I thought I would take up the invitation made by the SCVR team to comment separately on stocks that investors hold or are contemplating buying. Stocks which lack coverage throughout Stockopedia, and which typically don't meet the value category. As a quality and growth investor across the globe, that’s a lot of choices – so here goes! I welcome replies that question my reasoning in the expectation of eliminating some of the bias that inevitably colours my decision-making. If others benefit from the discussion then we are all winners.
I already have exposure to today’s investment theme in the UK and US. However, I don't consider myself qualified to pick the “best” stock against each investment idea. My investment approach instead is to pick a couple of attractive names to represent each niche and geography. I look for secular growth, high margins and returns on capital, strong cash conversion and economic moats based on the stickiness of the service, network effects, intellectual property or strong regulation.
The democratisation of finance is an area of breakneck growth, highly visible in the US with the success of the Robinhood app and bitcoin exchanges like Coinbase. But the stock I am weighing for investment today isn’t a high-growth, high risk newcomer. Rather it’s what I hope will be a quality anchor for the portfolio within this theme – a buy and forget, or “coffee can” stock, if you will.
I’m highlighting Aj Bell (LON:AJB), the investment platform for do-it-yourself investors, with a nod to its counterpart and my existing long term holding, Integrafin Holdings (LON:IHP), whose platform supports financial advisors for the administration of their clients’ portfolios. UK investors will be aware of the impact Hargreaves Landsdown (HL) has made on the landscape of personal finance over the course of the last decade and will see AJ Bell (AJB) in a similar context. The companies and products are similar but distinguished by different charging structures that produce higher operating margins for HL but faster growth for AJB. It’s the feisty, cost-cutting challenger to HL’s once formidable hegemony. Indeed there are many other such challengers, including the soon to IPO interactive Investor. Ultimately, all these platforms grow on the back of increased engagement by the public with investing, coupled – as all investors must hope - with the increase in the value of assets under administration (AUA) as investee…
