Mello 2019 - a few highlights from this year’s best investment gathering

Mello 2019, the annual two-day investment conference run by David Stredder, was back in London this week - and it was another big success.

Mello events are hands-down the best (and most fun) gatherings of private investors and they keep getting better. Once again, both days were packed with company presentations and a programme of talks and panel discussions in the theatres at the Clayton hotel in Chiswick.

Highlights were numerous, but things got off to an interesting start with a panel debate on how to encourage young people to become investors. MoneyWeek’s executive editor John Stepek hosted the discussion between Andy Parsons (The Share Centre), Michael Taylor (@ShiftingShares), Megan Boxall, Lord John Lee and Lilian Nandi.

Lord Lee, of course, was quite literally talking his own book - having published Yummi Yoghurt – A Taste of Stock Market Investment!, an introduction to investing for teenagers, earlier this year. He stressed that getting young people into investing not only helps them begin to build wealth, but is also in the national interest. He said it was important to empower young people, to help them detect and avoid fraud and prepare for inheritance.

There was general agreement that a new generation of young people are taking more control of their money and that investing is a crucial skill in looking after yourself. Indeed, with very first Child Trust Funds beginning to mature from September 2020, there’s an imperative to get younger people thinking about long-term investing. As Andy Parsons from The Share Centre pointed out, the concept of compound interest is perhaps one of the greatest life skills to get to grips with.

Elsewhere during the morning, Graham Neary (@GrahamNeary)did a stellar job of doing a live Small Cap Value Report. Among a wide range of companies that came up for discussion were Gear4Music, Rightmove, Google and Games Workshop.

That was followed by a panel discussion on how to start an investment share club - hosted by Ray Williams of SIGnet. This was interesting because it got to the heart of the fact that investors like to meet other investors. And while there are no particular tax advantages attached to investment clubs, they do provide a great forum for healthy debate about the pros and cons of shares. The discussion - prompted very much by questions from the audience - covered stock screening and strategies, trading rules, stop losses and portfolio weighting.

After all that, I managed to get into Mark Simpson’s (@DangerCapital) talk on the perils of loss aversion - where he’d managed to attract nearly double the intended room capacity (with the help of chocolate bribes!). And it was worth it - loss aversion is a debilitating problem for investors, made worse by human instinct. Fortunately, Mark (as outlined in his book, Excellent Investing) had some answers.

Another interesting panel debate during the day looked at whether corporate takeovers are becoming the norm. Pete Higgins (@Conkers3), one of the friendliest (and busiest) PIs I know, marshalled a panel including Richard Parris (ex-CEO of Intercede), David Stredder, Lord John Lee and John McArthur (ex-CEO of Tracsis).

Amazingly, Lord Lee said he’d been on the receiving end of somewhere between 50 and 60 takeovers in his portfolio during 50 years of investing is “good quality, small-cap stocks”. But the thrust of the debate here was that structural problems mean that smaller companies (sub £50 million market cap) are struggling to raise money from institutions. That means they either have to buy-and-build quickly to get to a certain size, or they are acquired themselves. Either way, M&A is becoming more prevalent. In turn, in the current climate, with the weight of private equity money around, private companies are arguably more expensive than public ones.

There was a suggestion that takeovers have played a role in reducing the numbers of companies quoted on the Alternative Investment Market over a number of years. John McArthur said that that was a “good thing”, given that the overall quality has improved - which is something I think many would agree with.

Overall, there was a vast array of presentations and discussions over the two days and I had no chance of getting to see all of it. Among others were the Mello Lair - a Dragon’s Den-style panel discussion - and the Mello BASH (buy, avoid, sell, hold). We also had the Stockopedia Stock Slam and an excellent presentation by Gervais Williams of Miton on the case for buying British small-caps - among many others.

And of course, Stockopedia CEO Ed Croft, was on stage during Wednesday explaining the findings of our research this summer into the collapse of Neil Woodford’s equity income fund and what we can all learn from it (you can catch his webinar on that research here).

So, once again, David Stredder and his team did a first class job of pulling off another great Mello conference. It was brilliant to see so many familiar faces and really encouraging that the event can balance bringing in a strong collection of interesting companies together with a super quality line up of presenters and speakers. Bring on Mello 2020.