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!
RESOURCES
Portfolio Management
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I have subscribed to ShareScope for some eight years. I use it to manage my portfolios; it calculates CGT, adds dividends as they are paid and I think has an excellent charting system. The portfolio views on this site are from ShareScope as are the charts. Earlier this year it launched a new IPAD version.
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If you subscribe through JohnsInvestmentChronicle by clicking HERE ShareScope will give you one month free data (worth up to £105)
Sites I use everyday
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Stockopedia: I use Stockopedia to find and research new stock ideas. It is very user friendly, with its own stock ranking system and among other things “guru” screens which enable you to find stocks which meet the criteria of some 40 plus investment gurus. You can also set up your own portfolios in order to analyse and keep track of their progress. For free trial click HERE
Research Tree
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Offers real time access to research notes from the majority of small to mid cap brokers
I find it of huge help to read research on smaller and mid-cap companies. I might not always agree with the conclusion but a lot of the research provides essential information on strategy, management, financial forecasts and industry dynamics.
Discount offer for readers of this site: 20% off an annual or 10% off a monthly subscription
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Use promo code “johnsinvestment” when signing up
Investegate
I use investegate.co.uk, a free site to keep track of company announcements; results, trading updates, director buying and selling and changes in major shareholdings. You can set an email alert to receive emails when ever there is a new announcement on one of your stocks
Other recommended investment sites
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The John Baron Portfolios
John Baron, a former colleague at Henderson Global investors, writes an excellent monthly column in the Investors Chronicle in which he manages two investment trust portfolios; one income and one growth. He recently launched a website in which four different strategies each aimed at different times in an investors life. I use investment trusts to gain exposure to themes or geographic regions alongside my individual stock picks. I find John’s knowledge most useful in helping me make my selections
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Trustnet
A great source of information on investment trusts and open ended investment companies
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Compound Income
A great site set up by an old colleague from Fleming’s days. Focuses on companies paying safe dividends and the power of compounding income.
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Private Investor World
Videos of company presentations. Worth a look as there are some good companies featured
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Conkers Corner
Interesting and enlightening interviews with successful private investors
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Good free research covering some interesting companies. Excellent regular Investor Forums. Usual format of Forums: Three companies present for 30 minutes each before a chance to talk with management over refreshments. Forums held in the early evening in central London
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Sharesoc; UK Individual Shareholders Society
I joined ShareSoc a few years ago and highly recommend it. I especially enjoy the company meetings and seminars which it organises on a regular basis.
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Associate membership is free: Click HERE for more information
Trading Bases
Some interesting stuff on shorter term base and swing trading. Some helpful insights into timing trades
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Wheeliedealer
An inveterate blogger and tweeter with some good educational content and ideas on his website