JohnsInvestmentChronicle My Approach to investing and 2014 so far

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My Approach to Investingand 2014 so far26th November 2014


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Agenda• My approach• What do I look for• Earnings upgrades• Where do I find ideas• Checklist• Basic rules• stop-losses

• 2014 so far…


My approach

• Preferred hunting ground; mid and small-cap • Current JIC Portfolio: FTSE 100 10.7%, FTSE 250 33.1% , FTSE Small 24.2%, FTSE Fledgling 2.5%, AIM

22.3%, Other 6.8% and cash 0.5%

• Market caps bands of current portfolio:• 14.6% <£50m, 1.6% between £50m and £100m, 54.8% between £100m and £1bn and 29.0% >£1bn

• 25.3% currently in investment trusts; thematic and overseas diversification• Between 20 and 30 holdings; currently 30


FTSE 100 v FTSE 250 January 1994 – Nov 2014


What do I look for?• Companies where the projected PE ratio is below 15x and the PEG Ratio is below

1.5x• Companies paying growing dividends• Companies that are generating “free cash” • Companies where earnings are being upgraded• Companies that are hitting new price highs


I tend to steer clear of …

• Companies with high levels of debt• Companies not paying dividends• “Blue Sky” valuations

• i.e. companies where you have to believe in a “fantastic” growth story to justify purchasing a holding• More often than not the actuality disappoints and you are left without any valuation support


Earnings Upgrades!

Interserve Ted Baker Next Renew Holdings

Bioventix DixonsCarphone easyJet Gem Diamonds


Where do I get ideas from?• Screens

• Valuation; PE’s, PEGS, Yields• New Highs• “Guru” screens and my own screen on www.stockopedia.com

• Director buying/Selling• Financial press• FT, Investors Chronicle, MoneyWeek, Shares Magazine

• Other websites

I dismiss most ideas in about a minute!

http://www.stockopedia.com/


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 Loss example• Renew Holdings; I would hope that 280p, the 21 day closing low, will provide support but in this case

would likely hold on until 200 day moving average


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/report & accounts • Read recent announcements at www.investegate.co.uk

• I love words like “materially ahead”

http://www.investegate.co.uk/


Basic rules• Write up the investment case before buying

• Often start writing the conclusion and decide not to buy!

• Don’t catch falling knives• After you have sold a position, 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• Be Disciplined!


2014 so far…

2014 up until 26th November +9.3% total return Since inception: January 1st 2012 +87.5% total return

JIC Portfolio value (daily close)


Winners and losers in 2014!• Winners:

• Crawshaw +164%• DixonsCarphone +55%• French Connection +56%• Biotech Growth Trust +42%• Worldwide Healthcare Trust +37%

• Losers• Fox Marble -27%• Coms -49% (until position cut)• Polar Capital Holdings -7%


2014 Mistakes so far!• COMS• Added to a losing position (not once but twice!)• Ignored warning signs (having to re-issue results and FD stepping down)• Did not take my loss early enough

• Fox Marble• “Blue Sky” story (need I say more!)


DISCLAIMERPlease accept the following:• The contents of this website, JohnsInvestmentChronicle.com, and this presentation is not intended as investment advice and

must not be construed as such. I am publishing my portfolio and trades only as a record of my own decisions and it should not in any way be considered as advice to buy or sell anything. Any information on the website is given in general terms and does not constitute personal advice to any individual. It is important readers understand that I am not “tipping” or making recommendations: I am not authorised to do so and I urge readers not to blindly follow my trades. Readers should always do their own research and be comfortable with the suitability and risks before making an investment. Furthermore, readers should obtain independent financial advice from an FCA regulated intermediary before investing money. Information or views in older blogs may become outdated and should not be relied upon unless confirmed by recent comment. JohnsInvestmentChronicle takes every care to ensure that the factual information on its website is accurate but cannot guarantee this.

• 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.

• JohnsInvestmentChronicle Limited is not authorised or regulated by the Financial Conduct Authority and does not provide financial advice. Any information that you use is entirely at your own risk. Past performance is no guarantee of future results.

• JohnsInvestmentChronicle Limited shall not have any liability for any loss sustained by anyone who has relied on the information contained in any publication published by JohnsInvestmentChronicle Limited.

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JohnsInvestmentChronicle My Approach to investing and 2014 so far