johnsinvestmentchronicle; my approach to investing

21st October 2013

DISCLAIMER

Please accept the following:

The content of this presentation is not intended as investment advice. I am describing my approach to investing, showing my portfolio and using examples, purely as a record of what I have done and does not constitute advice on whether a share should be bought or sold. You should always do your own research (DYOR), make your own decisions (MYOD) and be comfortable with the risks before making an investment. Furthermore, you should obtain independent financial advice from an FCA regulated intermediary before investing money. Investing in shares involves an element of risk: shares go up and down, (often in a manner that seems irrational), and in the worst case, a company going into receivership, you can lose all of your investment in that stock.

Agenda

• My approach

• Use of stop-losses

• Questions sent in advance

• Open forum

My approach

• Mid and small cap preferred hunting ground• FTSE 100 8.0%, FTSE 250 23.4% , FTSE Small 19.8%, FTSE Fledgling

11.2%, AIM 28.5%, Unclassified 9.1% and cash 2.0%

• Market Caps: 5.7% <£50m and 18.5% between £50m and £100m

• 32.4% currently in pooled vehicles; Investment Trusts favoured -thematic and overseas diversification

• No more than 30 holdings; currently 27

FTSE 100 v FTSE 250

(Source: ShareScope)

What do I look for?

• Companies where the projected PE ratio is below 15x and the PEG Ratio is below 1.5x

• Companies where earnings are being upgraded

• I like growing dividends

• I tend to steer clear of companies with high levels of debt

• Companies that are hitting new price highs

JIC Portfolio as at 21st October (Source: ShareScope)

Earnings Upgrades!

Adept Telecom Amino Technologies Berkeley Group Dixons

easyJet Synectics Thorntons Vislink

(Source: Stockopedia)

Where do I get ideas from?

• Stock screens• Valuation; PE’s, PEGS, Yields

• New Highs

• “Guru” screens on Stockopedia

• Director buying/selling

• Financial press

• Other websites

I dismiss most ideas in about a minute!

Checklist!

• Quick look on ShareScope; PE, PEG, Yield, Chart

• Closer look on ShareScope; earnings history and forecasts

• Stockopedia; balance sheet, cash flow, earnings upgrades/downgrades

• Read the company website

• Read recent announcements at www.investegate.co.uk• I love words like “materially ahead”

• Write up my investment case!

Director Buying/Selling (Source: ShareScope)

• Buying more important than selling!

Basic rules

• Write up the investment case before buying

• Don’t catch falling knifes

• Sell and move on!

• Don’t waste energy worrying about what you don’t hold; it is only what you do hold that matters

• Don’t be frightened to take a position

Setting Stop losses

• At what price would it look like the trend/momentum had changed?

• Moving Averages; 50 and 200, often act as support

• Tend to use closing price rather than intraday

• I don’t use automatic stop losses• Won’t help on a profit warning

• Can be stopped out on an intraday move

Stop losses; Lamprell (Source: ShareScope)

Stop losses; Globo (Source:ShareScope)

Stop losses; Worldwide Healthcare Trust (Source: ShareScope)

Mistakes

• Selling!• Sports Direct

• Ashtead

• Tribal

• Not being disciplined with stop loss• Agriterra

• Polo

RISK!• Risky in that it is all equities but so far Statpro statistics favourable in

comparison to FTSE All Share and looking forward is forecast to be less volatile than the index!

RISK!

Other Questions

• Access to companies

• Importance of PI’s

• Diversification

• Best current investment themes?

• Is JIC unique?