How I invest: managing a concentrated portfolio of stocks
With just over 20 years’ investing experience under his belt, Dave from Staffordshire has honed his skills to be able to run a concentrated portfolio entirely out of small, medium and large cap stocks.
The 46-year-old public sector worker first began putting money into the markets in 1999. ‘I opened an ISA possibly at the worst time to start investing,’ he says. ‘Fortunately I topped it up at opportune moments and eventually doubled my money by the time I cashed out when my son was born.’
His son is now a teenager and has already gained his first taste of the investing world by helping to edit some of the videos Dave made on his YouTube channel – all about stocks. ‘He enjoyed editing all of the “errs” out of my videos. I hope he gets serious about investing early.’
Dave says he is now less involved with the broadcasting side of his interests so as to spend more time with the family.
PAYING DOWN THE DEBTS
Having separated from his partner, he took out a second mortgage which has now been paid off. There is also not much left of the original mortgage to pay off. ‘I did toy with the idea of clearing the mortgage with my investments but after discussing this with my investor friends I decided to carry on investing.’
Dave’s goal is FIRE – a term to describe the ‘financial independence, retire early’ movement. This is where people manage to stop working early because they’ve saved up enough money, either cash or investments, to help fund their lifestyle and not be slave to employment. He says partial FIRE – namely having to work less – would also be fine, but in either case he would also like to have built up enough wealth to ensure his son has a good start in life.
‘I’m careful with money. If I can save a few quid I will as it all adds up and can be put to better use doing nice things with the family.’
Dave describes himself as a nervous investor and not someone looking to take on more risk. He used to spend 20 hours a month managing his portfolio and looking for new opportunities but this has been reduced more recently.
‘I look at financial websites for content, chat and stock screening to find new companies to research. I also follow the work of ShareSoc, the not-for-profit shareholder society.’
WHAT’S IN HIS PORTFOLIO?
His portfolio currently consists of 15 stocks, the biggest of which is biotechnology group Bioventix (BVXP:AIM). ‘This has been a stellar performer, which I’ve held from around £5 and was buying all the way up to £12. I had to trim it back slightly as it would have been around 50% of my portfolio. This was a mistake as it promptly doubled in price.’
The second biggest holding is Rockrose Energy (RRE), an oil and gas producer. ‘I wanted some exposure to oil and I get that from both Rockrose and a stake in activist investor Crystal Amber (CRS:AIM) which owns a significant chunk of Hurricane Energy (HUR:AIM).’
Completing the commodities theme in his portfolio is Fresnillo (FRES), the FTSE 250 precious metals miner. The company lagged many of its peers in last year’s gold price rally due to operational setbacks. However, its shares have started to recover in the past few weeks amid another rally in the metal price.
Income is another major theme among Dave’s investments with numerous stocks bought partially for their dividend-paying characteristics. Spread betting provider IG (IGG) was picked in his search for what he calls ‘quality companies’, noting that it operates in an addressable market worth billions of pounds. Acorn Income Fund (AIF) was purchased for income and the fact its shares were trading on a large discount to the value of its underlying assets.
Insurer Legal & General (LGEN) was snapped up for yield and as a play on the UK market. There is also quarterly-dividend paying Duke Royalty (DUKE:AIM) which lends money to private companies on a long-term basis, typically between 25 and 40 years, in exchange for part of their revenue.
SMALL CAP FAN
Elsewhere, Dave has selected numerous smaller companies which may not be familiar to the general public. These include D4t4 Solutions (D4T4:AIM) which he describes as ‘a very interesting business using clever technology to lawfully track people on the internet, mainly those visiting banks or insurers’.
If any readers have spent time waiting in airports over the past decade, they may recall seeing sports cars parked in the departures lounge with someone selling tickets to win a vehicle. This was the old business model of AIM-quoted Best of the Best (BOTB:AIM), one of Dave’s investments and a company which is now fully online running luxury item prize draws.
‘Trading has been going well,’ he says, and so has the share price. At the time of writing Best of the Best was trading at its highest level since June 2017.
DISCLAIMER: Please note, we do not provide financial advice in case study articles and we are unable to comment on the suitability of the subject’s investments. Individuals who are unsure about the suitability of investments should consult a suitably qualified financial adviser. Past performance is not a guide to future performance and some investments need to be held for the long term.