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Lord Lee shares investment tips


Lord Lee speaks during a FT Money reader event at OSB.©Charlie Bibby

Lord Lee at TOES Cash’s Event this month

From the shares he “bitterly regrets” now not shopping for, to those he bought too soon — and some he wished he’d by no means sold — Lord John Lee shared a full and frank account of over 50 years as a small-cap investor with more than 200 TOES Cash readers throughout two in particular organised TOES Events.

A figurehead for private investor readers who favour fishing for minnows Within The shallower waters of the inventory market, his strategies of divining profits-producing shares — normally household-run corporations or these listed on the alternative Investment Market (Goal) — have won him legions of followers.

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John Lee

Over two evenings At The FT’s London offices this month, the Manchester-born peer entertained more than 200 readers with stories from his Investment archives, provided pointers for younger investors who’re simply starting out, and published a beneficial Cash saving tip from his former boss, none other than Margaret Thatcher.

Regular readers of his column have adopted the united statesand downs (though Mostly ups) of Lord Lee’s burgeoning shares and shares Isa for many years. In 2003, he was declared the “Isa Millionaire” after a total of £126,000 invested into small UK companies attained a market price of over £1m, because of the facility of compounding dividends, a string of takeovers and solid Investment increase — all protected from the taxman’s clutches By virtue of the Isa wrapper.

Today, his Isa portfolio has swelled in worth to just over £4.5m — and despite the market gyrations of the previous few months, this valuation has held reasonably consistent, demonstrating its “non-speculative sanity”, as one reader put it.

“The Value of my portfolio is almost exactly the same, overall, because it was a few months ago,” Lord Lee mentioned. “So regardless of the autumn in the market, which has hit plenty of shares and sectors, this kind of portfolio has in reality held up beautiful smartly during what has been a turbulent duration.”

Furthermore, he isn’t tempted to sell out of his holdings now, predicting that possibly as many as three-quarters of the shares in his current portfolio could be taken over — hopefully commanding a hefty premium Within The process — over the subsequent decade.

Lord Lee speaks during a FT Money reader event at OSB.©Charlie Bibby

“I promote very, very infrequently. Because The market is wobbling, a variety of commentators are concerned in regards to the international scene, and assume let’s go 25 or 30 per cent cash. And Of Course, you could Grasp money inside a stocks and shares Isa now. But then which you can by no means be certain that of when is the best time to return into the market. For Those Who’re in a just right high quality company, stick with it, get the advantage of the dividend waft and be patient.”

Readers additionally remarked that his current portfolio seems to defy sectoral categorisation. “I don’t focal point on sectors and I Feel that’s almost definitely a mistake,” Lord Lee admitted. “I tend to focal point simply on the person firm and all its yardsticks and traits. But I bitterly regret, as an example, now not having the sense three or four years ago that with an election arising in 2015 that naturally, any govt looking to be re-elected would bring a few bundle of measures to motivate Extra housebuilding. With the advantage of hindsight, it was once blindingly evident. I will have to have invested in a lot of housebuilding shares, and i’d have done very neatly.”

Mostly, his regrets were promoting too early, handiest to peer shares and earnings proceed to jump and the businesses whose shares he has sold.

“I believe you need two issues for successful investing — in style experience and patience,” he said. “The Most Important mistake most non-public traders make is that they see a profit, they usually want to take it and move on. By and large, individuals who’ve made critical Cash from the stock market have been folks who’ve held corporations, now not folks that’ve chopped and altered.”

Recognizing smaller firms that meet his fundamentals in the case of valuation and dividend yield is turning into so much tougher — there were sighs of nostalgia from the target audience about his former dependancy of seeking out “double sevens”, corporations with a price/cash ratio of seven, and a dividend yield of seven per cent — However he’s Still finding new corporations to invest in.

His two most contemporary purchases have been Braemar Delivery and Tarsus, the global Events organiser, he advised readers. Be Careful for Extra on these in his subsequent FEET Money column in early March.

Pressing the flesh of administration has at all times been a key section of his Investment type. One reader, complaining that he more than likely couldn’t get an organization he invested in to take him out for lunch, asked Lord Lee to propose one of the best ways for small shareholders to obtain a dialogue with administrators.

“I’ve been a really perfect attender of AGMs over the years,” mentioned Lord Lee, including that his expertise on boards had showed him how senior management tended to “get into an enormous state” about the annual spectacle.

“They’ll spend hours and hours until now with their PR advisers and brokers going via what they may be able to and might’t say about current buying and selling, how they must answer troublesome questions, and they’re also interested by whether or not a sacked gross sales supervisor or former mistress would possibly flip up,” he jokingly recommended.

“Generally, the formal part of the AGM passes in about three and a 1/2 minutes and nothing happens. The moment it’s over, the chairman and chief government breathe a sigh of aid, and metaphorically — and frequently literally — reach for the gin bottle. And That Is precisely the moment the non-public shareholder should strike, as a result of at that point, all of their defences are down, they’re going to then speak in a calm method and which you could get answers to many of the questions you need.”

One Of The handiest shares in his 12-robust Isa portfolio that’s presently Showing a loss is PZ Cussons. “Could it’s that you’ve an emotional attachment to this share?” a reader gamely requested.

“Completely,” Lord Lee replied. “I Was on the board for ten years, so there’s a special relationship there. PZ Cussons, maker of Imperial Leather, has been a very a hit share for me through the years [he has a significant stake held outside his Isa portfolio] and i’m Still in revenue general. They’ve a strong portfolio of brands in rising markets, specifically in Nigeria. By Using 2050, Nigeria’s envisioned to be the fifth most populous u . s . in the world, and PZ is probably The Most Important manufacturer there, with an enormous distribution network which they are able to push other products down in future. However In The brief time period, the oil worth has had an impression and this week’s interim outcomes may just mirror these difficulties”.

He was once right — on Tuesday, its shares dipped nearly 9 per cent — But Lord Lee is just not a quitter.

Nonetheless, his paper losses are nothing in comparison with Dawson Holdings — the newspaper distributor that lost him just about £200,000 when it went into administration in 2009.

He was once also tempted With The Aid Of HMV, which for a time had its dividend yield flattered Through a falling share value — But after a restructuring failed, the dividend used to be axed, and the remaining is history.

A memorable moment in Lord Lee’s personal political historical past was once when he used to be Conservative MP for Pendle and Mrs Thatcher, the then high minister, got here to stick with his household overnight during a travel to the regions. On The time, her son Mark was about to get married. Exhibiting her thrifty side, the Iron Girl printed she had recommended him to position silver wine goblets on the wedding checklist instead of crystal ones, as the latter could be liable to chip.

In The queue for the ebook signing At The finish, one reader shared how Lord Lee’s words of knowledge had already made him begin eager about the long run.

“Are You Able To dedicate this guide to my dad Nigel, please?” he requested. “I hadn’t realised unless tonight that you just don’t need to pay inheritance tax on most Goal shares, so I’m keen that he finds out prior to it’s too late.”

If You Need to be alerted about future TOES Cash Occasions, please electronic mail Cash@TOES.com and head your e mail “FT Money Situations”.

When You’ve Got a query about any side of small-cap investing that you simply’d like to place to Lord Lee, that you could e-mail askjohnlee@FEET.com His subsequent column will appear in FEET Cash on Saturday March 5.

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