The veteran investor quizzes small-cap enthusiasts about their favourite shares.
I have known David Stredder for a long time — but he’s been an investor for far longer than that. He started when he was 17 and his economics teacher got him hooked when he entered a team in a newspaper stockpicking competition.
He turned his hobby into a serious investment pot when he sold his property business at the age of 39 and created a portfolio largely of Aim-listed dividend-paying stocks (many are family firms) with the added benefit of inheritance tax relief if held for more than two years.
JL: When did you first buy this share and why? What attracted you to it?
DS: This has to be my favourite company as it is the one that has given me the largest overall gain by some margin. It has been an incredible investment journey — Accesso’s share price is now more than 225 times higher than when I bought in 2003 at just 7p.
I had read on an investment website about a new product that helped visitors to theme parks avoid queueing for the most popular rides. As I had children who enjoyed going on these rides — but hated standing in queues — this sounded logical and investible. At that time the company was called Lo-Q and it was early stage with predominantly one very large customer. I thought it was very undervalued as it was off the radar for most investors because the company had no PR and did very little in the City to attract investment. I like companies that need to raise their profile.
How has the share performed?
Exceptionally well. For five years, it doubled every year and still seems to perform ahead of the market in most years as the company has expanded into more countries, products and advanced ticketing for its visitor attraction clients.
There was only one year when the company gave me concerns. Its main customer at the time, Six Flags, went into administration.
However, the product was so good it was critical to Six Flags’ revenue and Lo-Q was always paid in full and on time. The name was changed to Accesso Technology a few years later following a US company takeover. In fact, 80 per cent of its business was generated in that country so the word “queue” was redundant as in the US they are known as “lines”.
What percentage of your portfolio does this share represent and has any part of the original holding been sold?
It represents about 7 per cent of my portfolio. However, I try to restrict one company being more than 8 per cent of my overall holdings. At one point it was more than 15 per cent so I made a number of selling decisions and thankfully invested in other good companies with the proceeds. That allows me to sleep at night, as it would only take a disaster at a theme park to give investors a fright and put a hole in my portfolio.
In total, I now have half my original investment but the remainder is not only carried for free but actually worth a substantial multiple of that early stage investment.
How do you see the future for your chosen share?
I will probably hold it until all potential has been exhausted. I can foresee opportunity for global expansion. The company already has market leading positions in some countries but there is a massive opportunity to capitalise in the rest of the world. There are market verticals where Accesso is still weak — such as sport and live music — where it intends to grow. The queueing business is getting closer to the original vision of a queueless theme park, which will change the industry.
Finally, I suspect M&A is rarely far away, as technology advances and opportunities arise.
The company is well funded with some of the world’s largest attraction brands on the client list. There could be exciting times ahead for shareholders.
John Lee, the FT Money columnist, spoke to David Stredder, who has a financial interest in the company mentioned. The views expressed are personal.
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