A Question Answered on Winners and Losers

When I tweeted a mention of my forthcoming presentation on Business Perspective Investing, Andrew responded that he would be interested in a list of my winners and losers over the years and lessons learnt. So here’s some of them.

Health warning: this is not a recommendation to buy, sell or otherwise speculate in these companies. Some of the companies have been sold, or been delisted due to takeovers or other reasons. The notes are only a very trivial analysis of the reasons I purchased them. I will not be advising of future changes to my shareholdings and I have not included relatively new purchases for the same reason.

I give the company name, the year first purchased and the compound annual return (including dividends) reported by Sharescope up to the current date, or when sold. Note that I rarely purchase large holdings at once, but tend to buy more over time if the performance is good. If the performance is poor they are sold so the losses are minimised.

Most of the winning companies show consistent growth in revenue, operate in growing markets, have a high return on capital, positive cash flow, some intellectual property (IP) and competent management. Many of the companies have exploited the internet to provider a quicker or lower cost service.

Some of the Winners:

4Imprint (2016: 31.0%). A simple business distributing promotional merchandise, sold over the internet.

AB Dynamics (2015: 74.6%). Automotive technology gaining from the need for improved testing requirements and automated vehicle needs.

Abcam (2006: 31.1%). Distributor and producer of antibodies and proteins used in medical research, sold over the internet.

Accesso (2012: 32.0%). Visitor attraction software and services. Consolidator in a diverse sector.

Bioventix (2014: 39.3%). Producer of antibodies for medical diagnostics.

Boohoo (2014: 108.8%). On-line clothes retailer. Benefiting from changing shopping habits.

Delcam (2003: 26.3%). Computer aided design software for manufacturing.

Diploma (2015: 28.6%). Specialised technical products in life sciences, seals and controls.

DotDigital (2011: 33.2%). Email and other business marketing services.

Fevertree (2017: 89.4%). Producer/distributor of drinks and mixers. Great marketing and strong branding with outsourced manufacturing.

GB Group (2003: 31.6%). Identity checking internet services, benefiting from the need for quicker ID checks.

Ideagen (2012: 36.0%). Software for GRC applications. Driven by both organic growth and acquisitions, higher regulatory demands and strong sales management.

Judges Scientific (2010: 25.6%). Producer of scientific instruments. Organic and acquisition growth and emphasis on buying small companies that are cheap that can deliver a high return on capital.

Moneysupermarket (2011: 19.6%). Internet price comparison services.

Rightmove (2012: 21.2%). On-line estate agency portal. Benefiting from network effects and being the market leader.

Safestore (2018: 29.5%). Self-storage property company. Growing need to store personal and business items.

Segro (2016: 26.1%). Property company specialising in warehousing. A growing sector from internet distribution need.

Tracsis (2013: 17.1%). Software for rail operators.

Victoria (2012: 74.8%). Floor covering manufacturer led by charismatic manager.

Some of the Losers:

Blancco Technology (2016: -34.1%). IT product erasure and diagnostics. Dubious and inaccurate accounts.

Patisserie Holdings (2017: -100%). Totally fraudulent accounts led by Executive Chairman who failed to watch the detail I suggest.

As you can see, the industries in which the successful companies operate are quite varied but there is a strong focus on “newer technology” companies providing internet services or software. Although technology has been a hot sector in recent years, that has been so for most of my investing life and I expect it to continue. Note how my prejudices against certain sectors are reflected in the above list. Although I have invested in a few mining and oil producers over the years, they were generally not successful investments. Likewise financial businesses with minor exceptions.

The per annum returns may not appear spectacular but it is the high returns over many years that makes them an outstanding investment (or “ten baggers” as some are – for example Abcam has compounded at over 30% per annum for thirteen years). It may be unable to continue to do so but the company still has ambitious growth plans.

The high performing companies listed tend to be smaller ones but my portfolio does hold some larger FTSE-100 and FTSE-250 companies. The more successful ones of those don’t achieve such high returns as the companies listed above but typically more in the 10% to 20% per annum range. I also hold a number of investment trusts and funds which have similar returns. But the lower returns on those are compensated for by the lower risks associated with them.

Some of the companies have changing performance over time. For example Accesso was a strong performer until recently. I tend to top-slice companies when they become over-rated by the market or there are significant changes in the business, and try to buy when they are still cheap.

Andrew also asked “if people didn’t put as much time into it as you, do you think they can make it work?” Effort in any game is rewarded. Likewise the more experience you have the better you get. That usually means some time commitment is required. But whether you spend a lot of time or little, the key is to use the time effectively and not try to research everything in absolute detail. There is more information available than you can hope to handle in the modern world. Experience tells you what is important of course and what can be ignored. My book “Business Perspective Investing” just suggests what is important to look at, and what is not.

Note that I will be giving some overall portfolio performance information at my presentation next Tuesday (the 12th November at the Mello London event).

Incidentally ShareSoc/UKSA have published their joint submission to the consultation on “Intermediated Investments” from the Law Commission. It is very similar in content to my own but even more detailed on the problems of nominee accounts and how they should be fixed. It’s well worth reading. See here:

https://www.sharesoc.org/sharesoc-news/sharesoc-uksa-response-law-commission-review-of-intermediated-securities-call-for-evidence/

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s