Interview with a remarkable UK value investor and blogger, Richard Beddard of Interactive Investor

Wednesday, Apr 06 2011 by
11
Interview with a remarkable UK value investor and blogger Richard Beddard of Interactive Investor

In the article Other sources of investment ideas I mentioned Richard Beddard and his Interactive Investor blog. Richard is without question the best source of investment ideas for small UK based companies on the internet. And best of all… His ideas, portfolio and analysis is all completely free. This article is an exclusive interview with Richard Beddard where he explains his investment approach, his biggest investment mistake and life as an investment blogger. I trust you will gain as much from the interview as I have.You can find Richards blog here: http://blog.iii.co.uk/. His column in the Money Observer magazine can be found here.

How did you get started in investing?

Richard Beddard: One of us had to work out what to do with our savings, and my wife wasn’t showing much interest so back in the mid nineties I subscribed to ‘Successful Personal Investing’, a correspondence course. It was on paper, and I believe it still is.  Soon after, I set up an investment club at work with friends, and although we stopped investing together in the dot.com meltdown some of us still meet once a month. We even talk about investing occasionally!

Can you talk about your investment approach and how it has developed over time?

Richard Beddard: It’s always been based on company fundamentals and financials as I don’t really see how you can be an investor if you’re not trying to understand businesses; how they make money, and what makes them go bust.  I briefly dabbled in charting in the early days, but couldn’t make any sense of it. I describe my method as ‘screening plus’.  I screen the UK market for companies that look cheap and financially strong and then investigate them further, mostly by reading their annual reports going back ten years. Different numbers tell different stories. The combination of a low valuation and high financial strength (improving profitability and leverage ratios, for example) are signs a company is recovering. 

Sometimes I’m looking for recovery, and sometimes consistent profitability and financial strength, which I might be willing to pay more for. Looking back ten years, I’m trying to establish whether the story the numbers are telling me is true and enduring, or just an artefact of creative accounting or the result of a particular, temporary, set of circumstances.  I describe my approach in more…

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Disclaimer:  

This content is provided to you for informational purposes only and any discussion of past performance of any security, other investment or investment strategy should not be considered as being indicative or a guarantee of future performance. Please do your own due diligence and discuss it with your financial advisor before making any investment decisions. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. The price and value of securities referred to on this Site will fluctuate.


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FW Thorpe Plc is a United Kingdom-based lighting equipment company. The Company is engaged in the design, manufacture and supply of professional lighting equipment. The Company’s subsidiaries include Mackwell Electronics Limited, which is engaged in the design and manufacture of lighting components; Compact Lighting Limited, which is engaged in the design and manufacture of lighting solutions for retail applications; Philip Payne Limited, which is engaged in the design and manufacture of illuminated signs; Sugg Lighting Limited, which is engaged in the design and manufacture of architectural lighting; Solite Europe Ltd, which is engaged in the design and manufacture of clean room lighting equipment, and Thorlux Lighting, which manufactures lighting systems for industrial, commercial and controls markets. The Company acquired Portland Lighting Limited. more »

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Yield (fwd)
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Dewhurst plc is engaged in manufacturing electrical components and control equipment for industrial and commercial capital goods. The Company's primary segments include the United Kingdom, Europe, The Americas, Asia & Australia, and Other. Its secondary segments include lift, transport and keypad. The Company offers lift products, such as push buttons, switching components, displays, lanterns and gongs, key switches, Hidden Legends and indicators, auxiliary equipment, destination control products, fixtures, safety edges and WallRaff fixtures. It offers transport products, such as highway products, parking equipment, pushbuttons, and indicators and associated products. The Company offers keypad products, such as UniPad, MA range keypads and En-Pad for banking terminals, security, ticketing machines and petrol pumps. It offers rail products, such as US97 rail pushbutton, US97 rail indicator, US97 rail multi-sounder and PA status indicators. more »

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OneView Group plc, formerly Armour Group Plc, is a holding and investing company. The Company is engaged in the development and sale of cloud-based software products for use in retail estates. The Company's segments include OneView Commerce and Unallocated central costs. Its OneView Commerce segment is engaged in licensing of software and providing the related consulting, support and other services related to the software sold. The Company has operations in the United Kingdom, the United States, the Netherlands and Germany. Its subsidiaries include OneView Commerce Inc., Armour Automotive Group Limited, Enactor Americas and OneView Commerce DE GmbH. OneView Commerce Inc. offers Oneview Digital Store Platform, a cloud-based platform that provides associates with access to an omni-channel view of customers, orders, inventory, detailed product information and reviews. Oneview Digital Store Platform offers Point of Sale (POS), OneView Inventory solution and OneView Promotions Engine. more »

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  Is FW Thorpe fundamentally strong or weak? Find out More »


1 Comment on this Article show/hide all

emptyend 7th Apr '11 1 of 1
3

Richard is without question the best source of investment ideas for small UK based companies on the internet

Nonsense.

It was a big shock to me. SCS Upholstery, a company I owned, went bust very quickly, which demonstrated (painfully) that a company with no bank debt can go under......

It was obvious the company was in trouble, but I felt reassured by its lack of debt. I didn’t understand the doomsday mechanism that would undo the company. We all do now, because other high profile retailers like Woolworths died the same way. Although SCS had no bank debt it still had to pay rent. When people stopped buying sofas, credit insurers stopped insuring its suppliers’ invoices. The suppliers, themselves probably not in too healthy financial condition, demanded quicker payment and SCS couldn’t pay suppliers and the rent. Recently, I got a couple of quid back from the administrator. 
Call it a salutary lesson. The lesson I learned is that all liabilities are important, not just interest bearing debt. Some liabilities, like non-cancellable operating leases, aren’t even on the balance sheet.

So.....cashflow is quite important after all? Who'd have thought it? ;-)

It is a very good point that some liabilities aren't even on the balance sheet. There can be all sorts of commitments that a business has....any future expenditure which is contractually committed is a liability (even if sometimes there is the potential to renegotiate).

I do agree with this point though:

What are your ideas concerning portfolio composition and the value of individual holdings in relation to the portfolio?

Richard Beddard: I think there’s a very simple rule. The more confident you are in your analysis, the fewer holdings you need, and the less diversified they need to be.

ee

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About Tim Du Toit

Tim Du Toit

Tim du Toit is editor and founder of Eurosharelab. On his website he reveals what more than 20 years of equity investment have taught him – sometimes at considerable cost. To discover how you can avoid costly mistakes and enjoy greater profits, sign up for his free newsletter “Investing that makes sense” at www.eurosharelab.com   more »

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