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

Wednesday, Apr 06 2011 by
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: 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 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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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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1 Comment on this Article show/hide all

emptyend 7th Apr '11 1 of 1

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


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.


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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   more »


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