Next year I will be 80 — and thus a private investor for more than 60 years. I have bought and sold literally hundreds of different shares, from my first £45 investment when aged 16, to somewhat larger amounts today, and have been on the receiving end of over 50 takeovers or private buyouts.
In those early years, I bought and sold, chopped and changed, with mixed success, hoping to take small profits and move on. Hindsight is a wonderful thing. I owned Croda in 1982, taking a £56 profit — what a great growth story — and similarly with Associated British Ports in 1983, by far the most profitable of the privatisation stocks. But I sold shares like Clarkson and James Halstead far too soon.
I now realise that patience is the number one prerequisite for successful investing — buying into a growing business and staying with it — and better still, adding more if my belief in the business holds firm.
Recently I took part in a webinar at ShareSoc, a shareholder organisation where I am a patron, with two other serious investors. We were asked to discuss our five largest holdings and when we first bought. My five in alphabetical order were Air Partner, Anpario, Lok’nStore, Treatt and Vitec. This year their average appreciation has been 35 per cent.
I first invested in air services group Air Partner in 1999 at the equivalent of 41p. Today its share price is 81.80p — frankly not a big success so far. But I have had many take-offs and landings in between and I currently regard them as significantly undervalued with profits forecast to be “materially above market expectations”.
Anpario, which produces natural growth additives for pigs, poultry and other livestock was first bought in 2012 at 82p. I steadily added to holding, as my confidence increased, on a further 22 occasions, paying up to 380p. Today it is 620p. Anpario ticks all my boxes: well-managed, annual profits and dividend growth, cash rich, and a healthy future with our increasing world population.
Lok’nStore, the self-storage group, has been another success — first bought in 2013 at 137p, I added to my holding 16 times up to 582p. It is currently 965p following excellent results, a large pipeline of new stores, plus a 15 per cent dividend increase.
As readers of this column may know, Treatt, the flavours and fragrances group, is my star holding. First bought in 1999 at the equivalent of 31p, I have added to it 25 times. It is currently 1,115p having just announced outstanding results and a further 25 per cent dividend increase.
Although I trimmed it by 20 per cent some time ago, it still represents approaching 40 per cent of the total value of my Isa. Many would say that is far too many eggs in one basket, but I believe it to be an exceptional business — highly valued, yes, but with outstanding growth opportunities ahead.
Stock market history shows that in most successful portfolios, performance comes from just a small number of stocks that deliver — Treatt is certainly my contribution to this belief.
Vitec is the final holding of my “big five” and the most recent, first bought only two years ago at 1,150p pre-pandemic. However, I built it up speedily — on 21 more occasions — paying up to the current price of 1,465p. I was particularly pleased to pay only 640p during the pandemic low when many bargains were available. Headquartered just around the corner from my home in Richmond, Surrey, Vitec makes a wide range of photographic equipment serving the content creation industry, which is experiencing explosive growth.
Bloomberg estimates that spending by streaming companies on content could reach $50bn this year and Vitec is well-positioned as a key provider of the sophisticated equipment productions require. Were the company to be quoted in the US, or were it better known here, I believe it would be on a much higher rating.
I look back on 2021 with some satisfaction. Of the five holdings, Vitec appreciated 60 per cent, Lok’nStore 41 per cent and Treatt 38 per cent. Among my other significant Isa holdings, Cerillion, a provider of services to the global telecoms sector, rose about 100 per cent on stunning results and a 29 per cent dividend increase; Vianet in monitoring and information systems went up 28 per cent; and palm oil producer MP Evans 27 per cent.
Of my non-Isa holdings, lighting manufacturing FW Thorpe was the brightest, up 35 per cent.
Of course there were negatives, but these were thankfully limited. Concurrent Technologies drifted down, somewhat undeservedly I believe, by 30 per cent. I hope that new chief executive Miles Adcock can reverse this in 2022. My one real dog — Appreciate Group — limped 28 per cent lower. I am unsure how even my patience can maintain interest here. Overall though, 2021 delivered 22 per cent capital growth in my combined Isa and non-Isa portfolios.
Finally, an unfortunate example of the negative influence of private equity. Some months ago, ventilation products manufacturer Titon appointed a new chief executive. All seemed well until a recent announcement that he was departing, having hardly got his feet under the table. Titon understandably was “disappointed”.
On enquiring, I learnt that he had been lured by an extremely attractive private equity financial package which small-cap Titon just could not match. So now they have to start a new search all over again. This is a pity as Titon — with the slogan, “If you insulate you must ventilate” — should be seeing real opportunities for growth in the present climate. Its rock solid, cash-rich balance sheet should provide a superb platform on which to grow.
Lord Lee of Trafford is a private investor and author of “Yummi Yoghurt — A First Taste of Stock Market Investment”. He is a shareholder in the companies indicated