After 25 years and approaching 300 articles I’m writing my final portfolio replace for the FT. It has been an enormous privilege and pleasure to have written for therefore lengthy.
As I’ve made clear in my columns, the inventory market has been a big a part of my life, notably my Isa and its precursor, Peps. Generally I’m tempted to explain myself as a “skilled Isa investor”. Certainly, when my granddaughter was born, I recommended she needs to be known as Isa. This was not effectively obtained by her dad and mom, who sensibly named her Florence.
Over my 65 years of investing I’ve been known as many issues — essentially the most flattering being in recent times the “David Attenborough” of investing — although I can think about a number of the less-generous language utilized by traders when my suggestions have misplaced them cash.
Nevertheless, general I imagine now we have had many extra successes than failures. In 2003 I used to be declared the primary Isa millionaire and shared with FT readers my full portfolio. This had grown from £126,000 invested, plus crucially reinvested dividends, over the primary 15 years of Peps and Isas. Pleasingly, its worth has appreciated effectively northwards.
Now, in my 83rd 12 months, I’m nonetheless stuffed with enthusiasm and concepts. In spite of everything, Warren Buffett continues to be going sturdy at 94! FT readers and others are in a position to hear a few of them in my month-to-month podcasts with the Traders’ Chronicle — “Lee and the IC”.
Expertise has satisfied me that there are solely two necessities to profitable inventory market funding — widespread sense and, above all, endurance. Worth all the time comes by way of in the long run, though some shareholders may have died ready!
There are 4 shares that appeared in that 2003 Isa portfolio that I nonetheless personal — Christie, Nichols, Treatt and PZ Cussons (the latter very disappointing in recent times). Many, like Air Associate, Charles Taylor, GET, Tarsus, Windsor and Wintrust have been taken over — a number of the 60-plus takeover or “take personal” offers I’ve skilled, offering liquidity for reinvestment.
Some bids have been exceptionally worthwhile: Fenner I first purchased in 2008 at 60p when very depressed within the subprime bear market; I bought in 2014 at round 350p. Extra lately, I bought Lok’nStore at over £11 earlier this 12 months after first shopping for it at 135p in 2013. This latter bid pot — my largest ever — allowed me to high up my holdings in the remainder of my portfolio. Sadly, most Lok’nStore have been outdoors my Isa, thus a big capital features tax legal responsibility arises, even earlier than Rachel Reeves will get to work!
I solely put money into UK-listed corporations, having fun with the relationships with them and their chief executives. My focus is on “correct” companies that I can perceive — these which can be established, worthwhile, dividend-paying, ideally cash-rich or lowly geared. I eschew biotechs, start-ups, exploration and mining shares as they require specialist data.
I notably wish to see key executives with huge holdings — “pores and skin within the recreation” — and the larger the higher, so I comply with administrators’ offers carefully. I used to be lately inspired to see Braemar chief government James Gundy including to his holding; and David McCreadie and his spouse, of the Safe Belief financial institution, investing over £100,000.
One among my present campaigns is to stress non-executive administrators to put money into the businesses on whose boards they sit. Nowadays they’re paid fairly generously — £50,000 a 12 months — even £100,000 in small-cap corporations, but many have zero shareholdings. For my part NEDs ought to have not less than 25 per cent of their annual wage invested by the second 12 months of their appointment, demonstrating religion and dedication.
After all, through the years I’ve made many errors. If something I’m most likely too loyal to poor performers, however my greatest mistake has been promoting nice progress shares too quickly, like Clarkson and James Halstead. Others the place I simply received it plain flawed embody newspaper and journal distributor Dawson Holdings, destroyed by competitors from Smiths and Menzies; and HMV, once I was foolishly seduced by the then excessive yield. So, apologies to readers who have been equally bruised.
In all probability my greatest unresolved problem is the best way to deal with runaway successes; the actual kicker to a share value is the double-whammy of income progress and an upward re-rating, however the converse might be very bloody. I first purchased flavours and fragrances maker Treatt in 1999 on the equal of 30p, shopping for extra on 30 events. Because it grew I bought 20 per cent between £4 and £11 throughout 2020-21 — their shares peaking at £12 made it by far my greatest holding. Treatt’s income then dipped, the shares savagely derating right down to under £4. I clearly ought to have adopted the then retiring finance director, not less than partially, who bought most of his at £12.
Turning to my present “taking pictures star”, Cerillion, a supplier of enterprise companies to the worldwide telecoms sector, first purchased on itemizing in 2016 at 84p, I added 5 extra occasions to my holding, as much as 173p. Substantial contract wins, income and dividend progress, plus upward re-rating propelled the shares to over £19. With hindsight, I used to be clearly proper to trim Treatt however to date not Cerillion. A really nice dilemma to have.
Over the course of my investing profession, my greatest remorse is just not beginning an funding fund or comparable by which others might make investments. I hope my articles have nonetheless given readers pleasure, curiosity and maybe some worthwhile concepts.
Lord Lee of Trafford is an lively personal investor and a shareholder in all the businesses indicated