Lord Lee interview - we want your questions
Next week I’ll be travelling to the House of Lords to interview Lord Lee of Trafford, the Lib Dem peer, investing legend and author of How to Make a Million - Slowly.
Lord Lee is famous for becoming Britain’s first ISA millionaire back in 2003. Since then his investment portfolio has grown a great deal further as outlined in his long running column at the Financial Times. His buy-and-hold investment style is heavily focused on small-caps, where he prioritises attractive value and high dividend yields in family owned companies.
If you want to learn a bit more about Lord Lee’s investment process and haven’t yet bought his book - we’ve previously summarised some key points in this article.
I have a lot of questions that I’m keen to ask him, but I want to hear yours too. If you’d like me to ask Lord Lee a question, just let me know in the comments below. I can’t make any promises but I’ll prioritise those questions with the most thumbs-ups.
PS - Given Ed has enforced a strictly ‘no-suit’ policy at Stockopedia’s HQ can I get away with a jacket and jeans when travelling to the House of Lords ?
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37 comments
If he was starting out now, what general principles would he follow.
The pe <= 7 / yield >= 7 concept may well have been valid in the 70s ,
but the only stocks I am aware of that fit this filter in the last year or two were chinese AIM.
If the interview hasn't taken place yet, could you ask did he operate his stop loss on the recent purchase of Flowtech Fluidpower (LON:FLO). Thanks.
I think it would be interesting if someone from Stockopedia put Lord Lee's holdings into a virtual portfolio, perhaps specifying an arbitrary amount such as £10,000 for each holding. That would allow readers to see how each of the holdings scored against the various StockRanks and the other valuation criteria offered by Stockopedia.
I did do a folio on 23rd June with what I thought were his holdings, I used £1,000 per share, the problem is he buys and sells quite a lot and its difficult to keep track of his actual holdings, also of course it does not reflect his actual buying and selling prices or the size of his holdings. Anyway since June the folio is up 0.2%, he had quite a good run in the last 2 weeks as he was down about 2.5% a few weeks ago. Best performing is FW Thorpe (LON:TFW) and worst is Northbridge Industrial Services (LON:NBI).
Hi Herbie, you wrote: "I did do a folio on 23rd June with what I thought were his holdings, I used £1,000 per share, the problem is he buys and sells quite a lot and its difficult to keep track of his actual holdings, also of course it does not reflect his actual buying and selling prices or the size of his holdings."
Is it possible for other people to view that folio? I would find it interesting.
The FT article below gives the size of each of the holdings in Lord Lee's portfolio in November:
http://www.ft.com/cms/s/0/1616896a-9851-11e5-9228-87e603d47bdc.html#axzz3tQmRjivO
Also for those interested do remember you can get a rough idea of Lord Lee's current holdings at:
http://www.parliament.uk/biographies/lords/lord-lee-of-trafford/1132
I thought he had sold Northbridge Industrial Services plc?
He may have done. The HofL site is only as up to date as the information they are provided with and I am not sure quickly they up date once they have been notified. But it is a good overall view of his holdings though I personally think it is his philosophy that is more interesting than trying to duplicate his trades though I am not saying you are trying to do that!:-)
Ben asked for questions to put to Lord Lee. Is he not going to report back here?
NI
Lord Lee postponed the original date, but I believe it's been re-arranged for this week.
There was a Podcast interview with him and an article in today's paper which I wrote up here if anyone is interested in that. Seems the FT have had first dibs on his Lordship as they published his book!
Interesting new piece (based on interview) in the FT
http://www.ft.com/cms/s/0/1616896a-9851-11e5-9228-87e603d47bdc.html#axzz3tQmRjivO
Ben
My questions (echoing some of those above):
1. Would he consider auctioning himself for lunch with Lord Lee (a la Warren Buffett) at the House of Lords? Going by the interest here...:-)
2. Does he see an anomaly in the fact that I buy ARM Holdings (LON:ARM) (backing in a sense a UK company) and I pay stamp duty but I buy Apple Inc (NSQ:AAPL) and I pay no stamp duty. It is an anomaly I find ludicrous.
3. Does he (I think he does PZ Cussons (LON:PZC) Christie (LON:CTG) ) have holdings he would NEVER sell (again a la Buffett)?
Very envious of your chance to meet Lord Lee, on of the truly great private investors. Have fun!
Kind regards
Michael Broom Smith
The stamp duty anomaly is hard to fix in practice given open financial markets, UK residents could just open an account with a non-UK broker to avoid paying a stamp duty that applied to non-UK stock. In practice a government can only do such taxes on their domestic stocks, and even then within limits as if it's too high even domestic companies will list elsewhere.
I'm looking to get a' Lord Lee style' haircut in Arbroath. Does he have any suggestions?
Does he think that there is a tipping point - in terms of portfolio size - when it makes sense for an active PI to engage a 'full service" broker to give bespoke advice/place trades, rather than rely on the lower cost nominee services available on a number of platforms? In particular, does he think that a bespoke broker provides better pricing, net of higher broker costs, particularly for those who do not have access to Level 2 data?
"Does he think that there is a tipping point - in terms of portfolio size - when it makes sense for an active PI to engage a 'full service" broker to give bespoke advice/place trades"
That's an easy one
My own active broker charges 1.6% commission on the way in and the same again on the way out. So 3.2% on a buy/sell.
The bigger my portfolio, the bigger my transactions, the more I pay.
In contrast my low cost dealing accounts charge a flat fee of around £10 per pop.
The prices obtained by the full service broker are sometimes marginally better than those obtained by the low cost dealers but nowhere near 3.6% across the piece.
The only time the full service a/c has proved significantly better was when I needed to sell a large holding in a very illiquid stock. I could not get any price at all from the low cost systems. The full service guys did manage to dumpt the stock.
The key take-away from that experience was to resolve never to invest in illiquid stocks ever again.
I am in the process of moving from full service to low cost and it is going well.
T
Could you please ask if there is any attempt being made to reintroduce a tapering on capital gains for shares.
i.e. if you hold a share for 7+ years there would be no capital gains tax.
This would fit in with the governments aim of people investing for their future whilst also differentiating between investing and speculation.
Could you ask him about his most recent SELLS. He has sold out of Northbridge Industrial Estate at just 20% of its original high not so long ago and I wondered why he had felt the need to do this and simply not hold onto them... if he is indeed a long term holder? And if the low oil price is to blame and he felt this could leave the company in danger of failing, why did he invest in the first place in such a cyclically vulnerable company? Thanks, Richard
On a portfolio management front, I would be interested to hear Lord Lee's opinion on home bias.
Secondly would he attribute his investment success to stock picking or asset allocation?
Also does he think his success is repeatable, or was his strategy partly right place, right time?
I wonder what he thinks of the overall system of regulation as it affects private investors and would he agree that it seems to combine mindless over-regulation in some areas with total dereliction of duty in others?
What does he think of Lloyds attempt to swindle holders of ECN's? and the regulators' supine and complicit response?
What does he think of the scandal of Chinese companies floated on Aim?
What does he think about the corporate tax regime and the way multi-nationals are able to exploit it?
What does he think about the tax arrangements for expats and non-doms?
Ben, I'd ask him if he attributes his success to the broad performance overall of most of the stocks he has owned, or are there a small number of stocks he's owned for some time that have driven a disproportionately larger gain?
I.e. Have 20% of his holdings made 80% of his gains, or is it much more evenly distributed?
The LIFETIME allowance on a SIPP would not even buy a pension equivalent to that an MP gets after a mere 20 years. So one standard for MPs and another for us paying the taxes.
Therefore, I think suggesting lifetime limits is not a good idea, as we cannot rely on them being set at a reasonable level.
Does he think there should be a cap on ISAs' tax free status (like the lifetime allowance for SIPPs)?
Cig, could you imagine him saying yes? Would any other ISA investor say yes to that? Remember investments in ISAs are after tax. Pension investments are before tax.
Hi,
Can you also ask how much attention he gives to the macro environment. Do global economic events change his timing of purchases or sales? Does he steer clear of cyclical companies? How much does the market influence his attitude to investing in a business or does he just look at the company and ignore the global outlook.
Thanks
Ben, at this rate I'll be taking you with me. Thanks so much - this is really useful stuff.
How many stocks does he hold at any given time (and/or does this vary with market conditions?). What is the maximum percentage holding he would allow before re-balancing his portfolio. Given he has a 20% stop-loss on initial positions, what is the max percentage (pain) he is willing to lose on a (in profit) position as a percentage of his total capital.
These are more like risk management questions, but I would find his answers very informative.
Hi,
Having heard Lord Lee speak a couple of times, I would be really like to understand more about his policy of setting a stop loss at 20%. For example:
Many Thanks.
Ben
Related to the question by Hydrus at the top - I've not read Lord Lee's book so can't be 100% about this, but from what I've seen he seems to follow a relatively systematic approach. Certainly I've seen lists of guidelines attributed to him that could be described as checklists.
With regards to controlling emotion then, does he consider himself to be a systematic investor or is there flexibility in his stock selection process? Put another way, would he avoid a stock that met all of his checklist criteria because he had an odd feeling about it?
Tom
Ben
Could he give an update on the work he is doing to strengthen and enhance the rights of shareholders particularly in AIM companies. AIM is often seen as the Wild West of investment which is badly in need of reform - What are his views on potential reform and how it is to be achieved?
Ben - let's ask him about his approach to stop-losses. At the ShareSoc masterclass we had a discussion about it and he admitted he could have done better if he'd always used them. He said he's started using them.
Finally - if he's using stop-losses... does that mean he never 'averages down' ?
An obvious question, but what are his current three favourite investment opportunities and analysis of them.
Oh, and if you're hoping to get fed in the Lord's dining room the dress code is smart - jacket and tie.
One more - any progress in his efforts to gain full rights for shareholders investing via nominee accounts i.e. most of us?
He has written that on occasion he has held onto holdings for too long before selling. Has he changed his approach to the way he deals with losing positions? Does buy and hold still have a place?
Thanks
I'd like to know how he managed his emotions when his portfolio almost halved in value in 2008 and how he had the resolve not to sell? Did he panic sell anything and then regret it later?
As a long term investor managing emotions during a big downturn is pretty crucial so that's why I am interested.