My Approach to Investing
Summary
I focus my efforts on small and mid-sized companies searching for those where the growth prospects are not reflected in the share price. I am disciplined about the valuation I am prepared to pay; I don’t like to pay over 20x forecast earnings and favour companies that are paying a growing dividend and have a prospective dividend yield of at least 2.0%. I search for companies generating strong cash flow and if not having net cash, then debt levels that is low to moderate. Where possible I like to meet management and understand what makes them tick and if they have a decent stake in the business so much the better; our interests are aligned! I like companies that are beating expectations and earnings forecasts are being upgraded. Ultimately I am looking for the “double whammy” that comes from a re-rating and from faster than expected earnings growth. Having found a potential investment I look at the share price chart as it can help with timing; so often resistance and support levels work. I size a position based on my assessment of the potential Risk and Reward of the stock. I hold between 20 and 30 holdings, making use of investment trusts for overseas or thematic exposure.
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The most important number to me is the return of the Portfolio! I try not to get too emotionally involved with individual companies; if I cut a holding and it immediately bounces, so be it. All that matters is the return of the Portfolio, each month, each year, each decade!
I invest principally in the UK
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I invest mainly in UK stocks as that is where I have gained my experience. There are clearly opportunities to invest in overseas companies, and it is fair to say that it is now much easier to get the information you need. I think that for a private investor, such as myself, with limited time resources, it is better not to spread my net too wide. For me, it makes sense to focus my efforts on a market where I have experience and familiarity.
I focus on mid and small-sized companies
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I focus on mid and small-sized companies but not exclusively.
The FTSE 100 Index comprises the largest 100 companies and by value accounts for around 70% of the UK market, The FTSE 250, (the next 250 companies) accounts for about 25% of the market by value, and the FTSE Small Cap, FTSE Fledgling and FTSE AIM, the remainder.
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The table below shows the percentage returns over 1, 3, 5, and 10 years to 31st December 2020
My Approach to Investing
Summary
I focus my efforts on small and mid-sized companies searching for those where the growth prospects are not reflected in the share price. I am disciplined about the valuation I am prepared to pay; I don’t like to pay over 20x forecast earnings and favour companies that are paying a growing dividend and have a prospective dividend yield of at least 2.0%. I search for companies generating strong cash flow and if not having net cash, then debt levels that is low to moderate. Where possible I like to meet management and understand what makes them tick and if they have a decent stake in the business so much the better; our interests are aligned! I like companies that are beating expectations and earnings forecasts are being upgraded. Ultimately I am looking for the “double whammy” that comes from a re-rating and from faster than expected earnings growth. Having found a potential investment I look at the share price chart as it can help with timing; so often resistance and support levels work. I size a position based on my assessment of the potential Risk and Reward of the stock. I hold between 20 and 30 holdings, making use of investment trusts for overseas or thematic exposure.
​
The most important number to me is the return of the Portfolio! I try not to get too emotionally involved with individual companies; if I cut a holding and it immediately bounces, so be it. All that matters is the return of the Portfolio, each month, each year, each decade!
I invest principally in the UK
​
I invest mainly in UK stocks as that is where I have gained my experience. There are clearly opportunities to invest in overseas companies, and it is fair to say that it is now much easier to get the information you need. I think that for a private investor, such as myself, with limited time resources, it is better not to spread my net too wide. For me, it makes sense to focus my efforts on a market where I have experience and familiarity.
I focus on mid and small-sized companies
​
I focus on mid and small-sized companies but not exclusively.
The FTSE 100 Index comprises the largest 100 companies and by value accounts for around 70% of the UK market, The FTSE 250, (the next 250 companies) accounts for about 25% of the market by value, and the FTSE Small Cap, FTSE Fledgling and FTSE AIM, the remainder.
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The table below shows the percentage returns over 1, 3, 5, and 10 years to 31st December 2020
ABOUT ME
I launched this website in January 2012 so that I could share with other investors how I manage my investment portfolio; the JIC Portfolio.
There is complete transparency with the current portfolio and all transactions shown. I explain all trades through my blog and hope the site provides food for thought to more experienced investors as well as helping those who are new to managing their own portfolios. I believe JohnsInvestmentChronicle is unique: There are plenty of “tipsters” who will remind you of the “good ones” and quietly forget the disasters; I do not have that luxury as the Portfolio is there for all to see, backed with real money; mine! I have to confront my mistakes and deal with them; there is no hiding place! Above all, this is a true expose of the trials and tribulations of a private investor!
WHAT YOU GAIN AS A MEMBER
John's Investment Chronicle started in January 2012 so that other investors could observe how I manage my investment portfolio, the JIC Portfolio. In July 2020, I added a second portfolio, the JIC Funds' Portfolio, which only invests in funds and replicates Mrs R's SIPP.
There is complete transparency. You can see both portfolios and all transactions. There is an explanation of the thought process behind every trade in the investment diary. Members are notified of every trade within 15 minutes. The aim is to provide food for thought to more experienced investors and to help those new to investment. There are plenty of tipsters who will remind you of the good ones and quietly forget the not so good. John's Investment Chronicle does not have that luxury as the portfolios are there for you to see, backed with real money. I have to confront my mistakes and deal with them; there is no hiding place!
Above all, this is a true account of the trials and tribulations of a private investor!
By becoming a member of John's Investment Chronicle you will gain access to the members' area which includes:
The Investment Diary with regular and timely blog posts, a weekend roundup as well as monthly reviews.
Becoming a member also grants you access to the JIC Funds Portfolio, JIC Portfolio as well as JIC Funds Portfolio Transactions and JIC Portfolio Funds Transactions, highlighted below.
Once you have subscribed, if JICUK does not meet your requirements you can cancel your membership within 30 days and receive a full refund!
John Rosier
JIC Funds' Portfolio
The JIC Funds' portfolio started life as the JIC Top 10 Portfolio in August 2014, with £50,000 cash. In June 2020, I changed it to a “funds only” portfolio. It invests only in funds, (principally investments trusts and ETFs).
It aims to achieve long term growth, and therefore mostly holds funds exposed to equity markets. Diversification comes from exposure to geographical regions and themes. It aims to be a “do little portfolio” with trading kept to a minimum. Hopefully, it will achieve a reasonable compound growth rate over the next five years and one better than the FTSE All-World (Total Return) GBP Index.
JIC Funds Portfolio Transactions & JIC Portfolio Transactions
I mirror the transactions I make in my SIPP and ISA in the “JIC” Portfolio which started, with £151,110 cash, on 1st January 2012
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The first trade you see is for the JIC Portfolio in order to receive my contract note. I update the transactions table below and post my diary entry within 15 minutes of trading. After that, I submit any further orders I have.
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Dividends are included at the time a stock goes ex-dividend
By becoming a member you gain access to regular diary entries. The example below was published before the market opened on 7th July, on the news that K3 Capital had made two acquisitions.
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K3 Capital: (K3C.L, AIM All-Share: Market Cap £233m, 337p, 6.1% of JIC Portfolio, Medium Risk/High Reward, target 5.0%)
Conclusion: The acquisitions make sense in that they fit into K3’s strategy of providing business services to UK SMEs. It expands its offering into new sectors. K3 has grown both organically and through acquisition. It looks like they are paying a full price, but they are high margin businesses and sensibly there is a four-year earn-out and existing management are tied in and well incentivised. I see no reason not to back CEO and founder, John Rigby in making these acquisitions as thus far, his previous deals have added considerable shareholder value. He says today’s acquisitions will be immediately earnings enhancing. On 15th June it issued a positive trading update for the year just ended 31st May. It is valued at 21.0x May 2021 earnings forecasts, for 41% growth. In a note this morning, Finncap is forecasting 20% growth in the current year taking the PE ratio to May 2022 down to 17.1x and a further 22% growth the following year taking the PE ratio down to 14.0x. Forecast dividends lead to a yield of 2.7% for the year just ended, rising to 3.6% in the current year and 4.6% next year. For what it’s worth SimplyWallSt has it trading 50% below its estimate of fair value. If I didn’t own it I would be buying and am happy to stick with my Medium Risk/High reward rating, (pointing to a 5.0% position). I’m at 6.1% and will let it run. Happy Holder!
K3C has announced the acquisition of Knight Corporate Finance Group (KCFG) and Knight R&D Limited (KRD).
It is also raising £10.0m through the placing of 2,941,934 new shares at 340p to partly pay for the acquisitions.
KCFG is a specialist mergers and acquisition advisory firm within the telecoms and technology sectors. In the year ended 31st March 2021, KCFG generated revenue of £1.71m and EBITDA of £0.78m. the consideration is up to £8.6m, with £3.3m initially through a mix of cash and shares. There are then earnouts for each of the years ending May 2022, 2023, 2024 and 2025. The first year is 60% cash and 40% shares, the second is 70% cash and 30% shares and so on.
KRD is a specialist tax advisory firm serving UK SMEs. For the year ended 30th September 2020, KRD generated revenue of £3.16m and EBITDA of £1.98m. Consideration will be up to £16.3m comprising an initial consideration of £9.3m (£7.3m cash and £2.0m shares). There will also be an earnout of approx. £4.0m payable as 60% cash and 40% shares over the next four years.
Both acquisitions are expected to be immediately earnings enhancing.
K3 Capital - JIC Portfolio
K3 Capital - JIC Portfolio Transactions
Q2 2021
