LTBH, JDG and other stuff

Wednesday, Jul 20 2016 by

I sold out of JDG this morning (20/7/2016) after a profit warning in their interim results to end of June. It seems that despite several “quality looking” acquisitions over the last 18 months, JDG will be heading for lower EPS than it had 2 years ago.

I first bought JDG in January 2011 at a price of £4.35 and have held the shares since, buying and selling at various points that I considered opportunistic at those times but essentially always maintaining a decent level of holding. I watched the share price climb to a high of £23.75 in 2014, however, knowing that the price had got ahead of itself I did not sell out as I was sure that once you have found a great company with great management as Warren Buffet would say the best holding period is forever.

The LTBH strategy is regarded as a noble art form in the world of investing, we tend to regard those private investors that don't follow this strategy as perhaps less experienced. I admire the likes of Lord Lee and David Stredder, very experienced investors who seem to have an ability to pick shares that they hold and maintain that holding for a very long time. Warren Buffet who I study and respect has become one of the richest persons in the world whilst following this strategy.

My longest holding in my portfolio has now become Zytronic which I have held since April 2015 a mere 16 months despite the fact that I have been investing seriously since January 2010. Part of the problem of maintaining a LTBH strategy is that I follow a very focused portfolio strategy, quite simply I am bloody good at saying no to potential investments, if I was to sum up my philosophy in just a few words it would be:

Work within my own circle of competence
Keep it simple
Wait for the perfect pitch

Sound familiar? I make no apologies for plagiarising the worlds best investor, in fact my favourite investment is the “heads I win, tails I don't lose much” investment described in Mohnish Pabrai's excellent book “The Dhando Investor” which is highly recommended reading if you haven't already done so. Mohnish describes himself as a clone of Warren Buffet and is a very succesful investor himself.

Heads I…

Unlock this article instantly by logging into your account

Don’t have an account? Register for free and we’ll get out your way


As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.

Do you like this Post?
3 thumbs up
0 thumbs down
Share this post with friends

Judges Scientific plc is a United Kingdom-based company, which is engaged in the acquisition and development of a portfolio of scientific instrument businesses. The Company's activities are predominantly in or in support of the design and manufacture of scientific instruments. Its segments include Materials Sciences and Vacuum. Its subsidiaries include Armfield Limited, engaged in the design and marketing of engineering equipment and research instruments; Fire Testing Technology Limited, which is engaged in the design, manufacture and service of instruments that measure the reaction of various materials to fire; Scientifica Limited, which offers micropositioning equipment, microscopes and advanced imaging systems used in electrophysiology and neuroscience; Quorum Technologies Limited, which manufactures scientific instruments primarily used for electron microscopy sample preparation, and Sircal Instruments (UK) Limited, which designs, manufactures and distributes rare gas purifiers. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

SRT Marine Systems plc, formerly Software Radio Technology plc, is engaged in the marine technology business. The Company's principal activity includes development and supply of automatic identification system (AIS)-based maritime domain awareness technologies, and derivative product and system solutions for use in a range of maritime applications from safety and security to fishery management and environment protection. AIS is a mesh network radio communications system technology specifically designed for the marine domain, and it uses a combination of global positioning system (GPS) and high frequency radio to enable real time, simultaneous data communication between multiple, independent entities providing information, such as identity, GPS position, speed and other customized data. It offers a range of AIS products and maritime domain monitoring system solutions, which also fuse other maritime sensor technologies, such as radar, closed-circuit television and communications. more »

LSE Price
Mkt Cap (£m)
P/E (fwd)
Yield (fwd)

  Is LON:JDG fundamentally strong or weak? Find out More »

31 Posts on this Thread show/hide all

smallcapman 20th Jul '16 1 of 31

Hi Kalkanite,

Even though you are relatively new to the investment game, you seem to have honed in on an area of investment that resonates with me. I was given Ben Graham's book the Intelligent Investor by a relative when I was 17. I read it cover to cover, and it made absolute sense. The problem was, I didn't really have the temperament to follow his strategy. I then read Buffett's Berkshire Hathaway annual letters. Reading them I was always inspired to follow the sensible logical path espoused by the self effacing Buffett. However, my temperament led me to investing in ARM and Domino's Pizza, neither of which Buffett would have bought (He wouldn't have understood ARM's moat and he wouldn't have found one at all with DOM). I found myself leaning towards companies with a high ROCE, but not those with the value metrics of the old Graham style Buffett but closer towards the later Fisher style Buffett. I read the Superinvestors of Doddsville article, which inspired me to believe that there was a consistently successful way of investing.

I must say though, I don't think Buffett would have touched Judges. Acquisitive companies do grow, but sometimes they just keep on acquiring, and the returns are just not there. I've had an internal battle over whether I should hold CRAW, BOO and CAKE.

I held all three and they have done well. Judging whether to continue to hold or jump off, is the big question (if you'll pardon the pun)

In summary, my story is one of agreeing with the theory of the benefits of LTBH, but a bit lukewarm on some value metrics, with a strong bias towards ROCE. So in short I deviate from Buffett to satisfy my character.


| Link | Share | 1 reply
kalkanite 20th Jul '16 2 of 31

In reply to post #143499

Thank you for your reply SCM

"The intelligent investor" by Ben Graham is without doubt one of the best investment books ever wrote. It can be quite difficult to read at times due to the language of the time that it was written. Warren Buffet has completely simplified the writings of Ben Graham and taken the investment philosophy further such as being willing to pay a fair price for a company with a competitive advantage.

The thing that resonates with me regarding WB is how he keeps "investing" so simple, yes he is an extremely intelligent person but if the investment thesis is not a simple one then he will say no to it. The other thing that I have learnt from him is discipline, I have set out my own investment philosophy and "rarely" deviated from it ( I did buy a few Bowleven shares early this year despite this industry being way out of my circle of competence... since disposed of).

Charlie Munger puts the emphasis on simplicity when investing when he said the following.....

“What makes investment hard, as I said at U.S.C., is that it's easy to see that some
companies have better businesses than others. But the price of the stock goes up so
high that, all of a sudden, the question of which stock is the best to buy gets quite

We've never eliminated the difficulty of that problem. And ninety-eight
percent of the time, our attitude toward the market is ... [that] we're agnostics.
We don't know. Is GM valued properly vis-a-vis Ford? We don't know......

We're always looking for something where we think we have an insight which gives us a big statistical advantage. And sometimes it comes from psychology, but often it comes from something else. And we only find a few-maybe one or two a year.......

We have no system for having automatic good judgment on all investment decisions that can be made. Ours is a totally different system. We just look for no-brainer decisions.......

As Buffett and I say over and over again, we don't leap seven-foot fences. Instead, we look for one-foot fences with big rewards on the other side. So we've succeeded by making the world easy for ourselves, not by solving hard problems.

You say "in short I deviate from Buffett to satisfy my character" it is so important that you know yourself and develop your strategy accordingly, this avoids the natural biases that are fraught with investing. If I haven't done enough research when buying shares in past years I have had the tendency to panic and sell when the price has acted against me.

LEBARON..... "The very best investors are the ones who invest according to their own psyche. You ?nd that their investment styles are consistent with their personalities, their intellects, their approaches to work. It’s not somebody else’s style; it’s their own, and it’s deeply ingrained."

My focused strategy would have killed me if I had tried this in the first four years of my investing career but I do feel that since 2014 it has been the right thing to do, it forces me to look very carefully at the downside when I take a large position and to sell if there is a whiff around a company. I was holding Solid State SOLI when a report came out in the Guardian suggesting problems with their main contract and founders were selling stock, this saved me from a big fall.

I am passionate about investing and could go on and on but will be merciful and stop there.

| Link | Share
smallcapman 20th Jul '16 3 of 31

Hi again Kalkanite,

If you had met me in the seventies I would have bored you for hours about Buffett. I was very anti the City establishment. My older cousin was a forex dealer for a merchant bank in the City. He always preferred forex over share dealing, as the constraints in share dealing were unacceptable to him. He bought me Graham's book to try and set me on the right road to investing success. It was Fisher that guided Buffett away from pure value, enlightening him to the concept of paying up for quality. In essence, quality was a company producing long term high returns on capital with a strong moat, enabling a company to keep their margins high without being eroded by competitors.

Your original post talked about LTBH. Clearly one needs a fairly firm set of rules to understand when something has changed with a company. Buffet doesn't always get it right, and even he needs to ditch a holding when the results are not indicative of longer term outperformance. He dumped Tesco not long ago, clearly having got it wrong. I actually wondered at the time why he took a holding. Margins had been eroded and the ROCE was clearly on the decline.

I found it interesting that you took a holding in Bowleven. I used to hold, but just couldn't trust Hart. Sound Oil/Energy...that's another story. They have been an idiosyncratic long term holding of mine for quite some time. They've recently begun to see the fruits of James Parsons dynamic leadership.

Like you, I'm not without my investment vices. The one thing I am very very fastidious about though, is the quality of the management. There are some appalling CEOs about who treat the company as their own personal honeypot, without ever creating value for shareholders. Depending on the metrics one uses for value strategies, some of these CEOs can be found in some value company shares.

The most important lesson I have learnt, is not to focus on the share price, but the companies operational performance. As long as that's going in the right direction I continue holding, confident that the weighing machine does it's stuff. Of course, when the voting machine holds sway, it can be quite difficult not to take what's on offer when the SP clearly exceeds today's fair value. That's the 'problem' with companies like CRAW and BOO.

Nobody said the investment game was easy, even if it sometimes appears to be simple!


| Link | Share
kalkanite 20th Jul '16 4 of 31

Bowleven was a "punt" which is ironic as I am probably the worse critic when I hear of people taking punts. It was based on the idea that at the time (22nd Jan) that oil couldn't get much lower and would recover sooner rather than later, it was carrying more cash on its book than the market cap at the time so was in a good position to utilise that against a backdrop of oil stocks that were suffering with uncontrollable debt. Is was less than 1% of my portfolio as I don't really understand the sector.

I want to invest LTBH but find it difficult finding companies that can sustain good growing profits for long periods, hopefully another few years experience may change that. My stock picking has been lucky/good over the past few years with gains of 28.7% (2014), 30% (2015) and after my best month ever (so far) in July of this year I am circa 40% up since January 2016.

Re Craw, I was thinking of this share when I mentioned DS, it has had an incredible 3 years so well done for that one, I've looked at it many times but always thought the price had got too far ahead of itself. Only a few days ago I tweeted that I thought the lack of profits forecast for 2018 of 0.6p did not justify its current valuation, but WTFDIK? a missed opportunity as there was plenty of noises about it so my bad, I'm too good at saying no.

With regard WB and Tesco, it's nice to know that he is actually human. Incidentally despite his very cautious value investing it is interesting that "In 1948, Ben Graham through his company Graham-Newman Corporation bought 50% of GEICO for $712,000. By 1972, this investment was worth $400 million, a 562 bagger. The gain in GEICO would contribute more profit to Graham’s partnership than all the gains from all other investments combined. The irony is that Graham rarely invested more than 5% of the firm’s capital in one company, but with GEICO he invested 20% of the firms capital. Graham’s most successful investment ever came when he broke his rules and made an educated concentrated bet."

So LTBH does work when you get it right.


PS - Off to try and reduce my golf handicap now. Being a full time investor does have its reward :-)

| Link | Share | 1 reply
crazycoops 20th Jul '16 5 of 31

For the past couple of years I have been trying to move away from my portfolio being too focused because when you get it wrong, it can seriously damage your wealth. However, the current economic climate (UK and globally) has sent shivers down my spine and I liquidated a lot of holdings into cash - I am currently around 40% in cash. This cash backing has given me the confidence to become more focused again, at least in the short-term until the market direction becomes clearer.

Cash is by far my largest holding at present, followed by SRT - like you, the $100m contract to be delivered over 3 years with a further pipeline of £200m encouraged me to bet big with this one. I also hold ZYT. If you are looking for quality companies with a defensive moat to hold for the long-term, you might also like to take a look at BVXP and VCT. Like ZYT, both these companies are replacing old products with new ones which should stand them in good stead over the next 3-5 years. And while that transition is taking place of course, all three of these quality companies also pay a dividend.

Blog: Share Knowledge
| Link | Share
hayashi22 20th Jul '16 6 of 31

In reply to post #143562

After that post I think you are duty bound to share a few tips with us mere mortals!
Doing 30% last year is good going. Maybe highly concentrated portfolio?

| Link | Share
smallcapman 20th Jul '16 7 of 31


I think I've identified why you're not getting good investment returns


| Link | Share
kalkanite 20th Jul '16 8 of 31


Re BVXP, I met the CEO at the Derby Mello back in 2014 and was suitably impressed I have tried to get within the buy sell margin on a few occasions but with no success, maybe I just need to pay up and look big! I'm sure I will revisit BVXP shortly. With regards to VCT I will take a close look at them in the morning so thanks for the heads up.

Unfortunately the golf handicap has remained in tact, but the company and beer afterwards was dam fine :-)


I don't do tips, nor do I trust anyone else who does tips, I don't know where this saying comes from but it is very apt "Investors want to believe in someone. Forecasters want to earn a living. One of those groups is going to be disappointed. I think you know which..

I do however published my holdings at the end of each month on my twitter account since January 2015 (except Aug 2015 when I moved house) so my performance/holdings is open for anyone to see.


| Link | Share
cig 21st Jul '16 9 of 31

A large public procurement contract with a developed country, for solving a low priority problem, behind an opaque multinational structure, going according to plan would probably be a first in the history of mankind. I rate the probability of having at least a delay (the announcement of which may do wonders to SRT's share price) at circa 99%.

| Link | Share | 1 reply
kalkanite 21st Jul '16 10 of 31


I hope for your sake that the research you do on your own holdings is vastly better than that?

| Link | Share | 1 reply
janebolacha 21st Jul '16 11 of 31

In reply to post #143670

Is the "large country in Asia" actually Philippines?

I saw SRT were sponsoring this conference in Philippines:

If so, then I would certainly expect delays and other complications as the contract proceeds.

| Link | Share

Please subscribe to submit a comment

 Are LON:JDG's fundamentals sound as an investment? Find out More »

Stock Picking Tutorial Centre

Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis