If I had any doubt that patience is the number one requisite for successful investment, Sheila’s story confirms it.
The retired loyal secretary of a very old friend, she invested her modest savings in buying small quantities of the stocks which her boss and I were buying. He visited me recently to encourage my recovery from a hip replacement, bringing a printout of Sheila’s portfolio with him.
I cast my eye over it, alighting on Avon Rubber. Her holding, which had cost £1,200, was now worth over £57,000 as Avon has grown to be the global leader in military respirators. I ruefully looked back through my own records — I had bought Avon in 2004 at 192p, selling a year later at 171p. Heaven knows why. I remember vaguely that they were hoping for their first US order for respirators!
Fortunately, I’ve since managed to pick plenty more winners — and the overall performance of my portfolio over the past quarter has been pleasing.
The overwhelming Johnson victory was clearly the best possible news for investors — we should have five years of a broadly free enterprise, pro-business, pro-investor government to look forward to, free of the horrors of Corbynism.
Of course, there are concerns — the complexities of Brexit, the US China trade war and now the Coronavirus — but at last we have a more certain domestic backdrop.
I entered the election period pretty much fully invested, having topped up a number of my small-cap favourites and parked the bulk of my Charles Taylor and Tarsus takeover proceeds in Aviva and Legal & General on very attractive 7.5 per cent yields, tax-free within my stocks and shares Isa.
Plenty of UK-focused stocks have benefited from the so-called Boris Bounce. L&G is now over £3, leaving my buying prices in the 220p range well behind. Aviva still sits there offering a 7.5 per cent yield, looking like an outstanding each-way bet. Either management will deliver organically, or an activist investor will precipitate changes. Indeed, I have just switched half of my L&G holding, now on a yield of just over 5 per cent, into high-yielding Aviva.
Just before the year end, another ship came into port with the recommended private equity takeover of industrial property group Hansteen. I have only been aboard since last July — buying at 90p, takeover price 116p — so more to reinvest in due course.
Otherwise, it has been the usual short-term mix of good progress and mild disappointment. Food and drink ingredient maker Treatt, my largest holding, is trading around an all-time high, with BlackRock having built up a holding just in double figures.
Among my other holdings, Concurrent Technologies has received a big boost after announcing the development of its first artificial intelligence accelerator board, and Christie Group is beginning to move forward in recognition of the likelihood of an increase in terms of valuation work and transaction fees.
Together with a shrewd investment colleague, I visited Appreciate Group (the new name for Park Group) in its new headquarters close to the Liverpool waterfront.
Appreciate is not an easily understood business. It describes itself as “the UK’s leading multi-retailer redemption product provider to corporate and consumer markets” — essentially, selling gift vouchers and gift cards.
I had been disturbed by the group’s share price drift, but after talking to chief executive Ian O’Doherty and his team — and finding them optimistic about the increasing digitalisation of the company’s products — I confidently added to quite a large historic holding at 48p on a 7 per cent yield. Pleasingly, they have recovered strongly to 60p.
On the negative side, soft-drink maker Nichols was hit by the introduction by Saudi Arabia and the UAE of a 50 per cent excise tax levied on the retail price on non-carbonated sweetened drinks. However, I will definitely retain my longstanding Nichols holding, which shows a very substantial profit. The company’s large cash resources and strong cash flow should enable a continuing progressive dividend policy.
Also disappointing was the announcement from Air Partner that profits would be below expectations as a result of disappointing fourth quarter trading. Their shares fell to a level where they now yield what I believe to be a safe 7 per cent. Encouraging comments about contract wins for next year reinforce my faith in them.
Finally, I couldn’t resist picking up a token Fevertree holding when it slumped to just below £15 on a cautionary trading statement. I had missed out on this great Aim market success story and was certainly not going to chase the stratospheric price/earnings ratio its shares once traded on.
I don’t invest on the “high wire” — far too risky if anything goes wrong, as we have seen — but a £15 price, while still on a high PE ratio of about 30 times, is at least in touch with the real world. More importantly, I enjoy its products and wish the company every success in its global expansion, particularly in the US.
John Lee is an active private investor and author of ‘Yummi Yoghurt — A First Taste of Stock Market Investment’. He is a shareholder in all the companies indicated
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