View
220
Download
5
Category
Preview:
Citation preview
INVESTMENT CLUBS DAY 2012
Mourad KaraThe Mobius Investment Club
mourad@mobiusclub.co.uk
www.mobiusclub.co.uk
Investment Clubs DaySixth National Investment Clubs Conference
Simple schemes to boost members’ participation in investment selections & decisions
03rd November 2012
World Money Show
QE II Conference Centre
St James Suite London
Find out what other investment
clubs are up to?
(or How to keep it interesting)
INVESTMENT CLUBS DAY 2012
Outline
1. Meet the club
2. Members’ involvement
3. Selection approach
4. Initial investment methods
5. Timeline for different ways
6. Full toolkit and Systematic
7. Semi-systematic approach
8. Lessons learnt
…. "Bulls make money. Bears make money. Pigs get slaughtered“ ….
INVESTMENT CLUBS DAY 2012
First - Meet the club - A quick snapshot
The Mobius Investment Club
� Set up in October 1997
� Based in West Yorkshire
� 9 members (9M)
� Average £50 - £100 / month
� Unit Valuation System
� Current NAV ~£60k
� Use COW2000 for accounting
� Meetings in homes - rotating
� www.mobiusclub.co.uk Proshare Clubs Award Winner 2005 and 2006 (runner up 2004 and 2007)
Objectives: to learn, to enjoy, to invest
INVESTMENT CLUBS DAY 2012
Members’ participation in investing
Analysis
Research
Prepare
Submit
Review
Decision
Deal
Buy
Monitor
Shares
Deal
Sell
Add to & enhance club’s portfolio
Manage & watch club’s portfolio news, updates (share champions)
Keep a list of good shares for future
submissions
Usually at meetings or offline; prepare, review &
contribute; prior submissions
INVESTMENT CLUBS DAY 2012
Selection & investment approach
Selection & Decision
�One member�Sub-committee
�Allocation (sectors,
markets, budgets etc.)
� Allocation - rotating
�Open to all members�Others..
�One member one vote
Investment Profile
� Top-down versus bottom-up
� Long term and short term
� Mainly UK stock markets
� Markets and Sectors
� Mainly shares/stocks (~ funds)
� Stop/Loss
� Blend of investment profiles
� Technical Analysis & fundamentals
Portfolio
•16 slots•12 shares
• 4 funds
• Max ££ /share
• Cash reserve
• Reviewed AGM
INVESTMENT CLUBS DAY 2012
Initial investment approach
shouts tips (5,3,1,0)
1997 20122002 2007
Full (toolkit) investment proposals
July 04 July 09July 99
£-
£10,000
£20,000
£30,000
£40,000
£50,000
£60,000
£70,000
Oct-
97
Oct-
98
Oct-
99
Oct-
00
Oct-
01
Oct-
02
Oct-
03
Oct-
04
Oct-
05
Oct-
06
Oct-
07
Oct-
08
Oct-
09
Oct-
10
Oct-
11
Oct-
12
NAV portfo lio
2005-06
�Only 4 new proposals in 12 months
� 70% in cash (not by choice, like in 2008)
� Re-invest in previous shares
� Little or no new research/updates
INVESTMENT CLUBS DAY 2012
Timeline for different investment approaches
shouts tips (5,3,1)
1997 20122002 2007
Full (toolkit) investment proposals
Light-touch investment proposals
Systematic investment proposals
Semi-systematic investment proposals
July 04 July 09July 99
speculative
Funds
INVESTMENT CLUBS DAY 2012
Systematic & Full Proposals
Systematic approach
�Select criteria, schedule & policies
�Discuss & agree concept
�Growth, Value or Recovery filters
�Monthly run (up to max slots)
�Top share meeting criteria (no consultation)
�Report to members
�Share bought (if appropriate)
�Add to main portfolio (S/L monitor cycle)
�Review criteria, schedule & policies periodically
�Idea from Rolling Stocks IC – modified / adapted
�Variant: Conditional sys: 2 working days to reject top share (min 50% members’ support)
�First Year (pilot) – max 6 shares - (£9K) 1year
Proposals (using full e-toolkit)
�Document (8 Sections)
�Submit prior to meeting
�Inspired by 2000 ProShare Toolkit
�Modified – Club’s investment profile
�Standard Template
1.Company activities, details and description
2.Five-year business and profits growth analysis
3. Are management doing a good job?
4. Is the share good value for money today?
5. Earnings per share graph
6. Technical Analysis (Charting, timing)
7.Reasons for past growth (and future)
8.It’s make your mind up time
INVESTMENT CLUBS DAY 2012
Semi-sys highlights
1. Discuss & agree concept
2. Select criteria, schedule & policies
3. Shortlist 5 shares – report issued
4. One-Week turnaround - analysis
5. Respond to Coordinator only
6. Justify your selection (personal preference)
7. Select up to 3 shares; (5,3,1,0 points)
8. Total up to 9 points (all selections)
9. Monthly run of semi-sys (up to max slots)
10. Report will all contributions distributed
11. Stock bought if appropriate
12. Add to Portfolio (S/L, monitor cycle)
� Variant – Time it to a meeting for discussion (after submission)
� First Year (pilot) – max 6 shares - (£9K) 1year
INVESTMENT CLUBS DAY 2012
Semi-sys - members’ submissions review
Volex FennerTT
ElectronicsKingfisher
Computacen
ter total Max/share
Bob 1 3 5 9 5
Glynn 5 1 3 9 5
Hamood 3 3 1 7 3
Karim 3 5 1 9 5
Martin 5 1 3 9 5
Mourad 5 3 1 9 5
Ray 5 3 1 9 5
Tom 0 0
Total 9 21 11 12 8 61 33
Davis Bodycote Clinton Halfords John total Max/share
Anita 3 5 8 5
Bob 0 0
Karim 5 3 8 5
Liane 0 0
Martin 5 3 8 5
Mourad 1 5 3 9 5
Ray 3 5 8 5
Richard 0 0
Total 1 21 3 16 0 41 25
July 2012 run (Growth)Hamood (7/9 pts), all others
max 9pts
April 2008 run (Value) Bob (0/9 pts), some 8 & 9 pts.Bob is a Chartist (TA) and hence timing
wrong for proposed selection
� Recall (Step 6): members make investment analysis selection using their own preferred profile: TA, fundamental, sector preference, valuations, etc
INVESTMENT CLUBS DAY 2012
Semi-sys - post review criteria for final selection
Criteria Value Maximum Policy Pass/Fail
Members participation:
Number of members who responded7 8 >0% PASS
Responding members confidence in short-list:
Total number of points from all responding members
available for all shares
61 63 >70% PASS
Winning share collective support
Total points of winning share relative to maximum
possible
21 33 >50% PASS
Amount to invest £2,500
Volex FennerTT
ElectronicsKingfisher
Computacen
ter total Max/share
Bob 1 3 5 9 5
Glynn 5 1 3 9 5
Hamood 3 3 1 7 3
Karim 3 5 1 9 5
Martin 5 1 3 9 5
Mourad 5 3 1 9 5
Ray 5 3 1 9 5
Tom 0 0
Total 9 21 11 12 8 61 33
Four basic rules
� Evolved & adapted over time
1. Members’ engagement
2. Strength of shortlist proposed
3. Collective support of winner
4. How much to invest
Max £3k per share
Max pts by responding
1. >70% then £3k
2. > 60% then £2.5k
3. >50% then £2k
4. <50% then £0k
INVESTMENT CLUBS DAY 2012
Portfolios Four Sections in Portfolio
1. Standard
2. Systematic
3. Semi systematic
4. Funds
SCREENER (example) - Growth
Step 1- Any UK market- Mkt cap > £50M- Shareholder Fund >0- Total Cash > 0----- 0<PE<15- 0<PCR<15- 0<P/CF<15- 0<PSR<15------ EPS Gr (past 4 years) >0- EPS Gr n >0- EPS Gr (n+1)>0- ROCE >15%-----Variables obtained for checks:- Net Gearing- Net cash/ In Out from Operating Activities- Operating Pretax profit- Operating Profit/Loss
Step 2: Tool: MS Excel spreadsheet manipulation• Cashflow > Earnings • Net Gearing less than 50% • Shares with highest combination of EPS Gr FundsM&G Corp. Bond
FundsBlaclRock Gold & Gen
FundsETF Brent Oil
FundsJP Morgan India
StandardTracsis
StandardStanley Gibbons
StandardShell
StandardPersimmon
Semi-SysPace
Semi-SysHill & Smith
Semi-SysFisher (James & Sons)
Semi-SysFenner
Semi-SysDiploma
StandardBG Group
StandardAlbemarle & Bond
PortfolioStocks - October 2012
INVESTMENT CLUBS DAY 2012
Timeline for different investment approaches
shouts tips (5,3,1)
1997 20122002 2007
Full (toolkit) investment proposals
Light-touch investment proposals
Systematic investment proposals
Semi-systematic investment proposals
July 04 July 09July 99
speculative
Funds
INVESTMENT CLUBS DAY 2012
Comparison (engagement)
Schemes Advantages Disadvantages
Shouts, Tips (5,3,1)
Very little preparation or scrutiny
Early days
Full participation
Poor selections (+ submission on the day)
No incentive to prepare or improve analysis
Full Toolkit proposal
Comprehensive analysis of shares
Rich (in depth) debate about shares
Understand “the businesses” and portfolio
Takes long time to prepare:
Too few submissions (poor participation)
Frustrated proposers (if reviewers not up to speed)
Light- touch proposals
Easier to prepare proposal
More submissions made (before meetings)
Club has built experience in scrutiny
�Quality can drop (revert to shout & tips)
�Poor selections
�Wide variance in quality of submissions
�No incentive to properly research submissions
Systematic
proposals
Selection made based on collective profile
Spill-overs to research the other stocks
Collective ownership (refine policy/criteria)
�Not much participation after setting policies
�No incentive to do more (rely on systematic)
Semi-systematic
proposals
Short-list made based on collective profile
Analysis and submission not onerous
Really good participation throughoutSpill-overs to research the other stocks
Collective ownership (refine policy/criteria)
Sometimes less incentive to do more (rely on semi-
sys).
INVESTMENT CLUBS DAY 2012
Lessons learnt
• Understand investment/risk profiles of members
• Understand club’s profile (the resulting blend)
• Define strategy based on the above two points
• Innovate – try new things - experiment (really!)
• Write your rules, even simple ones – keep it simple
• Talk to other clubs, borrow, adapt, improve ideas & share
• Review at AGM (or other periods) – refine & document
• Package roles into smaller functions
• Put effort (really) on welcoming new members in (particularly established) club!
• Keep momentum going (meetings, emails, etc..)
• Ensure not 1 or 2 members take over or overpower club/meetings!
• Focus on collective participation and ownership
• Focus on constructive conflict and fairness
Share champions Dealing team Auditors x2
Tax officer Webmaster Chairman
Treasurer Portfolio reporting
Compliance officer Portfolio logs
INVESTMENT CLUBS DAY 2012
Give it a try
We have a number of documents online
� The semi-sys and systematic (policy) proposals
� Multiple stock selections (monthly)
� Members collated responses and reviews
� Full toolkit company proposals
� Try, modify, adapt & improve (let us know)
�Web site: www.mobiusclub.co.uk
�Most reports are in http://www.mobiusclub.co.uk/reports/
�Email contact: mourad@mobiusclub.co.uk
INVESTMENT CLUBS DAY 2012
How to keep it interesting & stimulating!
Mourad KaraThe Mobius Investment Club
mourad@mobiusclub.co.uk
www.mobiusclub.co.uk
INVESTMENT CLUBS DAY 2012
010
2030
4050
6070
8090
100110
120130
140150
160
Oct
-97
Oct
-98
Oct
-99
Oct
-00
Oct
-01
Oct
-02
Oct
-03
Oct
-04
Oct
-05
Oct
-06
Oct
-07
Oct
-08
Oct
-09
Oct
-10
Unit Value (in pence)
FTSE-allshare index rebased
Investment performance
£-
£10,000
£20,000
£30,000
£40,000
£50,000
£60,000
£70,000O
ct-
97
Oct-
98
Oct-
99
Oct-
00
Oct-
01
Oct-
02
Oct-
03
Oct-
04
Oct-
05
Oct-
06
Oct-
07
Oct-
08
Oct-
09
Oct-
10
Oct-
11
Oct-
12
NAV
Subs
-£8,000
-£6,000
-£4,000
-£2,000
£0
£2,000
£4,000
£6,000
P&
L o
n s
ale
tra
nsacti
on
s
loss
profit
0
5
10
15
20
25
30
Nu
mb
er
of
sale
tra
nsacti
on
s
Year
# loss
# profit
Recommended