following from 'Anon' :

"The events are advertised in the IC. They are 'paid for' ticket evenings. The ticket price includes tea, coffee and biscuits upon arrival, refreshments at half time and alcohol and canapés afterwards. There is a panel Q&A after the talks. (This was when Catherine Flood was given a hard time about Tesla!). I expect there is a lot of chatter and networking afterwards over the alcohol. I didn't stay as I had a train to catch. I received the link below today about future IC events. The portfolio evening looks interesting - Tom Stevenson from Fidelity will be speaking."


http://ftmail.ft.com/_act/link.php?mId=R816080817573970262531268&tId=1320734

Reply
Aston Girl
16/10/2016 04:34:42 pm

What a great summation of what was clearly an interesting evening. Thanks for posting it.
I believe this would be of interest to both beginner and experienced investors alike- especially the Investment Trust info and the hot sectors for small caps. Personally I'm pleased to see some of the ones I win get a mention.
May I ask if you'll be attending the next event?

Reply
WheelieDealer
17/10/2016 11:29:42 pm

Hi Aston Girl - thanks for the feedback on the Meeting Notes from Anon. I heard back from him as follows:

"I'm not planning on attending any of the scheduled IC Events but depending on the topic I will certainly consider attending another IC event in the future."

It does sound a very good event - for people in London who can get there easily they could be well worth a visit. Cheers, P

Reply
MckinneyVia link
7/4/2022 01:56:57 pm

Excellent article! Your post is essential today. Thanks for sharing, by the way.

Reply



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